Leitch v. Novac, 2017 ONSC 6888

CITATION: Leitch v. Novac, 2017 ONSC 6888

COURT FILE NO.: FS-14-398336

DATE: 20171117

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JENNIFER ANN LEITCH

Applicant

– and –

ANTHONY CHARLES JAMES NOVAC BOTH IN HIS PERSONAL CAPACITY AND IN HIS CAPACITY AS TRUSTEE OF THE NOVAC FAMILY TRUST (2013), MICHAEL NOVAC, BOTH IN HIS PERSONAL CAPACITY AND IN HIS CAPACITY AS TRUSTEE OF EACH OF THE NOVAC 2011 FAMILY TRUST AND THE NOVAC FAMILY TRUST (2013), NELLY NOVAC, IN HER CAPACITY AS TRUSTEE OF THE NOVAC FAMILY TRUST, SONAC GROUP INC., THE NOVAC 2011 FAMILY TRUST, THE NOVAC FAMILY TRUST (2013), JOHN MCCLURE, DAVID TAM

Respondents

Ilana Zylberman Dembo, Sheila Gibb & Kristy Warren, for the Applicant

Avra Rosen & Susan Sack for the Respondent Anthony Charles James Novac

Bryan R. G. Smith & Lindsey Love-Forester, for the Respondents Michael Novac, in his personal capacity and in his capacity as trustee of each of the Novac 2011 Family Trust and The Novac Family Trust (2013); Nelly Novac, in her capacity as a trustee of The 2011 Novac Family Trust; Sonco Group Inc.

No one appearing for the Respondents John McClure and David Tam, in their individual capacity as trustee of the Lulu Trust (2016)

HEARD: November 7, 2017

M. D. FAIETA j.

reasons FOR DECISION

introduction

[1] The Applicant, Jennifer Ann Leitch (“Jennifer”) and the Respondent Anthony Charles James Novac (“Anthony”) were married in May 1997 and separated on September 29, 2012. Jennifer and Anthony have two twin children, age 13. Jennifer commenced this Application for child support as well as other relief. About 20 months later Jennifer amended her Application to add a claim of conspiracy alleging that Anthony is significantly involved in his father’s businesses and that they have conspired to conceal his income and assets from Jennifer and that they continue to do so. The Application was amended to include various persons including Anthony’s father, Michael Novac (“Michael”) and one of his companies, the Sonco Group Inc.

[2] The added Respondents, including Michael and Sonco, have a brought a motion for summary judgment to dismiss the conspiracy claim. Affidavits have been exchanged by Jennifer, Anthony and Michael in respect of this motion. They, along with Keith MacIntyre (“Keith”) of Grant Thornton LLP (Sonco’s accountant), have been questioned on their affidavits.

[3] Jennifer seeks further production of answers and documents in relation to the conspiracy claim. On October 30, 2017, Jennifer filed a notice of motion (as amended November 2, 2017) for:

• An Order that Keith immediately produce the answers to the undertakings given during his questioning on May 9, 2017 and June 1, 2017, with the exception of the 156 files over which Michael claims litigation privilege;

• An Order that Anthony produce all emails as stipulated in his under advisements (numbers 1, 3, 6 and 8) and refusals (numbers 1, 14, 20, 22 and 23) without any search limitations/parameters except for the purpose of protecting solicitor-client privilege, in which case the search term to be used is “Rosen”, and all emails including the term “Rosen” are to be reviewed for solicitor-client privilege, and all such emails over which solicitor-client privilege is claimed are to be identified by date, sender, receiver and all parties copied and/or blind copied;

• An Order that Michael produce all emails as stipulated in his undertakings, advisements and refusals without any search limitations/parameters, except for the purposes of protecting solicitor-client privilege, in which case the search term to be used is “Lerners”, and all emails including the term “Lerners” are to be reviewed for solicitor-client privilege, and all such emails over which the solicitor-client privilege is claimed are to be identified by date, sender, receiver and all parties copied and/or blind copied;

• An Order that Anthony authorize Michael and his counsel Lerners LLP, to produce all emails in their possession that he created, sent, received or was copied or blind copied on, that are stipulated in Michael’s undertakings, advisements and refusal (including the emails removed from Lerners LLP email database on the instructions of Rosen Sack LLP), without any search limitations/parameters, except for the purposes of protecting solicitor-client privilege, in which case the search term to be used is “Rosen”, and the emails including the term “Rosen” are to be reviewed for solicitor-client privilege, and all such emails over which solicitor-client privilege is claimed are to be identified by date, sender, receiver and all parties copied and/or blind copied;

• An Order that Michael produce immediately the answers to the following of his advisements and refusals: R56, R57, A96, A99, A101, R74, R85, R86, R87, R99, R100, R106, R107, R110, R111, R114, R116, R120, R123 and R130 to the extent that they are not answered; and

• An Order that all other outstanding disclosure issues and issues relating to undertakings/advisements and refusal arising from the questioning of Anthony and Keith are to be reserved for a further motion/determination on a date to be set after all examinations of all parties have been completed and prior to trial.

[4] Counsel for Jennifer also advised that on October 30, 2017 her firm had received a brief of documents related to undertakings, advisements and refusals arising from Anthony’s questioning on June 27, June 28, July 4 and September 6, 2017. Given the shortness of time, she has been unable to review the materials provided to ascertain whether they adequately addressed the questions asked. Accordingly, she sought and I have granted an adjournment of that aspect of the motion related to Anthony’s productions.

[5] The following questions were addressed at the hearing of this motion:

(1) Should Michael be compelled to produce emails and other documents that pre-date January 1, 2012?

(2) Should Michael be compelled to produce all emails and other documents dated January 1, 2012 or later, other than those documents for which privilege is claimed?

(3) Has Michael waived solicitor-client privilege in respect of all communications with Burchells LLP?

(4) Should Michael be compelled to trace funds from a particular sale transaction?

BACKGROUND

[6] On October 17, 2014 Jennifer filed this Application for, amongst other things, a divorce, spousal support, child support and equalization of net family property. She alleges:

Anthony is a successful entrepreneur and businessman. Jennifer, a former practicing lawyer, left her practice 6 years ago to spend more time with her children and to pursue graduate studies in law. …

Anthony has developed two software companies that have been very successful; one was ultimately sold to PartyGaming PLC for a significant sum of money, and the other, Spreed Inc., builds mobile applications for the media industry and has recently settled a major lawsuit against the Globe & Mail relating to its mobile online interface.

When Anthony was starting his gaming business in or about 2000-2001, Jennifer provided a great deal of personal and financial support to Anthony. …

The business went on to become one of the leading online gaming companies and was ultimately sold for millions of dollars.

Anthony continues as principal and CEO of Spreed Inc, a leading mobile technology company.

Anthony also has a significant number of other business interests, many of which are intermingled with those of his father, Michael Novac, who is a businessman and real estate developer in Halifax. Michael and Anthony operate through a private family-owned group of companies collectively known as Sonco. Among other titles, Michael is the President and CEO of Sonco Group Inc.

Sonco is prominent in the national hospitality/gaming industry. Sonco was the developer of the Great Blue Heron Charity Casino in Port Perry, Ontario; the Grey Eagle Casino, which opened on December 19, 2007, and is located on the Tsuu T’ina Nation just outside of Calgary, Alberta; and Casino New/Nouveau- Brunswick, located in Moncton.

Anthony has been integrally involved in all aspects of the casino business with his father for over 15 years. Anthony has been instrumental in developing Sonco’s growing businesses. He is the President of Sonco Gaming and the Vice President of Sonco Hospitality. …

Anthony has been involved in the acquisition, application, development and/or operation of casinos in five Canadian provinces including New Brunswick, Ontario and Alberta. He acted as Project Manager on the development of the Great Blue Heron Charity Casino, Casino New Brunswick and the Grey Eagle Resort and Casino projects.

During the course of the marriage, the parties enjoyed a very comfortable lifestyle. For example, the family resided in a luxurious $3.5 million home in Rosedale … .

Since separation, Anthony has attempted to control Jennifer financially by refusing to pay spousal support that is commensurate with his income and the family’s lifestyle … .

Jennifer believes that Anthony is attempting to manipulate his income in order to minimize his support obligations. Income will likely have to be imputed or attributed to him. [Emphasis added]

[7] On January 6, 2015, Anthony delivered the following Answer:

I have a 2.5% interest in one of my father’s companies. That was acquired by a cash investment that I made. That was the extent of my “ownership”. I do not control my father’s companies. I have provided full disclosure to the Applicant regarding my business interests.

The Applicant states that during the course of the marriage, we enjoyed a “very comfortable lifestyle”. That has been true since 2006 and was made possible by the Applicant’s income and the sale of one of my business interests in 2006 which allowed us to live off the capital. …

I have been candid and forthright in my financial disclosure to the Applicant. Even before this proceeding was commenced, I had retained Duff & Phelps to assist me in providing full and accurate information regarding my business interests and income at all relevant dates. I am not attempting to “manipulate” my income as the Applicant alleges. If there is to be an imputation of income, it should be regarding the Applicant’s income. …

The Applicant states that I had two successful companies during the marriage. My company, 1X, was successful and was sold in 2006. The net proceeds of sale were approximately $11,500,000. We used that money to purchase the Rosedale home, the farm property and to set up the Spousal Trust. My other company, Spreed, was not financially successful.

I worked for my father’s business in Nova Scotia in the early to mid-1990s. When the Applicant and I married in 1997 and she was only able to find work in Toronto, I left my father’s business and moved from Halifax to Toronto. I started my own company in 1999.

In 2007 I started doing some consulting work for one of my father’s companies as a project manager on a project he was developing in Calgary. That consulting contract lasted 13 months.

Following separation in October 2012, I took on another consulting job with one of my father’s companies. I have since moved into a more permanent role in the company.

I have no ownership interest in my father’s businesses, except for the 2.5% of the shares of 998253 Alberta Ltd. I invested in this company prior to separation.

The Applicant is well aware of the situation with my father and his businesses. This was discussed throughout our marriage. My father created an estate freeze in 2011.

My current positions with my father’s companies are as follows:

(a) I am acting President of Sonco Gaming (a subsidiary company);

(b) I am the lead on a project in Edmonton and another project in Calgary.

In terms of remuneration, I currently receive a fixed percentage of the net cash flow from the deals that I deliver and manage. [Emphasis added]

[8] On March 18, 2015, Jennifer delivered the following Reply:

… Anthony’s claim that he has no ownership interest in his father’s businesses except for 2.5% of the shares of 998253 Alberta Ltd. is patently false. He also owns 100% of the shares of 641103 New Brunswick Limited, which holds limited partnerships in Sonco Gaming New Brunswick.

In addition, Anthony is a beneficiary of the Novac 2011 Family Trust, which Jennifer understands owns 100% of the shares in Sonco Group Inc., Sonco Gaming (Holdings) Inc., and 640854 New Brunswick Limited, as well as 95% of the shares of 998253 Alberta Ltd. In turn, Jennifer understands that Sonco Group Inc. owns 100% of the shares of Sonco Property Development and Services Company Inc., Sonco Gaming Inc. and Sonco Management Inc., and 51% of the shares in Sonco Gaming New Brunswick Limited.

Anthony is also both a beneficiary and trustee of the Novac Family Trust (2013), which Jennifer understands owns 100% of the shares in Sonco Gaming Management Inc.

Anthony is on the Board of Directors of five of the above-listed companies. … [Emphasis added]

[9] At a case conference held on June 29, 2015, a consent Order was issued that, amongst other things, required Anthony, on a without prejudice basis, to: (1) pay monthly child support of $5,629.00 and monthly spousal support of $11,193.00 commencing July 15, 2015; and (2) pay the costs of their children’s private school expenses for 2015/2016.

[10] Anthony was examined for five days between February 2016 and May 2016. The affidavit of Lana Morano, sworn February 1, 2017, states:

I am advised by the Applicant that the general tenor of the Respondent’s counsel’s statements during his questioning was that he would not be providing any information or documentation related to any of the Sonco entities. Similarly, in the Respondent’s response to a number of the requests that were noted Under Advisement, he stated that the requested information was under the sole control of “Sonco”. Despite the fact that the Respondent is an officer and/or director of the Sonco entities that would “control” this information, he claimed that he could not access the requested information and that “Sonco” had refused to provide it. The Respondent even relied on the same excuse – that he could not access the requested information or documents from “Sonco” – in his response to a number of his Undertakings.

[11] Jennifer alleges that Anthony has lied to her about his financial situation on more than one occasion after their separation. For instance, on October 16, 2014, Jennifer sent an email to Anthony asking him to pay a $354 dental bill for one of their children. He responded that he only had less than $1,000 in his bank account. However, bank records show that he had $739,848.22 in his account on that day.

Added Conspiracy Claim

[12] By Order of Justice Kiteley dated June 22, 2016, Jennifer amended her Application on July 15, 2016 to add the following claims:

• An Order granting Jennifer a monetary award and/or an equitable interest in Anthony’s business and property interests, or alternatively, an order requiring Anthony to repay to Jennifer all funds borrowed from the parties’ assets and joint lines of credits and invested by Anthony in his business and property interests;

• A declaration that Anthony breached his fiduciary duties as a trustee of The Lulu Trust 2006, an order that Anthony pay damages as a result of his breach of the fiduciary duties that he owed to Jennifer in his role as trustee, an Order that Anthony trace and account for all sums distributed from the Lulu Trust from its inception to the date that it was wound down;

• A declaration that the Respondents John McClure “McClure” and David Tam (“Tam”) breached their respective fiduciary duties to Jennifer as trustees of the Lulu Trust; an order that they pay damages as a result of breaching the fiduciary duties that they each owed to Jennifer as trustees of the Lulu Trust; alternatively an order McClure and Tam pay damages to Jennifer as a result of their negligence, their failure to carry out the duties required of them as trustees of the Lulu Trust, and due to the improper delegation of their duties to Anthony;

• An Order that Anthony and the other Respondents Michael Novac (“Michael”), Nelly Novac (“Nelly”), The Novac 2011 Family Trust (“2011 Trust”), The Novac Family Trust 2013 (“2013 Trust”) and Sonco Group Inc (“SGI”) [“the Sonco/Novac Respondents”] are jointly and severally liable to pay damages to Jennifer as they all conspired and/or were involved in sheltering and/or concealing Anthony’s income and/or assets to deprive Jennifer and her children of their respective support entitlements;

• An Order for the production for inspection of the original trust deeds for both trusts;

• An Order for the production of all written or digital communications between Michael and Anthony including all email and text messages from May 2011 to trial;

• An Order restraining and enjoining Anthony, Michael and Nelly from transferring, assigning or otherwise dealing with any assets held by either of the trusts or under the control of the trusts or other entity in which the trusts have a controlling interest, pending the determination of all issues in this proceeding, and requiring the trusts to preserve all such property until further Order of this court or with Jennifer’s agreement; and

• An Order that Anthony pay damages to Jennifer as a result of his continuing engagement and retainer of third parties to undertake continuing renovations to Jennifer’s farm property without her approval. [Emphasis added]

[13] Jennifer alleges that Anthony conspired with his parents, Michael and Nelly, to structure his business interests and his income in the businesses both just prior to separation and after separation with the intention of concealing, diverting and sheltering Anthony’s assets and income to defeat and hinder Jennifer’s claims and entitlements to both spousal and child support.

[14] The conspiracy claim is described at paragraph 24, page 16, of the Amended Claim, alleges the following facts:

Jennifer alleges that Anthony conspired with his parents, namely Michael Novac and Nelly Novac to structure his business interests and his income from the businesses both just prior to separation and post separation with the intention of concealing, diverting, and sheltering Anthony’s assets and income to defeat and hinder Jennifer’s claims and entitlements to both child and spousal support. In particular, Anthony and his parents used various trust and corporate vehicles to conceal Anthony’s true interests and entitlements to assets and income from an adjudication of support in favour of Jennifer. Further, through the structuring and creation of the Novac Family Trust (2013) and Sonco Gaming Management Inc. (“SGMI”) after separation and through subsequent transactions between the Novac Family Trust (2013), SGMI, Sonco Group Inc., and the Novac 2011 Family Trust, they have concealed and diverted millions of dollars in assets and income that would otherwise be accounted for in the determination of Anthony’s obligations to Jennifer for both the support of the children of the marriage and herself. [Emphasis added]

[15] The Sonco/Novac Respondents’ Answer, dated August 25, 2016, states:

Anthony has been on the periphery of Michael’s businesses since Anthony was a teenager, working with Michael during the summers. Anthony has not been integrally involved in all aspects of the casino business with Michael as alleged … . In the mid-1990’s, Anthony briefly worked with Michael and his businesses, but left in 1997 when he moved to Toronto … . Anthony began acting as a part-time consultant on the procurement of furniture, fixtures and equipment for the Grey Eagle Resort and Casino, a Sonco venture (Anthony was not paid for this work). Thereafter he worked on the following Sonco projects:

a) In late 2008, Anthony worked on the Casino New Brunswick development for approximately 13 months;

b) From mid-May 2012 to May 2013, Anthony worked on the Grey Eagle Casino expansion;

c) From October 2012 to May 2014, Anthony was the Project Manager on the construction of the Grey Eagle Casino hotel and entertainment center;

d) From May 2014 to November 2015, Anthony managed the Grey Eagle Hotel, on behalf of Sonco (until he was removed by the Tsuut’ina Nation band); and

e) From January 2014 to July 2015, Anthony managed the River Cree Resort & Casino, as set out in detail below.

Given Michael’s advancing age, Anthony was named as an officer of certain of Michael’s companies but Michael did not transfer ownership or control of his companies to Anthony.

… Anthony’s business interests are not intermingled with those of Michael. To the extent Anthony and Michael have made investments in business interests, they have always done so in their own respective names or through their own respective holding companies.

The fact that Anthony worked for the Sonco Group in various capacities, at different times, does not make Anthony an owner. Anthony provided services to the Sonco Group for which he was remunerated. The growth and success of the Sonco Group is attributable to Michael.

… Michael holds no assets in trust for Anthony, directly or indirectly.

… Michael is the Trustee of two trusts and Anthony is a beneficiary of both the trusts. Neither trust has allocated any property or income to Anthony nor is any trust property owned by Anthony. …

Motion for Summary Judgment

[16] On January 17, 2017, the Sonco/Novac Respondents brought a motion for summary judgment for an Order dismissing Jennifer’s conspiracy claim.

[17] Michael delivered a supporting affidavit sworn December 5, 2016 which includes the following statements:

I am not your average 82 year old man. At 82, I continue to be fully engaged in running my businesses from an overview perspective, and am involved in many of the day-to-day projects. I enjoy being busy. In the Spring, and then in the Fall of 2016, as I have done for many years (going back and forth from Nova Scotia to Florida), I captained my yacht from its Florida docking facility in West Palm Beach to its Summer port in Toronto, Ontario and back to Florida. …

The Sonco Group is primarily involved in the area of real estate development and the gaming industry. As set out in more detail below, the Sonco Group includes various entities controlled by me, which includes Sonco Group Inc., a full service real estate company that engages in building and land development. Other Sonco entities are also engaged in the ownership, operation and development of gaming properties.

[18] Michael states that he has been involved in the Canadian gaming industry for 22 years and has consulted on gaming projects across Canada:

• Great Blue Heron (Port Perry, Ontario): Michael entered an agreement for the construction and operation of a casino on the lands of the Mississauga of Scugog First nations in about 1995. Anthony was the project manager. When the casino opened in 1997, Anthony returned to Halifax as there was no continuing role for him. The casino is operated by a partnership which includes the Sonco Group. Anthony is not involved in the operation of the casino.

• Grey Eagle Casino (Calgary, Alberta): Michael entered an agreement for the construction and operation of a casino on the lands of the Tsuu T’ina Nation in about 2004. The casino opened in 2007. Anthony had no involvement with the construction and development of the casino however he acted as a part-time consultant on the procurement of furniture, fixtures and equipment. The casino is operated by Sonco. Anthony is not involved in the operation of the casino.

• Casino New Brunswick (Moncton, New Brunswick): In 2008, a Sonco entity was selected as the successful bidder for the development, construction, financing and operation of this casino. Anthony assisted with the bid as well as the development and procurement of the resort and entertainment. Anthony was paid a development fee of $200,000. Once the casino opened, Anthony had no further involvement in the operation of this casino. The Sonco entity that operated this casino was sold to an arm’s length purchaser in October, 2015.

• Grey Eagle Resort and Casino Expansion: In 2012, Michael and the Tsuu T’ina Nation entered an agreement for the construction and development of the expansion of this casino. Sonco also entered into contracts with the Tsuu T’ina Nation to manage the new hotel and entertainment facilities. Anthony had no involvement in the negotiation of the expansion – instead, his role was limited to the project management of the expansion from May 2012 to May 2014. Following the completion of the expansion, Anthony managed the hotel on behalf of Sonco until he was removed by the Tsuu T’ina Nation in November 2015. Sonco has continued to manage the facility through its employees. The only interest that Anthony has ever had in this facility is a 2.5% in a 998523 Alberta Ltd. which he purchased in 2007.

• River Cree Resort & Casino (Enoch, Alberta): Enoch Cree Nation operates a casino near Edmonton, Alberta. Sonco had nothing to do with the construction or development of this facility but became involved in 2013 when new management was sought. Michael was approached and entered into an agreement to manage this facility. On October 29, 2013, Michael established 8676569 Canada Inc. (“867”) for the purpose of entering into the management contract. One day earlier, he established the Novac Family Trust 2013. The 2013 Trust received the common shares of 867. Anthony was involved in the negotiation for this management contract. 867 changed its name to Sonco Gaming Management Inc. (“SGMI”) in January 2014. Shortly after entering this management contract, the Enoch Cree Nation decided that it wished to terminate the agreement. The parties came to an agreement on the price to terminate the contract. The agreement was implemented by the sale of SGMI’s shares to Enoch Casino LP in accordance with tax planning recommendations received from his accountant, Keith MacIntyre. The 2013 Trust transferred its shares in SGMI to Sonco Group Inc (“Sonco”) and, in exchange, received shares of equal value in Sonco. Sonco then sold its common shares in SGMI to Enoch Casino Corporation on August 14, 2015. The purpose of the establishment of SGMI, the 2013 Trust and the 2015 share exchange was not to injure Jennifer nor were such actions unlawful. Anthony’s right to receive income was limited to the opportunity to receive consulting fees while the management agreement existed. Such right to consulting fees ended with the termination of the management agreement. As a beneficiary of the 2013 Trust, Anthony has no entitlement to any of the property or income of the 2013 Trust as none of it has been declared payable to him, but he does have potential interests if the Trustees, in the exercise of their discretion, make declarations in favour of him as a beneficiary.

[19] Michael indicated the trusts were created for tax planning purposes:

The 2011 Novac Family Trust: This trust was established pursuant to a Trust Deed dated September 30, 2011 for tax planning purposes. The trustees have always been Michael and Nelly. The beneficiaries include Michael, Nelly and Anthony. Amongst other things, all shares of Sonco Group Inc. were transferred to the trust in order to effect an estate freeze. There have been no allocations or distributions from the 2011 Trust.

The 2013 Novac Family Trust: This trust was established for tax planning purposes. The trustees are Michael and Anthony. The beneficiaries include Michael, Nelly and Anthony. There have been no allocations or distributions from the 2013 Trust.

Motion to Vary Support

[20] On February 3, 2017 Anthony delivered a motion to, amongst other things, vary the child and spousal support. Anthony’s supporting affidavit sworn February 1, 2017 states there have been material changes since the temporary support order was granted on June 29, 2015. He states:

My child and spousal support obligations set out in the temporary Consent Order of Kiteley J. were based on my estimated 2015 income. Mr. Gobrin’s report concludes that my 2015 income for support purposes was $630,000.

In October, 2015, the assets and operating business of Casino New Brunswick (“CNB”) were sold to Great Canadian Gaming (New Brunswick) Ltd. I was not aware that CNB was going to be sold at the time of the Case Conference before Kiteley J. in June, 2015. Conrose Park, my holding company, received approximately $1.05 million (interest and principal) for my interest, while approximately $330,000 continues to be held in trust under an indemnity agreement for a period of 18 months after the closing of the CNB transaction. Mr. Gobrin determined that my 2015 income would total $1,383,000, inclusive of the post-separation notional gain on the sale of … CNB, assuming hindsight was not applied to the valuation of CNB at the date of separation. My 2015 income consisted of income that my holding company received from my management of River Cree Casino, as well as funds that I received from managing Great Eagle Casino.

As set out in Mr. Gobrin’s report, my 2016 income was $97,000. My income has materially changed for the following reasons:

a. Sonco Group sold its common shares in Sonco Gaming Management Inc. (“SGMI”) to Enoch Casino Corporation, in its capacity as General Partner of Enoch Casino LP. The closing took place on August 14, 2015. As a result of the share purchase by Enoch Casino LP, the Enoch Cree Nation became the managers of its own casino and no longer paid management fees to SGMI. As my remuneration was directly related to the management of River Cree Casino, my entitlement to consulting fees ended;

b. In the fall of 2012, my father entered into an agreement with the Tsuu T-ina Nation regarding an expansion of the Grey Eagle Casino. I was involved with the project management of the casino from May, 2012 until May, 2014 when the expansion was completed. Following the completion of the expansion, I managed the Great Eagle Hotel and hospitality group, on behalf of Sonco, until I was removed by the Tsuu T’ina Nation band from its lands in or about November, 2015. Following my removal, I had no further interest in managing the facilities, and received no further management fees. On December 1, 2015, my counsel wrote to the Applicant’s counsel to notify them of my removal … . The only interest that I have in Grey Eagle Resort and Casino is a 2.5% interest in a company known as 998523 Alberta Ltd., which interest I purchased in or about 2007.

As a result of the above, I was no longer receiving any income, and I began depleting capital to meet my expenses and to pay support in accordance with the temporary Consent Order of Kiteley J. On June 8, 2016, I negotiated a Consulting Agreement with my father to receive a salary to allow me to partially meet my support obligations. The Agreement provides that I will receive a salary of $120,000 from Sonco, even if I bring no projects to Sonco. If I do bring a new venture to Sonco, the Agreement provides that the bonus that I receive for such venture will not exceed 25% of the net profits to the company. …

The Divorcemate calculation reflects that I owe the Applicant an ongoing child support payment in the set-off amount of $866 monthly and that I would be responsible for 54% of the children’s special expenses. …

It is my position that the Applicant is not entitled to spousal support, however for the purpose of this Motion I am not seeking to terminate the Applicant’s spousal support entitlement, I am only seeking to vary it to $1/month. …

[21] On February 23, 2017, Justice Stevenson ordered that the motions for summary judgment and to vary support be heard together on May 1 and May 2, 2017.

[22] Jennifer’s affidavit, sworn March 3, 2017, responds to both motions. Amongst other things, she states:

Not long after we separated, Anthony began telling me that he was having “cash flow problems” and he implored me to collapse my RRSPs and sell the matrimonial home in order to meet expenses. I collapsed my RRSPs and listed the home for sale in late November 2013, at Anthony’s urging to pay family expenses, including the children’s school tuition fees. The home was listed … and the closing of the sale took place on August 28, 2014.

I know now, after countless requests for information and five days of questioning, that Anthony was lying to me throughout this period of time. Anthony had secured lucrative gaming contracts and he continued to enjoy the same luxuries that we enjoyed during the marriage, as he continues to enjoy to date.

Since we separated, Anthony has travelled extensively; he has continued to shop at designer clothing and home furnishing stores; he has continued to buy groceries at Pusateri’s and Whole Foods; he has continued to purchase Platinum-level season’s tickets to basketball games and hockey games; he drives an Audi Q7, a Land Rover and a Porsche; he rents a home in Forest Hill for at least $120,000 net per year. Anthony has disclosed that he spent just under $60,000 on art between the date of separation and August 2016 and he has likely spent more since then. Anthony enjoys luxury boating on Michael’s private yacht. Anthony has also been the sole source of financial support for his new partner … since they moved in together nearly four years ago. …

Anthony’s claims that he earned only $97,000 in 2016 and that he cannot continue to pay child and spousal support (beyond $1,352 per month) defy reasonable belief. In support of his position that he earned only $97,000 in 2016, Anthony is relying on an income report by Ohran Gobrin of Fuller Landau LLP dated November 29, 2016. …. . This report does not represent Anthony’s true income and business interests. Anthony was not truthful with Mr. Gobrin about his ownership interests in the Sonco group of companies and his ability to hide his true income within the Sonco business and trust structures.

… my claim is that Michael and Anthony conspired to use and did use the 2011 Trust, and various of the Sonco entities that the 2011 Trust owns, as vehicles to conceal Anthony’s true entitlements to income and assets in order to hinder and defeat my child and spousal support claims. I believe that Anthony conspired with Michael to conceal and reduce his income in this manner just prior to our separation in September 2012 and throughout the course of this litigation. …

Anthony does not have direct ownership interests in most of the Sonco companies. Rather, he is a beneficiary of the 2011 Trust which in turn is the owner of most of these Sonco entities. Anthony claims that this beneficial interest in the 2011 Trust is an excluded asset. It is my position that Anthony’s beneficial interest in the 2011 Trust is not excluded because not all of the assets owned by the Trust were “gifted” to Anthony by way of the establishment of the Trust. It is my position that Anthony could not have received by “gift” those assets which he already owned by virtue of his role in creating and building them in first instance. This issue is not the subject of my claim of conspiracy against the Novac/Sonco Respondents and need not be considered for the purposes of this motion. …

My claim of conspiracy against both the Novac/Sonco Respondents and Anthony relates to a course of conduct by Michael and Anthony (which I will set out in greater detail below) to hide and artificially reduce Anthony’s income as soon as it was clear to Anthony that he and I would be separating. Michael and Anthony managed their affairs and entered into a series of transactions (which I will explain in greater detail below) with the positive intention of concealing the significant income which Anthony earned as a result of Anthony securing or playing a key role in securing highly lucrative casino development and management contracts.

In particular, Anthony and Michael agreed to create and did create a new family trust, namely the Novac Family Trust (2013) … and a new corporate entity, Sonco Gaming Management Inc., in order to hide and shelter income from a very lucrative management contract that Anthony secured, for the purpose of injuring me and depriving me and the children of the support to which we are entitled.

As a result of Anthony’s and Michael’s conspiracy, Anthony was able to conceal, and did in fact conceal, his earnings from me during the period from late 2013 through mid-2015. During this period of time, Anthony was earning somewhere in the range of at least $65,000 to $95,000 per month, yet he made repeated representations that he had “cash flow” problems and implored me to collapse my RRSPs, sell the matrimonial home (which was registered in my sole name) and borrow money from my parents (who have modest means). Anthony induced me to collapse $139,000 of my RRSPs and he pressured me to sell the matrimonial home in order to pay for our family expenses as a result of the financial picture he painted with the help of his father. …

I received net proceeds from the sale of the matrimonial home in the amount of $1,066,361.53 … . ….

I depleted the bulk of the net proceeds of the sale of the matrimonial home to cover living expenses for the children and me and to pay legal and accounting fees chasing Anthony for disclosure. Notwithstanding that Anthony and I have now been separated for over four years, I have still not been able to obtain a complete and accurate picture of Anthony’s financial affairs. This is due to Anthony’s and Michael’s evasiveness, obfuscation and deliberate machinations to minimize Anthony’s income and net worth. There have been blanket refusals by both Anthony and Michael to produce financial statements and financial records relating to Sonco entities and the 2011 and 2013 Trusts. I believe this is part of Anthony and Michael’s continuing litigation strategy to conceal Anthony’s true income and property in order to injure me and deprive me and our children of our financial entitlements.

In 2015, through subsequent transactions between the 2013 Trust, SGMI, Sonco Group Inc. and the 2011 Trust, Anthony and the Novac/Sonco Respondents agreed to divert and did divert millions of dollars in asset and income that would otherwise be accounted for in the determination of Anthony’s financial obligations for the support of our twins and for me.

While Michael alleges that he entered into these transactions for estate planning and tax planning purposes, I do not believe that these were the predominant purpose of these transactions. Rather, the predominant purpose was to transfer the asset owned by the 2013 Trust to another corporate entity in order to further conceal it and place it out of reach, once I learned about it. The asset was moved from a trust and corporate structure where Anthony had control to a trust and corporate structure where, at least on paper, Anthony does not appear to have control. Michael states … that Anthony had no right or entitlement to the assets or income of the 2013 Trust and/or SGMI. This is patently false because Anthony was a beneficiary (and one of the two trustees, alongside Michael) of the 2013 Trust, and the 2013 Trust wholly owned by SGMI.

During Anthony’s questioning in the Spring of 2016 it was confirmed that Anthony plays a significantly larger role in the Sonco casino operations that either Anthony or Michael have represented. It also became very clear during the questioning that Anthony was continuing to work on a full-time basis, pursuing various ventures and opportunities on behalf of Sonco, while he was representing that he was no longer earning any income through Sonco as of the end of 2015 (with the exception of nominal board fees). …

I believe that Anthony recognized the optics were not great because soon after the questioning Anthony and Michael entered into a written “consulting agreement” for the first time in the history of their dealings … for an annual salary of $120,000. It is obvious that this is yet another ruse by Michael and Anthony to continue to artificially minimize Anthony’s income while this litigation is outstanding – the purported annual salary of $120,000 does not even cover the annual rent and utilities of Anthony’s leased Forest Hill home.

It is my understanding that Anthony is no longer focusing on the gaming industry and he has expanded into the parking business and the development and construction of a condominium in Halifax, under a new corporate entity, Sonco Urban Developments Inc., which was incorporated on April 6, 2016. This company appears to be owned wholly owned by Sonco Group Inc., which was the recipient of the buy-back proceeds from the 2013 Trust. … [Emphasis added]

[23] Keith MacIntyre of Grant Thornton LLP is Sonco’s accountant. Keith provided advice to Sonco regarding the corporate restructuring involving SGMI, Sonco Group Inc. and the 2013 Trust and the buyout of the River Cree Resort & Casino management contract. The Sonco/Novac Respondents delivered two affidavits from Keith, sworn December 8, 2016 and March 29, 2017, in support of their motion for summary judgment.

[24] Michael delivered a second affidavit, sworn March 29, 2017, in support of the motion for summary judgment. He attaches as Exhibit “J” a memorandum dated June 22, 2015 prepared by Keith and sent to Richard Landzatt, Sonco’s CFO, and copied to Michael. The memorandum describes several steps for a proposed transaction “Sonco Alta Sale” which related to SGMI’s sale of the River Cree management contract for $5.75 million in July 2015. The last two steps are as follows:

Michael Novac takes his tax free proceeds and lends to Anthony his portion as a loan that will be forgiven when Anthony’s divorce is final;

This reduces Michael Novac’s estate tax;

This keeps income out of Anthony’s hands;

Michael Novac takes his tax free proceeds and lends to Anthony his portion as a loan that will be forgiven when Anthony’s divorce is final;

Again this prevents income from being shown in Anthony’s hands. [Emphasis added]

[25] Michael states that he has no recollection of receiving the above memorandum. He states:

The organization of the structure was a work in progress and I would not have been interested in the mechanics of the exercise until it was finally structured. I left the details to Richard and Keith. I would have paid no attention to email if it had been received and I did not discuss the paragraphs dealing with amounts payable to Anthony or anyone else and do not recall ever reading them until only a few days ago. The only plan that I approved is that contained in the July 3, 2015 letter to Mr. Clarke … [Emphasis added]

Email Disclosure

[26] Michael was examined for 4 ½ days in April, May and June, 2017. He gave 12 undertakings, 23 advisements and 29 refusals that involve the mass production of emails relating to his and Anthony’s involvement with Sonco. This included a request that Michael produce all emails from Michael or Anthony to employees at Sonco from January 1, 2012 to date.

[27] The affidavit evidence of Cassidy Johnston (a law clerk at Lerners), Debbie Miller (Manager of Litigation Support and EDiscovery at Lerners), Kelly Eckert (an associate at Rosen Sack LLP) and Cara Lio (a legal assistant at Epstein Cole), along with a flow chart handed up at the hearing of this motion by Ms. Sack, co-counsel for Anthony, can be summarized as follows:

• Sonco did not have a dedicated server until 2015; before that time, each individual using a Sonco email account stored their own emails locally on their own device; as a result, when Lerners set about collecting emails from Sonco, collection had to be completed from a number of different sources including computers currently in use, computers no longer in use and the Sonco server;

• Anthony has had two email accounts since January 2012; these accounts were used for both personal and business purposes;

• Anthony’s private computer, his Gmail account from which he sends emails (@spreedinc.com and @sonco.ca) and his cloud-based server were provided to Lerners by Sonco starting in June 2017 to allow for his emails to be downloaded; Rosen Sack reserved the right to later take the position that the emails in this collection were privileged or irrelevant;

• Lerners collected a database of about 420,000 emails from the following individuals for the following timeframes: 1) Michael, Anthony and Kathy Beaman – from January 1, 2012 onwards; 2) Harry Hamilton – from January 1, 2012 to the date of his retirement in June 2015; 3) Richard Landzaat – from May 2015, when he was hired by Sonco, onwards; 4) Adam Digby – from November 1, 2015 onwards; Each of these individuals was regarded as a “custodian” for purposes of this data collection process;

• Lerners processed these emails through an e-discovery tool called Digital War Room whereby the documents were identified by that software for their components before being transferred into a database called Case Logistix where the emails could be read;

• From the resulting database of about 420,000 documents (emails and attachments), Lerners removed: (1) about 75,000 documents identified as spam; (2) documents for which the Sonco/Novac Respondents claim solicitor client privilege: (a) all emails involving Lerners; (b) all emails involving Burchells LLP except those emails involving Burchells with respect to River Cree given that the Sonco/Novac Respondents waived solicitor-client privilege over those emails; (c) all emails involving Stewart McKelvey LLP for the period May 1, 2015 to date; (4) emails that contain the Lerners’ domain name; (5) all identical copies of a document (while preserving one copy of that document) through a process called “de-duplication”;

• Lerners did not cull the email database for relevance, except at Rosen Sack’s direction;

• The next steps taken with respect to the documents in Anthony’s custody the following steps were as follows:

o Rosen Sack was provided access to this database of 124,724 emails by Lerners on October 19, 2017;

o On October 25, 2017, Rosen Sack directed Lerners to exclude irrelevant and privileged emails contained in the Novac Collection [Anthony’s laptop, Gmail hosted cloud server and the Sonco server], by applying a list of inclusive search terms: Grey Eagle, GEC, GE, Contains “Tsuu”, Contains “T’ina”, Tsuut’ina”, Tsuu Tina, development services agreement, dsa, hospitality management agreement, hma, [and about 40 other search terms] that in its view would catch all of the relevant and producible documents. This search was completed overnight and removed 97,597 documents from this database;

o On October 26, 2017 Lerners provided Rosen Sack with the remaining 28,380 emails from Anthony’s database;

o On or about October 27, 2017, Rosen Sack performed a further search for privileged documents (even though this had been done by Lerners) and documents that were completely irrelevant or personal. This resulted in 66 emails being removed on the basis of privilege and 1,187 as personal; Rosen Sack advised the parties that it had no objection to the remainder of the 27,127 documents being disclosed to Jennifer;

o On October 30, 2017 Rosen Sack advised Lerners to remove 972 Outlook Calendar entries from the above email disclosure as Anthony will produce those records separately;

• At Lerner’s request, Anthony, with his counsel, also reviewed documents that had been collected from other custodians of which Anthony was either the author or recipient, whether directly, by copy or blind-copy.

[28] Further, Lerners provided Rosen Sack with access to 862 emails that were collected from Anthony and which contained correspondence between Sonco and Burchells LLP. The Sonco/Novac Respondents waived privilege over these documents. Rosen Sack manually reviewed these emails and takes no position on their release.

[29] The roughly 265,000 documents that were produced by Michael to Jennifer on November 1, 2017 can be categorized as follows:

• 27,127 documents from a database of 124,724 documents found in Anthony’s private computer, Gmail account, and Sonco’s server;

• 34,491 documents from a database of 34,821 documents held by other custodians where Anthony was either the author or recipient, whether directly, by copy or blind-copy;

• About 203,000 documents held by other custodians where Anthony was not either the author or recipient, whether directly, by copy or blind-copy; and

• 862 documents related to Burchells.

ANALYSIS

[30] The primary objective of the Family Law Rules, O. Reg. 114/99, is to enable the court to deal with cases justly – by ensuring procedural fairness, by saving expense and time, by dealing with a case in ways that are appropriate to its importance and complexity, and by giving appropriate court resources to the case: see Rules 2(2), (3). The court is required to apply the rules to promote this primary objective and the parties and their lawyers are required to help the court promote this objective: see Rule 2(4).

[31] In Manchanda v. Thethi, 2016 ONCA 909, 84 R.F.L. (7th) 374, at para. 13, the Ontario Court of Appeal stated:

This court has stated that the most basic obligation in family law proceedings is the duty to disclose financial information. The requirement is immediate and ongoing: Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6, at para. 11.) In 2015, Family Law Rule 13 was amended to emphasize a party's financial disclosure obligations. A party's non-compliance must be considered in the context of this strict financial disclosure obligation. Rule 1(8) provides the court with the authority to strike claims. Those who choose not to disclose financial information or to ignore court orders will be at risk of losing their standing in the proceedings as their claims or answers to claims may be struck.

[32] In addition, subrule 19(1) of the Family Law Rules requires that every party shall, within 10 days after another party’s request, give the other party an affidavit listing every document that is,

(a) relevant to any issue in the case; and

(b) in the party’s control, or available to the party on request.

[33] Subrule 19(11) provides that

If a document is in a non-party’s control, or is available only to the non-party, and is not protected by a legal privilege, and it would be unfair to a party to go on with the case without the document, the court may, on motion with notice served on every party and served on the non-party by special service,

(a) order the non-party to let the party examine the document and to supply the party with a copy at the legal aid rate; and

(b) order that a copy be prepared and used for all purposes of the case instead of the original. [Emphasis added.]

[34] Similarly, under Rule 20(5), a court may make an order for questioning or disclosure if the following conditions are met:

(a) It would be unfair to the party who wants the questioning or disclosure to carry on the case without it;

(b) The information is not easily available by any other method; and

(c) The questioning or disclosure will not cause unacceptable delay or undue expense.

[35] Under Rule 20(16), an order for questioning may also require the person to bring any document or thing that is relevant to any issue in the case and in the person’s control or available to the person on request.

[36] The test under Rule 19(1) and Rule 20(16) is narrower than the “semblance of relevance” test traditionally applied given that the Rules require disclosure when the question or request for production is "relevant to any issue in the case" rather than the former, broader test of whether the question is one “relating to any matter in issue”: Ontario v. Rothmans Inc., 2011 ONSC 2504, 5 C.P.C. (7th) 112, para. 129; Eva v. Eva, 2010 ONSC 2088, at para. 4. The focus on “relevance” as opposed to the “semblance of relevance” is also consistent with the primary objective of the Family Law Rules described in Rules 2(2) and 2(3), particularly on promoting the saving of expense and time.

[37] Relevance depends on the facts in issue. For evidence to be relevant it must tend to "increase or diminish the probability of the existence of a fact in issue". There is “…no minimum probative value required for evidence to be relevant.”: R. v. Arp, 1998 CanLII 769 (SCC), [1998] 3 S.C.R. 339, at para. 38.

[38] If a person being questioned refuses to answer a question, the court may, on a motion, decide whether the question is proper and give directions for the person’s return to the questioning: see Rule 20(19).

[39] If a person fails to follow the above rules, then the court may deal with the failure by making any order that it considers necessary for a just determination of the matter, including an order for costs or, in exceptional cases when no other remedy would suffice, an order to dismiss a claim: see Rule 1(9); Van v. Palombi, 2017 ONSC 2492, para. 30 (Div. Ct.).

[40] Accordingly, a person may refuse to answer a question or to produce a document if: (1) the question or requested document is not relevant to any matter in issue in the proceeding; or (2) the question or the demand for disclosure is not proper.

ISSUE #1: SHOULD MICHAEL BE COMPELLED TO PRODUCE EMAILS AND OTHER DOCUMENTS THAT PRE-DATE JANUARY 1, 2012?

[41] Whether the pre-2012 documents sought by Jennifer must be produced by Michael turns on whether they are “relevant to any issue in the case”. This issue relates to Questions A96, 99, 101, R74, R85, R114, R116, R120 and R130 from Michael’s questioning.

[42] The “issues in the case” for purposes of the motion for summary judgment are framed by the conspiracy allegations in the Amended Application, described above, and the elements of an action in conspiracy.

[43] In D'Agnone v. D'Agnone, 2017 ABCA 35, 48 Alta. L.R. (6th) 8, at paras. 19-25, the Alberta Court of Appeal provided the following guidance regarding what must be proven to establish a claim in conspiracy:

The tort of conspiracy requires the defendants to have an agreement to engage in a course of conduct with the predominant purpose of injuring the plaintiff, or if the conduct of the defendants is unlawful, to have acted knowingly or having ought to have known that injury to the plaintiff is likely to result: Canada Cement LaFarge Ltd. v. British Columbia Lightweight Aggregate Ltd., 1983 CanLII 23 (SCC), [1983] 1 S.C.R. 452 (S.C.C.).

In Cement LaFarge, the court acknowledged that “the scope of the tort of conspiracy is far from clear”, but it may be found where parties combine and effect loss in the following manner:

1. Whether the means used by the defendants are lawful or unlawful the predominant purpose of the defendants’ conduct is to cause injury to the plaintiff; or

2. Where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendants should know in the circumstances that injury to the plaintiff is likely to and does result.

In Mraiche Investment Corp. v. Paul, 2012 ABCA 95, 524 A.R. 151 (Alta. C.A.) at para 40, this Court adopted the somewhat restated test as follows:

. . . the following elements must be proved:

1. an agreement between two or more persons;

2. concerted action taken pursuant to the agreement;

3. (i) if the action is lawful there must be evidence that the conspirators intended to cause damage to the plaintiff;

(ii) if the action is unlawful, there must at least be evidence that the conspirators knew or ought to have known that their action would injure the plaintiff (constructive intent);

4. actual damage suffered by the plaintiff;

The tort of conspiracy requires an agreement that is acted on and causes injury to the plaintiff. The agreement may be inferred and need not be in any specific form, or even constitute a binding contract: .. . Proving an agreement to a conspiracy is often dependent on circumstantial evidence. However, to be party to a conspiracy, more than mere knowledge that a conspiracy exists is required: … . The facts of the alleged agreement must be known and intention to be part of the alleged agreement must be found: … . There must be intentional participation with a view to furthering the common design and purpose.

The first form of civil conspiracy identified above, predominant purpose conspiracy, requires that the predominant purpose of the defendants’ conduct is to cause injury to the plaintiff, using lawful or unlawful means, and that the plaintiff suffers loss caused by the defendants’ conduct: … .

The second form, unlawful means conspiracy, requires that the alleged co-conspirators do something contrary to law to further their agreement. Unlawful means have been held to include fraud, perjury and breach of court orders: … .

A third characterization of civil conspiracy includes knowing assistance in breach of trust. This requires that there be a trust, that the trustee perpetuate a dishonest and fraudulent breach of trust, and that the respondent participate in and have actual knowledge of the trustee’s dishonest and fraudulent breach of trust: … . The knowledge requirement for this type of liability is actual knowledge; recklessness or wilful blindness will also suffice: … .

[44] Jennifer admitted in questioning that the impugned actions related to the alleged conspiracy would have started a few months prior to her separation from Anthony in September 2012.

[45] Jennifer submits that pre-2012 documents are relevant to show that Anthony was integrally involved in Sonco’s affairs and is entitled to income from Sonco. However, such evidence will not serve to prove that “… Anthony conspired with his parents … to structure his business interests and his income from the businesses both just prior to separation and post separation with the intention of concealing, diverting, and sheltering Anthony’s assets and income to defeat and hinder Jennifer’s claims and entitlements to both child and spousal support” or otherwise establish the elements of a cause of action in conspiracy.

[46] Accordingly, Jennifer’s motion to compel Michael to deliver documents that pre-date January 1, 2012 is dismissed.

ISSUE #2: SHOULD MICHAEL BE COMPELLED TO PRODUCE ALL EMAILS AND OTHER DOCUMENTS DATED JANUARY 1, 2012 OR LATER, OTHER THAN THOSE DOCUMENTS FOR WHICH PRIVILEGE IS CLAIMED?

[47] Jennifer strongly objects to Rosen Sack’s vetting of Michael’s email productions which resulted in Lerners releasing about 27,000 emails rather than 121,000 emails. Jennifer states that it is inconceivable that more than 90,000 emails were not relevant. She states:

As set out in my affidavit sworn March 3, 2017, my claim of conspiracy relates, in part, to the $5.75 million buy-out of the management contract River Cree Resort & Casino. Anthony and Michael have represented that only Michael benefitted from the buy-out of the management contract, despite the fact that the Novac Family Trust (2013) (of which Anthony is a trustee and a beneficiary) was the indirect owner of the contract and despite the fact that the Novac 2011 Family Trust (of which Anthony is a beneficiary) owns the corporation that purportedly received the buy-out payment. I can think of many examples of emails off the top of my head that would be relevant to this part of my conspiracy claim that would not have been captured by Rosen Sack’s search terms. For example, Anthony could have sent an email to Michael or Mr. Landzaat (Sonco’s CFO) that said “transfer my share of the buy-out proceeds to this account until my divorce with Jen is over”. Both of those emails would be highly relevant to my conspiracy claim, but not captured by Rosen Sack’s search terms.

Anthony has a tendency to use short forms and nicknames, which would not be captured in the above search terms. For example, during his questioning in the Spring of 2016, Anthony referred to the 2013 Trust as “2013” and as “13”. When asked by Epstein Cole if “13” was his nickname for the 2013 Trust, Anthony replied “I think maybe it’s what I’ve been calling it”. However, neither “2013” or “13” were included in Rosen Sack’s list of search terms …

As another example, with respect to the OLG Gaming Bundle, Rosen Sack did not include the search terms “OLG”, “bundles” or “RFP” (Request for Proposals)”, which are much more obvious search terms than “Modernizing Land Based Gaming in Ontario”. Again, at his questioning in the Spring of 2016, Anthony referred to OLG breaking the province into “bundles” when explaining the OLG Gaming Bundles to my counsel. …

Rosen Sack has only included search terms about the Sonco projects that Anthony and Michael have disclosed. This is a significant problem, as I do not trust that either Anthony or Michael have disclosed all of the Sonco projects that Anthony is working on, based on the fact that Anthony has lied before in these proceedings about his involvement in Sonco projects. For example, during his questioning in the Spring of 2016, when discussing the casino industry, Anthony disclosed that there was “something going on in Ontario” but that he and Sonco did not have “any involvement in that”. Anthony then explained that OLG had broken the province into “bundles” and those bundles had then gone to tender, RFP or RFPQ. When asked by my counsel about whether he was involved in the RFP stage, Anthony said that he had “not read any of the Ontario ones because [he] was not involved”. …

However, during Michael’s questioning on April 4, 2017, Michael confirmed that Sonco had spent a lot of time and money pursuing two of the bundles – Bundle 2 and Bundle 6. Michael confirmed that Anthony was “part of the team” for both bundles and that the team had participated in each of the bundles for about three to five months. Michael said that their involvement with Bundle 2 began in or around the Spring of 2015 (and that Anthony had accompanied him to some of the meetings for Bundle 2) and that their involvement with Bundle 6 began in or around the Spring of 2016. …

When asked about the OLG Gaming Bundles at his questioning on September 6, 2017, Anthony conceded that Sonco was involved with the bundles, but attempted to minimize his involvement, For example if he was involved in the RFPQ process with respect to Bundle 2 he answered: “honestly I don’t remember”, but that if he was involved, it would have been in a “very minor way”. Anthony then refused to provide an undertaking to produce documentation that would demonstrate the extent of his involvement. With respect to Bundles 6, Anthony conceded that he was involved, and that he helped prepare the submission in October 2016. …

[48] Michael takes no position on this objection.

[49] Anthony submits that the email disclosure sought by Jennifer amounts to a fishing expedition that results in an invasion of personal privacy.

[50] In Kovachis v. Kovachis, 2013 ONCA 663, 311 O.A.C. 228, at para. 34 the Ontario Court of Appeal stated:

Although full and frank disclosure is a necessary component of family law litigation, exhaustive disclosure may not always be appropriate. Courts and parties should consider the burden that disclosure requests bring on the disclosing party, the relevance of the requested disclosure to the issues at hand, and the costs and time to obtain the disclosure compared to its importance: … . Disclosure orders must be fair to both parties and appropriate to the case. [Emphasis added]

[51] I am also guided by subrules 2(2)-2(4) of the Family Law Rules which state:

(2) The primary objective of these rules is to enable the court to deal with cases justly.

(3) Dealing with a case justly includes,

(a) ensuring that the procedure is fair to all parties;

(b) saving expense and time;

(c) dealing with the case in ways that are appropriate to its importance and complexity; and

(d) giving appropriate court resources to the case while taking account of the need to give resources to other cases.

(4) The court is required to apply these rules to promote the primary objective, and parties and their lawyers are required to help the court to promote the primary objective.

Although it was not referred to by any of the parties in their submissions, the application of the principles for managing electronic discovery outlined in the Second Edition of the Sedona Canada Principles, 2015, might have assisted the parties to better manage this electronic disclosure process. The principle of cooperation in developing a plan for the production of electronically stored information, if necessary with advance judicial guidance, is particularly pertinent to this case: see Melanie Kraft, “Electronic Discovery” in Harold Niman, ed., Evidence in Family Law, loose-leaf, (2017-Rel.27), (Toronto: Thomson Reuters Canada Ltd., 2017), at para. 3:40.10.

[52] In my view, it is clear that the list of search criteria used by Michael, albeit at Anthony’s direction, to identify relevant documents on the basis of certain terms associated with certain projects was too limited to capture all relevant documents. As a result, Jennifer’s request for production is not a “fishing expedition” unlike the situation in Nicolardi v. Daley, [2002] O.J. No. 595 (S.C.). A more reasonable and practical approach was adopted by Rosen Sack in respect of the other custodian collection whereby Lerners excluded from production those documents over which solicitor-client privilege or litigation privilege was claimed by use of certain search terms followed by Rosen Sack reviewing the remaining 34,821 documents over the course of one or two days to exclude irrelevant and personal matters as well as privileged communications with additional search terms.

[53] It is agreed that solicitor-client privilege communications between Anthony and his counsel in connection with this Application should be excluded. Jennifer submits that this objective is achieved by excluding emails that include the term “Rosen”. Anthony submits that email communication between himself and any of his current and former legal counsel in respect of this Application should be excluded. I agree. Anthony shall provide a list of the email addresses of these individuals to Lerners and Epstein Cole within three days.

[54] Anthony submits that personal communications with his romantic partner should be excluded from the emails disclosed. I agree. Anthony shall provide the email address(es) of his partner to Lerners and Epstein Cole within three days.

[55] I hereby order that within seven days, Michael deliver to Jennifer the emails from the Anthony Novac collection (124,724 emails and attachments as shown on the Flow Chart provided by Ms. Sack) after Lerners has removed privileged documents (by removing all emails that contain the email addresses described above) and personal communications (by excluding any emails sent to or from the email address(es) of Anthony’s partner). For all emails for which solicitor-client privilege is claimed, Michael shall identify each email by date, sender, receiver, and all parties copied and/or blinded copied.

[56] I am not persuaded that the time and expense to implement the above disclosure approach will be significant. On the other hand, it would be unfair for Jennifer to carry on without these documents. The ability of this court to justly deal with the motion for summary judgment to dismiss the conspiracy claim, which is an important and complex matter, requires that mass number of withheld emails, that may include potentially material information, be made available to Jennifer in order to respond to the summary judgment motion.

ISSUE #3: HAS MICHAEL WAIVED SOLICITOR CLIENT PRIVILEGE IN RESPECT OF ALL COMMUNICATIONS WITH BURCHELLS?

[57] Michael’s affidavit, sworn March 29, 2017, at paras 90, 92, 96, 97 states:

There are many references in Jennifer’s Affidavit, …, to an alleged conspiracy between Anthony and I to use the 2013 Trust and the Sonco corporate structure to shelter Anthony’s true income for support to defeat her support claims. This is simply untrue. …

As I was aware of the potential benefits of a trust for tax planning purposes from the setting up of the 2011 estate freeze, I knew that using a trust provided potential tax benefits for my estate planning. Moreover, as pointed out in my prior Affidavit, there were important commercial reasons for the establishment of the trust. …

In order to corroborate my evidence of what occurred, and to put to rest the suggestion by Jennifer that there was some action taken that was directed at her in some way, it is necessary that I refer to discussion and information that was received from Bruce Clarke, Sonco’s solicitor. In doing so, neither I nor Sonco are generally waiving privilege with respect to communications with Mr. Clarke or members of his firm, except as they relate to the formation of the structure put in place in October, 2013, being the formation of the 2013 Family Trust and SGMI. Privilege is not otherwise waived.

The structure, which utilized a trust and a new corporation, was something discussed with Sonco’s legal counsel, Burchells LLP, specifically Bruce Clarke, in early October 2013. Attached as Exhibit “F” is an email from Bruce Clarke dated October 3, 2013 in which he summarized discussions we had had. …

[58] In disclosing Burchell’s privileged email, Michael expressly waived privilege as it relates to “the formation of the structure put in place in October, 2013, being the formation of the 2013 Family Trust and SGMI”.

[59] On questioning, Michael refused to produce Burchells files related to the Grey Eagle Casino project and (as yet unbuilt) Gorsebrook Park condominium development that coincided with or followed the establishment of the 2013 Trust. See Questions R86, R87, R88, R99 and R100.

[60] In Guelph (City) v. Super Blue Box Recycling Corp., (2004) 2004 CanLII 34954 (ON SC), 2 C.P.C. (6th) 276, at paras. 74-100, Justice Corbett, summarized various principles regarding the law of privilege which include the following:

• Solicitor-client privilege is a “fundamental civil and legal right”;

• The functional purpose of solicitor-client privilege goes to the very heart of the administration of the legal system. All persons, whether natural, corporate, or governmental, must have access to expert legal counsel without fear that this recourse may be used to their detriment;

• Where legal advice of any kind is sought from a professional legal advisor in [his or her] capacity as such, the communications relating to the purpose made in confidence by the client are at [its] instance permanently protected from disclosures by [the client] or by the legal advisor; except that the protection be waived;

• There are limited circumstances where privileged communications may nonetheless be compelled from a party asserting its privilege – waiver, furtherance of unlawful conduct, risk to public safety, wrongful conviction, abrogation by statute;

• Once it is established that a communication is subject to solicitor-client privilege, the onus rests on the party seeking to overcome the privilege to establish that the communication ought to be compelled from the party asserting the privilege;

• Privilege may be waived expressly or implicitly. When privilege is waived, the waiver applies to the entire subject-matter of the communications: a party may not "cherry-pick" privileged communications, disclosing what is helpful for that party and claiming privilege over the rest; and

• Two circumstances may give rise to implicit waiver : (1) waiver by disclosure - once the privileged communication has been disclosed, the privilege that attaches to it is said to be lost; (2) waiver by reliance - by pleading or otherwise relying upon the privileged communication as part of a substantive position taken in the legal proceedings.

[61] Jennifer submits that “waiver by reliance” applies in these circumstances as Michael disclosed a solicitor-client privileged communication in order to support his position that there is no merit to Jennifer’s conspiracy claim.

[62] In my view, it is clear from the paragraph of his affidavit referenced above that Michael chose to ‘cherry-pick” a single privileged email communication to support his substantive position that the 2013 Trust was not established or used to conceal Anthony’s income from Jennifer. As a result, Burchells’s solicitor privileged communications related to the Grey Eagle and Gorse Brook projects form part of the “entire subject-matter of the communication” given that they are alleged to have been part of the continuing conspiracy to conceal Anthony’s income from Jennifer. Accordingly, I find that Michael shall produce the requested documents related to Burchells.

ISSUE #4: SHOULD MICHAEL BE COMPELLED TO TRACE THE PROCEEDS OF SALE?

[63] Michael refused to provide a “detailed tracing” of the $5.75 million in funds that were received by the Sonco Group Inc. as a result of sale of the River Cree management contract. See questions R56 and R57. Michael took the position that the delivery of General Ledger statements provided the answers to the question of what happened to the River Cree proceeds of sale if counsel for Jennifer would simply take the time to review the ledgers. However, counsel for Michael had some difficulty taking the court through all of the ledgers in an effort to trace the proceeds of sale. Clearly, this is not a simple exercise. I direct Michael to provide the detailed tracing requested by Jennifer.

CONCLUSIONS

[64] For the reasons given, I dismiss Jennifer’s motion for production of emails and other documents that pre-date January 1, 2012.

[65] I order that Michael deliver to Jennifer:

(1) all emails from the Anthony Novac collection (124,724 emails and attachments) except those that are: (a) solicitor-client privileged communications (by removing all emails that contain the email addresses described above) and (b) personal communications (by excluding any emails sent to or from the email address(es) of Anthony’s partner), within seven days. Michael shall deliver a document to the parties that identifies each email for which he claims solicitor-client privilege, by date, sender, receiver, and all parties copied and/or blinded copied, within ten days;

(2) Burchells LLP’s file in respect of the Grey Eagle and the Gorsebrook Park projects, within seven days;

(3) a “detailed tracing” of the $5.75 million in funds that were received by the Sonco Group Inc. as a result of sale of the River Cree management contract, within seven days.

[66] On consent of the parties, I order that Keith MacIntyre shall answer his Undertakings given during his questioning on May 9, 2017 and June 1, 2017 as follows:

(a) Keith MacIntyre shall provide the requested information in Undertakings 1, 2, 3, 6, 7, 8, 9, 14-64 inclusive, and 66-92 as soon as possible but no later than November 24, 2017. He shall provide these answers directly to Epstein Cole LLP, with copies to Lerners LLP and Rosen Sack LLP.

(b) With respect to Undertaking 4 (which by inference includes Undertakings 5, 10, 11, 12, 13 and 65), Keith MacIntyre shall produce the files to Lerners LLP as soon as possible but no later than November 24, 2017, subject to subparagraph (c) below, with covering letter(s) and/or emails copied to Epstein Cole LLP, and the following shall occur:

(i) Lerners LLP shall vet the file for any documentation which is in its clients’ position privileged or not relevant;

(ii) If Lerners LLP takes the position on behalf of its clients that any of the information/documentation is privileged or not relevant, Lerners LLP shall provide a chart/index identifying: (a) in the case of emails, the sender, recipient(s), subject line and date, or (b) if the document/information is not an email, a brief description of the document.

(iii) The issues that may flow from paragraph (ii) above shall be determined by the Court should that be necessary;

(iv) All documents that are not subject to objection pursuant to subparagraph (ii) shall be forwarded to Epstein Cole LLP in the form received from Keith MacIntyre as soon as reasonably possible and with best efforts by November 28, 2017;

(c) Keith MacIntyre shall have a reasonable amount of additional time, if necessary, to produce emails for the year 2011 in light of a technical problem;

(d) Keith MacIntyre’s answers to Undertakings requiring the production of metadata shall be provided in the form of screen-captures of the metadata, or as part of the original digital file containing the metadata, not in handwritten or typed format.

(e) When gathering and producing email files in response to Undertakings, Keith MacIntyre shall do or direct Grant Thornton to do the following, subject to paragraph (h) below:

(i) Collect and provide the email boxes for the relevant time period for all custodians that are identified as having docketed time to the client, including all services;

(ii) Completed global email deduplication (for all custodians);

(iii) Collect and provide all emails to and from the “@sonco.ca” domain;

(iv) Collect and provide all emails to and from the following specific email addresses: (1) anthony@spreedinc.com; (2) bclarke@burchells.ca; (3) mstrum@burchells.ca;

(v) Collect and provide all emails with the following search terms: (1) Novac; (2) Landzaat; (3) Bruce AND Clarke (4) Sonco (5) Lerners (6) Harry AND Hamilton (7) SGMI (8) River Cree (9) @sonco.ca (10) Enoch (11) Tsuu T’ina (12) Grey Eagle (13) Gorsebrook (14) Meaghan Strum; (15) Meaghan A.Strum (16) Landzatt (17) Leitch

(f) Keith MacIntyre shall direct Grant Thornton to apply “Fuzzy Searching” to keywords to assist with identification of terms spelled slightly differently or misspelled.

(g) If additional domains are identified through the searches listed above as being relevant to the involved individuals, then Keith MacIntyre shall expand the search to include additional communications with that email or domain.

(h) If any of the above email searches identify documents relating to other Grant Thornton clients having no relationship with this matter or, to the best of Grant Thornton’s knowledge, the individuals involved in this matter, Grant Thornton is not required to produce such irrelevant documents.

[67] Unfortunately, this motion was typical of many of the “high conflict” divorce applications that come before court involving one or more parties with apparent financial means – they often involve multiple counsel, a mountain of paper, and a significant amount of legal fees spent on a motion to address a narrow issue which by no means finally resolves the entire dispute. In this case, a mountain of paper was considered necessary by counsel to address the narrow issues addressed above. The addition of many affidavits and other documents has increased the size of the continuing record by four volumes. In addition, there were factums, numerous books of authorities and several volumes of compendiums. I was not provided with an outline of costs by the parties at the hearing of the motion, however I expect that the amount of legal fees claimed will be significant. Whether the parties are both able and willing to sustain this continued pace of legal expense and conflict in their lives through trial (estimated to be at least six weeks long) remains to be seen. It is obviously not too late for the parties to attempt to settle their differences. Should they wish this court’s assistance to help them settle their differences, then I would be only too happy to make those arrangements on their behalf with one of my colleagues. If all parties would like to take the court up on this offer, then I ask that they notify me of same within five days.

Mr. Justice M. D. Faieta

Released: November 17, 2017