SUPERIOR COURT OF JUSTICE - ONTARIO

Court File and Parties

Re: Titus Steel Company Limited

v.

Wayne Robert Hack, 9589864 Canada Incorporated doing business as Progressive Armor, and Progressive Armor Incorporated USA

Before: Master R. A. Muir

Counsel: F. Scott Turton for the plaintiff Andy Seretis for the defendants

Reasons for Decision

[1] The plaintiff brings this motion seeking answers to questions refused on discovery.

[2] At the beginning of argument, the parties advised the court that the defendants had agreed to answer five of the disputed questions (refusals 3, 4, 5, 8 and 10). The defendants did so with the understanding that they were not conceding the relevance of the questions but were simply answering the questions for practical reasons.

[3] As a result, eight questions remained in dispute and were the subject of argument.

[4] This is a wrongful competition claim. The defendant Wayne Robert Hack (“Mr. Hack”) is a former employee of the plaintiff. Mr. Hack resigned in March 2016. The plaintiff alleges that Mr. Hack effectively ran the armour plate division of the plaintiff and had enjoyed unrestricted access to suppliers and customers.

[5] The plaintiff alleges that prior to his resignation Mr. Hack began setting up a business to compete with the plaintiff which he then continued after March 2016. The plaintiff also alleges that Mr. Hack and the corporate defendants used the plaintiff’s confidential information in breach of Mr. Hack’s fiduciary and other duties to the plaintiff. The plaintiff claims significant damages as a result. The plaintiff also seeks an accounting and disgorgement of any profits made by the defendants. The defendants deny the plaintiff’s allegations.

[6] In determining the issues on this motion, I have applied the relevance test set out in Rules 30.03, 31.06 and 29.2.03 of the Rules of Civil Procedure. I am also mindful of the principles relating to the scope of discovery as summarized in Ontario v. Rothmans Inc., 2011 ONSC 2504, at paragraph 129.

[7] The first category of questions in issue relate to the requested production of electronic documents and an inspection of Hack’s personal computer. These questions have been listed as refusals 1, 2 and 11.

[8] In my view, these refusals need not be answered. I agree with the defendants that mere speculation that relevant documents exist that have not been produced is not a sufficient basis for ordering production or the delivery of a further and better affidavit of documents. A moving party must adduce some evidence to support the suggestion that documents are missing. See In-Store Products Ltd. v. Zuker, 2015 ONSC 6215 (Master), at paragraphs 32 to 46. The plaintiff has not done so. The defendants’ evidence is that they have reviewed their documents with their counsel and produced the relevant documents. I note that the defendants’ production appears to be much more extensive than the plaintiff’s production. This is not a situation where it is obvious that a party’s production is inadequate.

[9] I also agree with the defendants that a request for full access to a party’s personal computer and other electronic devices is highly intrusive and would undoubtedly result in the disclosure of irrelevant personal information. In the absence of evidence that documents are missing, such a request is nothing more than a fishing expedition. See In-Store Products, at paragraph 38.

[10] Refusal 9 asks whether certain legal advice received by the defendants may have related to matters other than the issues in this action. It need not be answered. In my view, questions 8 and 10, by implication, are restricted to matters relevant to the allegations made by the plaintiff in this proceeding about the defendants setting up a competing business. The answers to those questions will obviously relate to that issue and not some other unrelated legal advice the defendants may have sought or obtained.

[11] I see no relevance to refusals 6 and 7. They need not be answered. These questions seek information about other businesses the defendants may have been operating and who paid the rent on the defendants’ virtual office. These questions are speculative and not supported by the pleadings. Unrelated businesses are not relevant. There are no allegations in the statement of claim that the defendants were operating other competing businesses other than the named defendants.

[12] Refusal 13 seeks information about whether Mr. Hack altered any ballistics reports other than the one acknowledged in his evidence. Mr. Hack’s evidence is that he did so on the instructions of the plaintiff. Mr. Hack has pleaded, in response to this specific issue that he always acted in accordance with the plaintiff’s instructions. In my view, this pleading implies that there may have been other similar events. Refusal 13 is of some relevance based on this portion of the defendants’ pleading. It shall be answered.

[13] Refusal 12 seeks the production of the defendant corporations’ financial books and records from incorporation to date. In my view, this production request is relevant and proportional to the accounting remedy and to the plaintiff’s claim for damages. There has been no order for the bifurcation of liability and damages. If the plaintiff elects to claim damages on the basis of disgorgement, it will need to determine what profits may have been made by the defendant corporations. The only way to do this is through access to the defendant corporations’ financial documents. I agree that this is a broad request. Ordinarily, financial statements and tax returns would be sufficient. However, the request is proportional in the context of this action as the defendants have advised that the defendant corporations did not prepare financial statements or tax returns. For these reasons, refusal 12 shall be answered.

[14] To the extent that the court has ordered questions to be answered, or the defendants have agreed to answer questions initially refused, they shall do so within 60 days.

[15] If the parties are unable to agree on the issues of re-attendance or the costs of this motion, they shall provide the court with brief written submissions by August 6, 2019. Any submissions may be sent directly to me by email.

2019 07 04 Master R. A. Muir