Court File and Parties

COURT FILE NO.: CV-08-354560 (Toronto) MOTION HEARD: 2019 12 13

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Arcádia Participações Ltda., plaintiff/defendant by counterclaim and Alexey Kondratiev and Smart Games Canada Inc., defendants/plaintiffs by counterclaim and Eugene Chayevsky, Adenilton Cezar Xavier, Cadillac Jack, Inc., Finstar Financial Group LLC and Tilley International & Associates Inc., carrying on business as Tilley Entertainment, defendants by counterclaim

BEFORE: MASTER R. A. MUIR

COUNSEL: Alexey Kondratiev in person and on behalf of Smart Games Canada, Inc. Erika Anschuetz for the plaintiff and defendants by counterclaim Eugene Chayevsky, Adenilton Cezar Xavier, Finstar Financial Group LLC and Tilley International & Associates Inc., carrying on business as Tilley Entertainment Max Shapiro for the defendant by counterclaim, Cadillac Jack, Inc.

REASONS FOR DECISION

[1] The defendants/plaintiffs by counterclaim bring this motion seeking an order granting leave to Mr. Kondratiev to represent the defendant corporation, as a non-lawyer. The moving parties also seek an order validating service of their affidavit of documents and productions as of June 28, 2019.

[2] The plaintiff and the defendants by counterclaim do not oppose these requested orders, although they do express some concern with respect to Mr. Kondratiev’s ability to represent the corporation. However, in my view it is just in the circumstances of this action to permit Mr. Kondratiev to represent the corporate defendant. Mr. Kondratiev is the principal of the corporate defendant. Mr. Kondratiev will be representing himself in any event and I note that the corporate defendant has not generated revenue for the last three years. Its financial statements show very few assets.

[3] The balance of the relief on this motion was opposed by the responding parties. The defendants/plaintiffs by counterclaim seek an order striking the statements of defence of the defendants to counterclaim Tilley International & Associates Inc., carrying on business as Tilley Entertainment (“Tilley”) and Finstar Financial Group LLC (“Finstar”), citing irregularities with their affidavits of documents. Finally, the moving parties seek an order sanctioning the defendants to counterclaim for an alleged breach of the order of Master Brott of October 3, 2019.

[4] This dispute involves the ownership and development of electronic bingo machines to be used in the Latin American gaming industry. This litigation has a long and complicated history. Fortunately, very little of that history is relevant to the matters in issue on this motion.

[5] The evidence of the moving parties also included evidence of allegedly improper or criminal behavior on the part of persons involved with this proceeding and the underlying events giving rise to the litigation. None of that evidence is relevant to matters in issue on this procedural motion and only served to cloud the record and detract from the real points of disagreement.

[6] At the outset of the hearing of this motion, the moving parties sought leave to file a supplementary motion record with an amended notice of motion. I declined to grant permission for the supplementary record to be filed. The supplementary record had only been recently served and was not filed in a timely manner. The date for this motion was a special appointment long motion hearing and had been scheduled several months in advance. The responding parties would have needed to respond which would have required an adjournment. Moreover, the relief in the amended notice of motion will depend, to some extent, on my decision on the motion that is properly before the court. Finally, the moving parties will not be prejudiced. They can bring a motion to vary the order of Master Josefo in due course. If a motion date is booked and a notice of motion is served before the set down deadline in Master Josefo’s order, the court will not dismiss this action pending the hearing of that motion.

[7] I am not prepared to strike the statements of defence as requested by the moving parties. Finstar served its sworn affidavit of documents in May 2016. Finstar’s affidavit of documents was sworn by Pavel Ivlev, who was responsible for the winding-down of Finstar’s operations. As such, he is a person who would have knowledge of Finstar’s operations and its records and documents. In any event, the Rules of Civil Procedure, RRO 1990, Reg. 194 (the “Rules”) do not specify who is to swear an affidavit of documents on behalf of a corporation. In my view, it is sufficient if it is obvious from the face of the affidavit of documents that the person swearing the affidavit of documents conducted a search of the corporation’s records. It is also not surprising that Finstar’s affidavit of documents is similar to the plaintiff’s affidavit of documents as they are related corporations. I note that the moving parties have been in possession of Finstar’s affidavit of documents since May 2016 and made no objection until earlier this year.

[8] Tilley has not served a sworn affidavit of documents. It has served an unsworn affidavit of documents and has indicated that a sworn version will follow. The draft affidavit of documents lists no documents. This is not surprising either as Tilley’s position has always been that it is not a proper party to this action, and it had nothing to do with the matters in issue in this proceeding. Nevertheless, even a party that has no relevant documents is required to serve a sworn affidavit of documents stating as much.

[9] Striking a defence for breach of the Rules is a remedy of last resort to be used only in exceptional circumstances where a party has shown a cavalier disregard of its obligations. See Glass v. 618717 Ontario Inc., 2011 ONSC 2810 at paragraph 36. Tilley’s breach of the Rules cannot be described in this fashion. Its failure to serve an affidavit of documents is obviously related to the fact it has no documents. It has now served a draft affidavit of documents and has promised to serve a sworn version executed by Clive Tilley, a former officer and director of Tilley. An order requiring Tilley to do this is sufficient in the circumstances of this motion.

[10] Finally, I see no breach of Master Brott’s October 3, 2019 order. Master Brott ordered that the defendants to counterclaim, other than Cadillac Jack, Inc., be represented at mediation by one person who had instructions from all those defendants by counterclaim and would be able to enter into a binding settlement agreement. Mr. Pavel Ivlev attended the mediation with counsel for those defendants by counterclaim. The evidence of those defendants by counterclaim is that Mr. Ivlev was present at the mediation as their representative in accordance with the terms of Master Brott’s order. There is nothing in the evidence to suggest otherwise.

[11] I therefore order as follows:

(a) Mr. Kondratiev is hereby granted leave to represent Smart Games Canada, Inc.;

(b) service of the affidavit of documents and productions of the defendants/plaintiffs by counterclaim is hereby validated as of June 28, 2019;

(c) Tilley shall serve a sworn affidavit of documents by January 15, 2020; and,

(d) the balance of the relief on this motion is dismissed.

[12] If the parties are unable to agree on the issue of the costs of this motion, they shall provide the court with brief submissions in writing by January 27, 2020. The parties may deliver brief reply submissions by February 3, 2020. All costs submissions shall be filed with masters’ administration, 393 University Avenue, Toronto, 6th floor.

Master R. A. Muir DATE: 2019 12 16