Court File and Parties

CITATION: Industrial Alliance Securities Inc. v. Kunicyn et al, 2017 ONSC 7711

COURT FILE NO.: CV-13-478970

MOTION HEARD: 20171212

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Industrial Alliance Securities Inc., Plaintiff

AND:

Diane Kunicyn, Defendant, Plaintiff by Counterclaim

AND:

Industrial Alliance Securities Inc. and Lise Douville, Defendants by Counterclaim

BEFORE: Master Jolley

COUNSEL: B. Kolenda, Counsel for the Moving Party Defendant

G. Splawski, Counsel for the Responding Party Plaintiff and Defendants by Counterclaim

HEARD: 12 December 2017

REASONS FOR DECISION

[1] The defendant/plaintiff by counterclaim brings this motion for answers to certain questions refused by Industrial Alliance Securities Inc. (“IAS”), the plaintiff/defendant by counterclaim and by Lise Douville, defendant by counterclaim.

A. Background Facts

[2] Ms. Kunicyn was an investment advisor with IAS from October 2010 to February 2012 when she was terminated without cause. At the time of her termination, IAS demanded repayment of forgivable loans that it had provided to her between October 2010 and October 2011.

[3] Prior to joining IAS Ms. Kunicyn worked as an associate as part of the investment advisory practice of Mr. Vitug. In 2006 Mr. Vitug was suspended by his regulator, the Investment Industry Regulators Organization of Canada (“IIROC”). In 2010 Ms. Kunicyn took over responsibility for the management of Mr. Vitug’s book of business and began the process of purchasing it from him and then transferring to IAS.

[4] She alleges that, to the knowledge of IAS, she maintained an office in space sublet by Mr. Vitug where Mr. Vitug also had an office. Her space was segregated from that of Mr. Vitug and he played no role in her advisory business.

[5] In 2011 IIROC began to investigate the transition of Ms. Kunicyn’s practice to IAS. Ms. Kunicyn alleges that IAS and its director and president, Lise Douville, gave information to IIROC that it knew to be false and which resulted in proceedings being brought against her. While IIROC ultimately discontinued its prosecution and withdrew the notice of hearing, Ms. Kunicyn alleges she suffered damages as a result of the actions of IAS and Ms. Douville.

B. Preliminary Issue on Questions Answered Under Protest

[6] At the outset, I note that Ms. Douville has answered five refused questions, listed in the undertakings and refusals charts as A.2, A.3, C.3, C.4 and D.1, while maintaining her objection to the question. IAS answered I.2 on the same basis. It is their position that the issue of the propriety of the question should be dealt with contextually in whatever upcoming motion Ms. Kunicyn wishes to use the answer or at trial, where a trial judge can make that determination. They argue that that is an effective method of avoiding motions on refusals such as these, where answers have already been provided.

[7] Rule 34.12 provides:

A question that is objected to may be answered with the objector’s consent, and where the question is answered, a ruling shall be obtained from the court before the evidence is used at a hearing.

[8] The Rule does not specify whether the ruling is to be made by the master or judge presiding over the hearing in which the evidence is sought to be introduced or whether the ruling can be obtained on a preliminary motion such as this one. Rule 34.12(3) provides that a ruling on the propriety of a question that is objected to and not answered may be obtained on motion to the court. This is contrasted with Rule 34.12(2) which provides that where a question is objected to but answered with the objector’s consent and the objection maintained, the ruling is to be obtained from the court before the evidence is used at a hearing. Counsel for the respondent relies on Rule 34.12(3) for the inference that motions are to be used to obtain answers to refusals only where the question was not answered, not where it has been answered under objection

[9] I acknowledge that there was commentary when the Rule was introduced to the effect that these rulings on relevance, admissibility, etc. should be made at the hearing in which the evidence is sought to be used. This is the approach taken by Justice Myers in his recent decision in 2287913 Ontario Inc. v. ERSP International Enterprises Ltd. 2017 ONSC 7185.

[10] This court is routinely asked on motions that are heard well in advance of a hearing to make findings on the relevance of questions asked on examination for discovery and I find that there is nothing inappropriate about proceeding to obtain a ruling on the question from a judicial officer who will not hear the ultimate hearing. In fact, the master or judge on the substantive motion or the judge at trial may have expected those refusals to have been dealt with by motion in advance rather than clog trial time.

[11] There may be different considerations where a matter is case managed and all parties are ordered or agree to answer all questions and leave the issues of relevance and admissibility to the hearer of the ultimate motion or trial. However, there is no such order here.

[12] Counsel for the moving party argues that rather than move the process forward, she is prejudiced by the question having been answered under objection. Had they not been answered, she could have obtained a ruling on relevance. If the responding party’s argument is accepted, the moving party argues that she is unable to obtain that ruling on the six questions answered under protest but can obtain that ruling on the other questions refused and not answered.

[13] In light of the respondent’s objections to the questions answered, counsel for the moving party seeks a ruling on the relevance of the question. Rule 30.06 provides as follows:

30.06(1) A person examined for discovery shall answer, to the best of his or her knowledge, information and belief, any proper questions relevant to any matter in issue in the action or to any matter made discoverable by subrules (2) to (4) and no question may be objected to on the ground that,

(a) the information sought is evidence;

(b) the question constitutes cross-examination, unless the question is directed solely to the credibility of the witness; or

(c) the question constitutes cross-examination on the affidavit of documents of the party being examined.

[14] The scope of discovery is defined by the pleadings. In this circumstance, I find the moving party is entitled to the ruling sought on the relevance of the questions answered under protest. This does not limit the discretion of a master or judge hearing any substantive motion or a judge hearing the trial to determine the relevance of those answers to the issues before him or her.

[15] I now turn to the refusals in the groupings agreed to by counsel.

C. Refusals of Ms. Douville

Grouping A – Questions Related to the Office Arrangement between Ms. Kunicyn and Mr. Vitug and IAS’ Knowledge and Investigation – 3 Refusals

Refusal A.2 - Question 592 - To assume that Mr. Borromeo, an IAS branch manager, knew in April 2010 that Ms. Kunicyn and Mr. Vitug shared an office space, and advise whether Ms. Douville would expect him to convey that information to compliance and/or to her.

[16] Ms. Douville has answered the question while maintaining the position that the question is improper as it calls for speculation.

[17] I find the question not relevant and properly refused. Here the allegation in the Fresh as Amended Statement of Defence and Counterclaim is not that Ms. Douville ought to have known about the space sharing arrangements between Ms. Kunicyn and Mr. Vitug such that what she should have been told might be relevant. The allegation is that she knew they were sharing space and lied about that to IIROC during its investigation and procured a correction to the statement of Mr. Franch, an employee of IAS who had given evidence to IIROC that Ms. Douville was aware of the space sharing arrangement.

Refusal A.3 – Question 609 – To advise whenever it was that Mr. Borromeo learned of the office-sharing arrangement, based on his role and mandate, particularly the mandate to investigate the relationship between Ms. Kunicyn and Mr. Vitug, whether Ms. Douville would have expected Mr. Borromeo to convey that information about the office-sharing arrangement to his superiors.

[18] For the reasons set out above, I find the question not relevant.

[19] Refusal A.4 – Question 626 – If Ms. Douville knew of the office sharing arrangement between Ms. Kunicyn and Mr. Vitug, whether she would have spoken to Ms. Kunicyn about it.

[20] Ms. Douville’s evidence is that she did not know of the office sharing arrangement so what she would have done had she known is not relevant. Nor is it raised in the statement of claim which alleges actual knowledge.

Grouping C – Questions Related to the Evidence of Paul Franch

Refusal C.1 – Question 725 - To advise how Ms. Douville learned of Mr. Franch’s evidence to IIROC.

Refusal C.2 – Question 728 - To advise whether the information about Mr. Franch’s evidence came to Ms. Douville from a lawyer.

[21] Ms. Douville’s position is that the answers to those questions are privileged.

[22] In her amended defence and counterclaim Ms. Kunicyn pleads that Mr. Franch, a senior vice president of IAS, was aware of the space sharing arrangement between Ms. Kunicyn and Mr. Vitug. She further pleads that when Mr. Franch was interviewed by IIROC in January 2012 he told the investigators that (a) he had learned of the space sharing arrangement between Ms. Kunicyn and Mr. Vitug shortly after Ms. Kunicyn moved to IAS and, (b) that he told Ms. Douville about the space sharing arrangement and that a conference call had been scheduled in December 2010 to discuss the space sharing.

[23] She alleges that IIROC then attempted to interview Ms. Douville. In anticipation of that interview, Ms. Douville and one or more others at IAS met with Mr. Franch and procured a false ‘correction’ to his earlier evidence to IIROC. This resulted in a letter from counsel for IAS to IIROC dated 26 April 2012, stating as follows:

Mr. Franch has had an opportunity to consider and reflect upon the evidence given to [IIROC] Staff with respect to Lise Douville’s knowledge that Mr. Vitug shared office space with Diane Kunicyn. During his interview, Mr. Franch testified that Ms. Douville was aware that an office sharing arrangement existed. However, upon reflection, Mr. Franch now believes that his recollection was inaccurate and that Ms. Douville did not become aware that such an office sharing arrangement existed until late 2011 when it came out during the course of IIROC’s investigation into this matter.

[24] Counsel for IAS argues that the questions do not relate to the underlying facts, which are known, i.e. that Ms. Douville learned of Mr. Franch’s evidence and she contacted Mr. Franch about that evidence. They relate to privileged information. Ms. Douville argues that she is not required to answer a question that would require her to waive privilege. If she were required to answer that she received the information from counsel, for instance, then she would have had to waive the privilege to which she is entitled. Counsel for Ms. Kunicyn maintains that the questions are relevant as they relate to communications between Mr. Franch and Ms. Douville and IAS and that Ms. Kunicyn is entitled at least to know that the information came from a lawyer in order to test the privilege claim. I agree that the questions are properly refused on the basis of solicitor client privilege and need not be answered.

Refusal C.3 – Question 775 - To advise where Ms. Douville was when she placed her call to Mr. Franch discussing the evidence he had given to IIROC.

Refusal C.4 – Question 777 – To advise where Ms. Douville was when she made her call to Mr. Franch.

[25] These questions were answered under reserve that Ms. Douville did not recall where she was when she placed the call. Her counsel argues that the questions are irrelevant. I agree that the place where the call took place is not relevant and the questions are properly refused.

Grouping D – Evidence Relating to IIROC

Refusal D.1 – Question 787 - To advise what information Ms. Douville was seeking from Linda Boiteau, the head of compliance at IAS, in preparation for her interview with IIROC.

[26] This question was answered under reserve that Ms. Douville could not remember. The claim alleges that in anticipation of her interview with IIROC, Ms. Douville took certain steps, including meeting with Mr. Franch to procure a correction the plaintiff alleges was false. If the information that Ms. Douville was seeking from Ms. Boiteau concerned the share arrangement or the statement of Mr. Franch, then that would be relevant to the issues raised in the pleading. I find the question relevant and answered.

D. Refusals of Ms. Boiteau on behalf of IAS

Grouping I – Productions and Intended Evidence

I.2 – Question 251 – To provide metadata information that was recorded along with the IAS audio recordings that were produced.

[27] Ms. Kunicyn takes the position that the metadata information is needed to confirm the dates and any other information that was recorded. IAS argues that Ms. Kunicyn has the content of the tapes and that IAS agreed to provide the dates of the recordings produced. Otherwise there was no relevant information in the metadata. IAS also answered the question under protest, advising that it does not have the metadata.

[28] I agree with IAS that the dates of the conversations are relevant, which it has agreed to produce, but I have not been pointed to any other information in the metadata that would be relevant to the issues raised. I find the question not relevant and would have been properly refused.

Grouping B – the IIROC Investigation of IAS and Ms. Kunicyn

B.4 – Questions 301 and 302 – To advise whether IIROC ever expressed any concerns to IAS or its counsel during the course of the investigation about the accuracy of any answers or information provided to IIROC.

[29] Ms. Kunicyn argues that this question is relevant to when IAS knew that its statements to IIROC were inaccurate. It is also relevant to whether IIROC prosecuted the case based on its belief in the truthfulness of IAS’ statements to it. IAS argues first that the IIROC investigation was broader than the issues raised in this proceeding and, as such, the question is too broad. Second, it argues that the question is not relevant based on Ms. Kunicyn’s theory of the case as set out in the statement of claim. I agree. According to the pleading, IAS and Ms. Douville always knew that her statements to IIROC were inaccurate. The allegation against IAS and Ms. Douville is that Ms. Douville knew that Ms. Kunicyn and Mr. Vitug shared office space and yet told IIROC that they did not know about the office sharing arrangement. Whether or when IIROC became suspicious about IAS’ answer is not relevant to the allegation against IAS that it knowingly lied to IIROC. The question is not relevant and was properly refused.

B.5 – Question 312 – To provide information as to who was involved in preparing Mr. Borromeo and Mr. Franch for their interview with IIROC.

[30] IAS has advised that counsel was involved in the preparation of both Mr. Borromeo and Mr. Franch and that the contents of that preparation are privileged. They also advised that if anyone else were involved, they would have had to indicate that name to provide a complete answer to the question and they gave no further name(s). I find the question has been answered.

B.10 – Question 334 – To advise the source of the information conveyed in an email dated 26 April 2012 from counsel for IAS to IIROC where it informed IIROC that Mr. Franch had a correction to the evidence he had given earlier to IIROC.

B.12 – Question 334 – To advise whether anyone other than Mr. Franch conveyed the information in the email dated 26 April 2012 to counsel.

Counsel for IAS advised that Mr. Franch was the source of the information in the email. IAS argued that Ms. Kunicyn has the content of the email, knows that it contains Mr. Franch’s evidence, has a privilege log and can ask questions of Mr. Franch concerning the source of the information he had. What is not clearly answered is whether it was Mr. Franch who passed this information to counsel or whether it was another individual at IAS. But whether it was Mr. Franch or another IAS employee, the communication with counsel, including the fact of the communication, is protected by privilege. The question was properly refused.

Grouping G – IAS Relationship with Messrs. Franch, Borromeo and Pizem

G.2 – Question 390 – To advise why Mr. Borromeo left IAS.

[31] Counsel for Ms. Kunicyn took the position that to the extent the departure of these individuals was related to Ms. Kunicyn and the facts germane to this proceeding (see factum, paragraph 54), the question is proper. I find the question has been answered. IAS has advised that Mr. Borromeo left for reasons unrelated to Ms. Kunicyn or any of the issues in the action.

G.4 – Question 387 – To advise why Mr. Franch left IAS.

G.5 – Question 388 – To advise if Mr. Franch’s departure had anything to do with Mr. Vitug or Ms. Kunicyn.

[32] I find these questions have been answered. IAS has advised that Mr. Franch left IAS for reasons unrelated to Ms. Kunicyn or to any of the issues in this action.

Grouping I – Productions and Intended Evidence

I.1 – Question 23 – To produce emails from the time that Ms. Kunicyn worked for IAS that Ms. Boiteau had with her during the meeting she had with Ms. Douville to prepare for her examination for discovery.

[33] IAS advised that all the emails that Ms. Boiteau had at that meeting have been produced, which then gave rise to the request to identify the specific emails at I.2.

I.2 – Question 23 – To identify the emails that Ms. Boiteau had in her meeting with Ms. Douville within the productions.

[34] Counsel for Ms. Kunicyn argues the question goes to the knowledge of Ms. Boiteau during her examination for discovery and how prepared she was for the examination and whether her answers are reliable. Counsel for IAS argues that a question asking a witness what she reviewed to prepare for her examination is privileged.

[35] I do not agree that the answer to the question is privileged. A party conducting an examination for discovery is entitled to know whether a witness has reviewed any prior statements they made to prepare for their examination (Six Nations of the Grand River Band v. Canada (Attorney General) 2000 CanLII 26988 (ON SCDC), 2000 O.J. 1431 and to ask for the names of those whom the witness contacted to prepare for the examination (Air Canada v. McDonnell Douglas 1995 CanLII 7147 (ON SC), [1995] O.J. No. 195, affirmed 1995 CanLII 7160 (ON SC), [1995] O.J. No. 4881 and No. 4898). Questions on documents a witness reviewed to prepare for an examination for discovery would fall in the same category. However, I find the question to be not relevant. Testing a witness’ state of knowledge and preparedness is done by asking the witness substantive questions on examination, not by asking what she looked at to prepare. Whether the witness is able to answer the questions or not is proof of preparedness. If the witness was not prepared, that may be give rise to a re-attendance but is not otherwise a relevant question.

I.3 – Question 29 – To advise why Ms. Boiteau set up a meeting with Ms. Douville.

[36] Ms. Boiteau answered this question at Q14 when she advised that she met with Ms. Douville to prepare for her examination for discovery.

I.4 – Question 35 – To advise whether Ms. Boiteau recalls anything else about the preparation meeting with Ms. Douville last week.

[37] Counsel has some leeway in asking about the preparation done for an examination for discovery but a blanket question about whether a witness recalls anything else from a preparation meeting is not relevant. To the extent strategy or related issues were discussed, they are protected by litigation privilege, which was not waived.

I.11 – Question 283 – To the extent that any telephone recordings are identified but not produced, for instance, on the basis of privilege, to provide a privilege log.

[38] IAS has responded that they have produced all relevant, non-privileged telephone recordings. However, that is not responsive to the question which was to identify in the log any recordings that exist but that are not being produced on the basis of privilege. This question is relevant and to be answered. At the motion counsel for IAS advised that there were no recordings over which privilege was claimed and that will be confirmed in writing to counsel for Ms. Kunicyn.

I.12 – Question 12 – To advise whether there is any other evidence, beyond the evidence contained in the productions and raised on the examination for discovery of IAS, upon which IAS intends to rely at trial and, if so, to provide a summary.

[39] IAS’ position is that the question is too broad and I agree. The refusal was proper and the question need not be answered.

E. Costs

[40] If the parties are unable to agree on costs, they may each submit to the motions office clearly marked to my attention a costs outline and submissions no more than three pages in length by 19 January 2018.

Master Jolley

Date: 22 December 2017