Creative Kitchen Gallery Inc. v. YRCC No. 715;, 2020 ONSC 1260

COURT FILE NO.: CV-14-518859 DATE: 2020/02/26

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Creative Kitchen Gallery Inc., 2308478 Ontario Ltd. and Steve Torok v. York Region Condominium Corporation No. 715 and Birendra Singh

BEFORE: Master A. Graham HEARD: January 10, 2020

APPEARANCES: L. Rapley and L. Herrington for the plaintiffs S. Inkoll and N. Rambaran for the defendants (moving parties)

REASONS FOR DECISION

(Defendants’ motion to replace the corporate defendant’s representative for oral discovery)

[1] The plaintiff 2308478 Ontario Ltd. (“230”) owns a commercial condominium unit at 166 Bullock Drive in Markham, Ontario. The plaintiff Creative Kitchen Gallery Inc. rented the unit from 230. The plaintiff Steve Torok owns both companies. The plaintiffs claim damages arising from alleged mismanagement of the 166 Bullock Drive property by the defendant York Region Condominium Corporation No. 715 (“YRCC 715”).

[2] The action has a lengthy history, the original statement of claim having been issued on December 24, 2014, and examinations for discovery have not yet been held. In their correspondence of March 22, 2018, accompanied by a proposed discovery plan, the plaintiffs selected Edgar Arabian as the YRCC 715 representative whom they wish to examine for discovery. Arabian was elected to the YRCC 715 Board of Directors on December 6, 2016, was elected president of the Board on January 27, 2017, and was re-elected president on August 7, 2019.

[3] The defendant YRCC 715 has proposed that its oral discovery witness be Senthuran Krishnakulasingham (“SK”), who was a Director of the corporation from November 14, 2013 until his removal from the Board at a meeting on July 16, 2019. This defendant now moves under rule 31.03(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for an order that the plaintiffs examine SK instead of Arabian. YRCC 715’s submissions, which will be set out in greater detail below, are as follows:

1. SK is by far the more knowledgeable individual with respect to the subject matter of the action, having been a board member commencing November 14, 2013, more than a year before the statement of claim was issued on December 24, 2014, while Arabian did not become a board member until December 6, 2016, almost two years later.
2. Arabian has acted in a conflict of interest, having assisted the plaintiff Torok in a manner contrary to YRCC 715’s interests in this action.

[4] The plaintiffs’ submissions in response to the motion, also to be elaborated on below, are:

1. A corporation’s witness need not be the most knowledgeable individual and Arabian is sufficiently knowledgeable to be YRCC 715’s witness.
2. Arabian’s conduct in relation to Torok does not amount to acting in a conflict of interest.
3. SK, as a former director of YRCC 715, is not an eligible corporate discovery witness.
4. SK is not an eligible discovery witness for YRCC 715 because his counsel’s position at his cross-examination was that his answers do not bind the corporation.

[5] For the reasons set out below, the motion is dismissed.

Statement of claim

[6] Although the original statement of claim was issued on December 24, 2014, the plaintiffs have subsequently amended it, most recently on April 11, 2019. The plaintiffs’ current pleading contains allegations of:

• Problems with the “control, management and administration of the common elements and assets of YRCC No. 715” subsequent to the acquisition of the plaintiffs’ unit in December, 2011, including the failure to enforce parking rules, address roofing problems, manage garbage and commercial waste, and build a reserve fund and implement capital projects (statement of claim paragraph 15).
• Tension between the plaintiff Torok and the corporation’s Board of Directors, culminating in the corporation commencing a Small Claims action against Torok and Creative Kitchen in September 2014. This action was not prosecuted and was dismissed for delay in September, 2017 (paragraph 17).
• An application commenced by the plaintiff 230 in April 2016, seeking the appointment of an administrator pursuant to the Condominium Act, 1998, S.O. 1998, c. 19 and the reasons of Dow J. released December 9, 2016, dismissing the application with costs to the plaintiff, noting “the inactivity of the Board in 2011-2013” (paragraph 19).
• A Reserve Fund Study completed on August 11, 2016, which was adopted by the YRCC 715 Board. The plaintiffs allege that the defendants have failed to undertake any of the recommended capital repairs or to collect sufficient reserve funds from the unit owners to meet the requirements of the building (paragraphs 22 and 23).
• A breach by YRCC 715 of its contractual, statutory and common law duties to the plaintiffs, including the release of fraudulent Status Certificates as recently as October 2018 on the motion (paragraph 25).

Evidence on the motion

SK’s affidavit in support of the motion and his cross-examination on that affidavit

[7] SK deposes that he served as a member of the YRCC 715 Board of Directors from November 14, 2013 until July 16, 2019. Following the election of November 14, 2013, in which Torok ran unsuccessfully, Torok’s relationship with the Board “swiftly deteriorated” (paragraph 10). In August 2014, Torok was involved in an altercation with one of the corporation’s property managers, which precipitated the Small Claims action commenced September 10, 2014. The plaintiffs commenced the current Superior Court action on December 24, 2014. Although SK and other Board members were also named defendants at that time, the only individual defendant remaining is Birendra Singh.

[8] SK reviews the commencement of the Application by the plaintiff 230 on April 5, 2016, Dow J.’s decision of December 9, 2016, the election of Arabian to the Board on December 6, 2016, and Arabian’s election as Board president on January 27, 2017 (paragraphs 17-19).

[9] SK deposes (paragraph 23) that at a meeting of November 13, 2018, the Board selected him to be the Board’s representative at examinations for discovery in this action, “as it was agreed that I was the Board member with the most knowledge of matters related to the litigation”. Arabian was present at that meeting, at which everyone in attendance was cautioned against sharing any information related to the litigation with Torok. However, SK acknowledged at his cross-examination that this was “not a Board meeting” at which minutes were taken, but rather, a meeting of Board members including SK and Arabian, with YRCC 715’s counsel, for the purpose of discussing the lawsuit (SK’s cross-examination, Qs. 228-239; Q. 384).

[10] YRCC 715 also relies on SK’s affidavit evidence in support of its submission that Arabian, as a Board member and president, has acted in a conflict of interest in relation to the plaintiffs’ action. SK deposes (paragraph 25) that in April 2019, based on a review of some of the plaintiffs’ Schedule “A” productions, the Board realized that Arabian had forwarded confidential Board emails to Torok without the Board’s knowledge or approval, and Torok was relying on these emails in this litigation.

[11] The communications contained in the plaintiffs’ affidavit of documents and relied upon by YRCC 715 include (at Exhibits J and K):

• On November 15, 2016, Arabian sent Torok an email informing him that he was going to try to get elected to the YRCC 715 Board.
• Shortly after Arabian was elected to the Board on December 6, 2016, Arabian involved the plaintiff Torok on the Parking Committee without advising the Board or the property manager and without obtaining the Board’s approval. SK states that Arabian’s claim that he was working with Torok on the Parking Committee was for the purpose of justifying his sharing of emails with him.
• On May 31, 2017 and June 1, 2017 (after Arabian became Board president on January 27, 2017), Arabian exchanged various emails with Janet Huang, the corporation’s property manager, with respect to a proposed increase in the condominium corporation’s maintenance fees. The issue was whether there should be a 5% increase or an 11% increase. Arabian forwarded this email chain to Torok on the evening of June 1, 2017.
• On July 15, 2017, Arabian commented that minutes of three Board meetings provided by Janet Huang did not appear to accurately reflect what occurred at those meetings. The issue under discussion was the extent of any increase to the condominium maintenance fees.
• On August 10, 2017, Arabian provided Torok with a further email exchange of August 9 and 10, 2017 between himself and Janet Huang, again with respect to the Board minutes relating to the extent of the proposed increase in maintenance fees.
• On February 8, 2018, Arabian provided Torok with an email chain between himself and other Board members in which he expressed his frustration with their lack of response to a request that they meet to address problems relating to garbage disposal and the use of the driveway.
• On June 13, 2018, Arabian wrote to the other Board members in respect of complaints by some unit owners regarding the use of the parking lot by other unit owners in violation of condominium corporation bylaws.
• On January 31, 2019, Arabian provided Torok with a copy of an email dated November 28, 2018 from a lawyer for one of the unit owners responding to threats to have that unit owner’s customers ticketed and towed from the parking lot.

[12] SK deposes (paragraph 27) that Arabian gave Torok a Status Certificate, which was erroneous in that it did not mention this litigation, and which the plaintiffs characterized as fraudulent in paragraph 25 of the most recent version of their statement of claim.

[13] SK refers (paragraph 28 and Exhibit M) to the Directors’ Code of Ethics from the Canadian Condominium Institute, which requires a director of a condominium corporation to disclose any conflict of interest in respect of (among other things) legal actions to the Board. The Conflict of Interest provisions in this document also include a statement that Directors undertake that they “will not disclose to any person . . . information decided by the Board to be confidential or privileged or which reasonably ought to be deemed confidential.”

[14] SK further deposes (paragraph 30) that the Board asked Arabian to step down because he had breached confidentiality and was not acting in the best interests of the Corporation. Arabian then circulated a petition to dissolve the Board, which was signed by Torok, among others, and which led to the Owner’s Meeting of July 16, 2019 that resulted in the removal of SK and one of the other directors.

[15] SK states that he is the appropriate discovery witness for YRCC 715 based on his being a unit owner since 2008, a Board member from November 14, 2013 until July 16, 2019, and was approved as the corporation’s discovery witness at a meeting of November 13, 2018. SK further states that Arabian is not an appropriate representative because he was not elected to the Board until December 6, 2016, almost two years after the statement of claim was issued, he is “a friend, confidante and supporter of Torok”, he has provided confidential Board communications to Torok without the approval of the Board, and he shared an erroneous Status Certificate with Torok.

[16] At SK’s cross-examination on his affidavit, in response to plaintiffs’ counsel’s question as to whether SK’s answers would be binding on YRCC 715, the corporation’s counsel replied that “he’s not a member of the Board, so he’s not a corporate representative”. When asked by plaintiffs’ counsel for clarification of this position, YRCC 715’s counsel confirmed that SK’s answers were not binding on the defendant corporation.

Affidavit of Rose Suppa in support of the motion

[17] Rose Suppa is a legal assistant at the firm representing YRCC 715. She reviews the history of the action, including much of the correspondence between counsel, from the issuing of the statement of claim in December, 2014 to plaintiffs’ counsel’s efforts to examine Arabian as YRCC 715’s discovery witness between March 22, 2018 and July, 2019. I have not summarized this evidence because, although it addresses the delay in the action, most of it is irrelevant to the issues on the motion and any relevant evidence is more succinctly set out in the plaintiffs’ responding affidavit reviewed below.

[18] Ms. Suppa’s affidavit includes (exhibit BB) an email dated April 26, 2019 from Arabian to various people including the property manager, counsel for YRCC 715, and SK. In this email, Arabian takes exception to the communication by one of the Board members to other unit owners of what he describes as confidential information from a Board meeting on April 18, 2019, “against all condo rules. . . especially after asking me to step down for accusing me of the same thing.” Arabian further states: “Please remind yourselves this law suit started before I purchased my unit and has nothing to do with me. You as the old board went against Steve [Torok] (Unit 1) and now we as a corporation are getting sued. My only intentions are to serve this board and I will continue to defend all unit owners and be transparent with all that is going on.”

Responding affidavit on behalf of the plaintiffs

[19] The plaintiffs’ responding affidavit is sworn, not by one of the parties, but by Ms. Herrington, a lawyer in the firm representing the plaintiffs. The first 12 paragraphs of this affidavit are a review the history of the relationship between the parties similar to that set out in SK’s affidavit. The deponent then recounts the plaintiffs’ efforts to examine Arabian as YRCC 715’s discovery witness, beginning on March 22, 2018, followed by a series of amendments to the statement of claim, culminating in the amended pleading of April 11, 2019 reviewed above.

[20] During this period, plaintiffs’ counsel reiterated on September 18, 2018 that she sought to examine the Board president Arabian on behalf of the defendant corporation. Defendants’ counsel’s response of September 19, 2018 was that “the pleadings need to be sorted out before discoveries can proceed”, but he made no objection to producing Arabian as YRCC 715’s discovery witness. In correspondence of February 22, 2019, plaintiffs’ counsel again referred to her intention to examine Arabian as the corporation’s discovery witness.

[21] With a letter of April 2, 2019, plaintiffs’ counsel attached a discovery plan, revised March 14, 2019, that again referred to Arabian as the corporation’s discovery witness. In the email of April 2, 2019, with which she sent that correspondence, plaintiffs’ counsel proposed dates for “examination for discovery of Mr. Arabian”. Defendants’ counsel’s response, sent later the same day, did not take issue with Arabian as YRCC’s discovery witness. Similarly, plaintiffs’ counsel sought available dates for Arabian’s examination on April 16, 2019, and defendants’ counsel’s response of April 18, 2019 contains no objection to Arabian as the choice of witness. In correspondence of June 28, 2019, addressing the scheduling of examinations, defendants’ counsel again took no issue with Arabian as YRCC’s discovery witness.

[22] YRCC 715’s counsel first objected to the plaintiffs’ choice of Arabian as its discovery witness in a second email of June 28, 2019. His objection was based on an upcoming “special unit owners’ meeting” scheduled for July 17, 2019 (held on July 16, 2019 as referred to above), which would consider petitions to remove Arabian from the Board, and to dissolve the Board and hold a new election. YRCC 715’s counsel then stated, “as Mr. Arabian may not be on the Board after July 17, did not join the Board until long after this litigation was commenced, and has been asked to step down due to a conflict of interest, it would not be appropriate to schedule an examination for discovery with Mr. Arabian representing YRCC 715.” Counsel then proposed that SK be the corporation’s witness on the basis that he had been on the Board since prior to Mr. Torok’s purchase of his unit, and the Board (including Arabian) had agreed at a previous meeting that SK be its discovery witness.

[23] With correspondence of July 10, 2019, plaintiffs’ counsel served a notice of examination on Arabian, and stated that “whether he is replaced July 16 th or not, he [Arabian] is the YRCC representative with the most knowledge as to matters in issue”. On July 12, 2019, defendants’ counsel stated that he would move to enforce their choice of representative.

[24] The plaintiffs’ affidavit includes the minutes of the unit owners’ meeting of July 16, 2019, which confirm the votes to remove SK and another director from the Board and defeating the motion to remove Arabian from the Board owing to a breach of confidentiality. Finally, the plaintiffs’ affiant states that Arabian was re-elected as Board president at a meeting of August 7, 2019.

The law

[25] The applicable rule is:

31.03(2) Where a corporation may be examined for discovery,

(a) the examining party may examine any officer, director or employee on behalf of the corporation, but the court on motion of the corporation before the examination may order the examining party to examine another officer, director or employee; and

(b) the examining party may examine more than one officer, director or employee only with the consent of the parties or the leave of the court.

[26] The parties have submitted various authorities on the issue of when a court may substitute a corporation’s choice of discovery witness for the examining party’s. The law on this issue is most succinctly summarized by Strathy J. (as he then was) in Ciardullo v. Premetalco Inc. , [2009] O.J. No. 3625 (cited with approval at para. 6 of Sawah v. Strategy Insurance Limited, 2011 ONSC 2114) at para. 9:

9 . . . [T]he examining party has a prima facie right to select the corporate officer, director, or employee to be examined, the court will not lightly interfere with the selection, and the onus is on the corporation to show that the person selected is inappropriate: Farris v. Staubach , [2004] O.J . No. 3961 ; Wexler v. Suncor Energy Products Inc. [2006] O.J . No. 4012 (Sup. Ct.) , app. for leave to appeal dismissed, [2007] O.J . No. 994 (Div. Ct.) . Those authorities indicate that in determining whether to substitute another corporate representative for the person selected, the court should consider:

• whether the person selected is sufficiently knowledgeable in relation to the matters in issue;
• whether it would be oppressive to require the person selected to be examined, for example because it would give rise to an excessive number of undertakings or unnecessarily take the person away from onerous management responsibilities; and
• whether there would be prejudice to the examining party to be required to examine someone other than the person whom he or she selected.

[27] YRCC’s first objection to the plaintiff’s selection of Arabian as YRCC’s discovery witness is that SK would be a more knowledgeable witness. Strathy J. in Ciardullo identifies the extent of a witness’s knowledge of the issues in a case as relevant to this motion.

[28] There is no principle that the Court must select which of two possible discovery witnesses has the most knowledge, but it is important to select a person with sufficient knowledge of the matters in issue so that the examination will not be a waste of time (See Gibson v. Bagnall, [1978] O.J. No. 3645 (H.C.J.) at para. 8 ). If the corporate witness selected by the examining party is lacking in first hand knowledge of the matters in issue, there would be prejudice to all parties because of the number of undertakings required and the possibility of additional costs arising from a further examination of a more knowledgeable witness (See CIBC v. Cigam Entertainment Inc. , [1999] O.J. No. 2011 (S.C.J.) at para. 24 ; Ward v. Manulife Financial , [2002] O.J. No. 446 (S.C.J.) at para. 9 ).

[29] The issue of the relative familiarity of two potential discovery witnesses with the circumstances of the case was addressed by Van Rensburg J. (as she then was) in Sawah, supra at para. 11 :

11 Having considered the affidavit evidence and the arguments of counsel, I am satisfied that Mr. Stonehill [the witness selected by the examining party] has sufficient knowledge of the matters at issue to be an appropriate discovery witness for SIL [the corporate party to be examined] and I am not persuaded that Mr. Forrest [the SIL corporation’s proposed witness] has significantly greater direct knowledge that would warrant interfering with the plaintiff’s choice of discovery representative. The issue is not which individual is more knowledgeable or indeed which would make a better witness objectively.

[30] These authorities indicate that the witness ultimately selected must have “ sufficient knowledge” to be an effective witness ( per both Gibson and Sawah ), as opposed to being the most knowledgeable witness. However, based on Van Rensburg J.’s decision in Sawah , the fact that a potential witness has “significantly greater direct knowledge” of the circumstances of a case may be the basis for the court “interfering with the plaintiff’s choice of discovery representative”. Whether the relative degrees of knowledge of two potential witnesses will persuade the court to choose one instead of the other will depend on whether one is so much more knowledgeable than the other that their selection will clearly make the examination more effective.

[31] YRCC 715’s second objection to the plaintiffs’ choice of Arabian as their discovery witness is that he has a conflict of interest. The defendants rely on Scott Transport Ltd. v. Bondy , [1973] O.J. No. 1884 , in which Pennell J. stated (at para. 5) that the purpose of enabling a corporation to move to substitute its discovery witness is “for the purpose of preventing subrule 326(2) [the predecessor to rule 31.03(2)(a)] from being put in force in a manner which would be unfair and prejudicial”.

[32] With respect to the issue of conflict of interest, in Machado v. Pratt & Whitney Canada Inc. , [1993] O.J. No. 1111 , Master Sandler stated (at para. 40):

40 . . . I have read several reported cases that suggest that if the representative of the corporation chosen by the opposite party is adverse in interest to the corporation, a change should be made : see Kowk v. Kitchener-Waterloo (1985), 2 C.P.C. (2d) 250 ; Protter Management v. Ontario Housing Corporation (1975) , 8 O.R. (2d) 445 ; Walton v. Bank of Nova Scotia , [1960] O.W.N. 541 ; Hawman v. McConnell (1987), 21 C.P.C. (2d) 243 (Sask. Q.B.) ; Exhibition Association of Saint John v. CIBC (1987), 21 C.P.C. (2d) 88 (N.B.Q.B.) , where the director of the plaintiff, who had been chosen by the defendant to be examined, was in conflict of interest with the plaintiff on the very issue in the action, and it would be unfair to the plaintiff to be bound by the discovery evidence of the person with whom it was in a position of conflict of interest; and Moncur v. City of Regina , [1986] 6 W.W.R. 183 (Sask. Q.B.) where the court upheld the defendant corporation's objection to the plaintiff examining a qualified and informed corporate officer (the mayor) where his expressed views and opinions were diametrically opposed to the position taken by the corporation, and since the examination of the officer of the corporation could be used in evidence against the corporation, the corporation's objection was reasonable . [emphasis added]

[33] Machado was followed in University of Toronto v. Deprenyl , [2003] O.J. No. 2988 , in which Master Hawkins stated (at para. 5):

5 I recognise that the right of an examining party to select the person to be examined on behalf of a corporation is not to be interfered with lightly. Where however the person nominated to be examined for discovery on behalf of a corporate party has a conflict of interest as regards that corporate party, the court may order that a different corporate officer be examined.

[34] The plaintiffs also oppose SK being YRCC 715’s discovery witness because he is no longer an “officer, director or employee” of the corporation. The plaintiffs again rely on Scott Transport Ltd. v. Bondy , supra in which Pennell J. held as follows (at para. 6):

6 The plaintiff served an appointment to interrogate the defendant corporation through M as its president. But M has ceased to be an officer or director, having resigned. I think that the meaning of Rule 326(2) is that a corporation shall answer by one of its current officers. The fact that the corporation is bound by any admissions in the same manner and to the same extent as any other person seems to show more clearly that the person to be examined must be an officer at the time of the examination. I am of opinion [sic], with respect, that the right to examine M ceased when M ceased to be an officer of the corporation.

[35] In 1973, when Scott Transport was decided, the applicable Rule of Practice was rule 326:

326(2) In the case of a corporation, any officer or servant of such corporation may, without order, be orally examined before the trial touching the matters in question by any party adverse in interest to the corporation, and may be compelled to attend and testify in the same manner and upon the same terms and subject to the same rules of examination as a witness except as hereinafter provided.

(3) A corporation may apply to the court to have examined an officer or servant in lieu of the officer or servant selected to be examined.

[36] Although worded differently, the substance of the current rule 31.03(2)(a) is essentially the same as the former rule 326(2) and (3). Under both versions, an opposing party has/had the prima facie right to examine any officer or employee of a corporation, and the corporation has/had the option of seeking a court order allowing it to produce a different representative. The only difference is that rule 326 referred to “any officer or servant” being examined and rule 31.03(2)(a) applies to “any officer, director or employee”. Accordingly, the statement of the law in Scott Transport would reasonably extend to directors, as well as officers and employees, so the examining party’s right to examine a particular director, e.g. SK, or the corporation’s right to proffer SK as its discovery witness, would cease when SK ceased to be a director.

[37] The defendants submit that, even though rule 31.03(2)(a) allows the court only to order the examination of “another officer, director or employee”, the court still has discretion to order the examination of SK as a former director. The defendants rely on rule 2.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194:

2.03 The court may, only where and as necessary in the interest of justice, dispense with compliance with any rule at any time.

[38] In this regard, the defendants also rely on Thorne v. AXA Canada Inc., 2012 ONSC 2409 (Div. Ct.) to argue, as stated in their factum, that “there are circumstances where a former officer, director or employee is a more appropriate representative” (than a current one), and that “the Court has upheld on appeal an order that a former employee act as a discovery witness”. The defendants rely on a statement of Corbett J., writing for the majority, that it “simply cannot be right” that a representative of a corporation is no longer an eligible representative merely because he ceases to be an employee of the corporation.

[39] The defendants’ reliance on Thorne is based on a misreading of the decision. In Thorne, the parties, through their counsel, had previously agreed that a Mr. Landry, a former employee of the defendant AXA, be the corporation’s discovery representative. Mr. Landry’s examination was scheduled on several occasions, but never proceeded, not because the plaintiff objected to him as AXA’s discovery witness, but because of his own scheduling conflicts. After the plaintiff became self-represented, he sought to examine Mr. Blais, AXA’s President and Chief Executive Officer, as the corporation’s discovery representative.

[40] On appeal, Corbett J. accepted the motion judge’s conclusions that Mr. Blais had little or no involvement in the matter, that the plaintiff had ulterior motives in seeking to examine him, and that he was not a suitable choice of representative. Corbett J. concluded (at paras. 17 and 18 of Thorne) that “given the history of the matter”, i.e. the parties’ previous agreement that AXA’s former employee Mr. Landry could be its discovery representative, Mr. Landry was an eligible discovery witness for the corporation. The position that Corbett J. stated “simply cannot be right” was the plaintiff’s argument that the parties could not agree between themselves that Mr. Landry, a former employee, could be the corporation’s discovery witness.

[41] Accordingly, the decision in Thorne stands for the proposition that it is open to the parties to agree that a former employee may be a corporation’s discovery witness. The decision should not be interpreted to mean that the examining party must accept the corporation’s choice of a former officer, employee or director as its discovery witness. On that point, Corbett J. stated (at para. 15): “I do not find it necessary to address the broader question of whether a party may be compelled to accept a former employee as a discovery witness”, because that issue was not before the motion judge.

Issues on the motion

[42] The issues on the motion are:

1. Is SK sufficiently more knowledgeable than Arabian about the issues in the action that the court should order that he replace him as YRCC 715’s discovery witness?
2. Does Arabian’s conduct in relation to issues that have arisen between the plaintiff Torok and YRCC 715 give rise to a conflict of interest between him and the corporation?
3. Is SK, as a former director of YRCC 715, still eligible to be selected as the corporation’s discovery witness?
4. Is SK rendered ineligible to be YRCC 715’s discovery witness as a result of his counsel’s admission at his cross-examination that his answers do not bind the corporation?

Analysis of the issues

1. Is SK sufficiently more knowledgeable than Arabian about the issues in the action that the court should order that he replace him as YRCC 715’s discovery witness?

[43] The statement of claim contains allegations relating to the defendant corporation’s conduct prior to December, 2014, when the original statement of claim was issued. The plaintiffs also rely on the application decided December 9, 2016, and Dow J.’s reference to “the inactivity of the Board in 2011-2013.” These allegations are all in respect of events that pre-date Arabian’s election to the Board of Directors on December 6, 2016.

[44] The plaintiffs also plead allegations relating to a Reserve Fund study completed on August 11, 2016, which, although also prior to Arabian’s election to the Board, was clearly being discussed by the Board after his election because the emails provided to Torok relate to a possible increase in maintenance fees based on this study. In addition, the plaintiffs plead the release of the allegedly fraudulent Status Certificates as recently as October, 2018.

[45] The defendant’s proposed discovery witness SK was a member of the YRCC 715 Board commencing November 14, 2013, more than a year before the action was commenced, and would therefore be knowledgeable about the corporation’s actions during the period preceding the commencement of the action on December 24, 2014, and for that matter, prior to his removal from the Board on July 16, 2019. Arabian was not elected to the Board until December 6, 2016 and would therefore have little or no first-hand knowledge with respect to the actions of the Board before that date.

[46] In fact, Arabian has as much as admitted that he has limited knowledge of what the Board was doing before he was elected to the Board, having written in the email quoted at paragraph [18] above, that “this law suit started before I purchased my unit and has nothing to do with me”. In making this statement, he appeared to have been trying to distance himself from the circumstances giving rise to the action. Arabian does appear to have some direct knowledge of the Board’s treatment of the Reserve Fund study dated August 11, 2016, before his election to the Board, and would have at least as much knowledge as SK with respect to the Status Certificates that are the subject of the action.

[47] I conclude that SK is more knowledgeable than Arabian with respect to the bulk of the issues in the action, but that Arabian does have some first-hand knowledge with respect to the issues have arisen more recently. Although an examination for discovery of Arabian may well result in more undertakings than an examination of SK, I am not persuaded that the additional undertakings would result in the oppressive circumstances contemplated in paragraph 9 of Ciardullo, supra .

[48] I also note that, although plaintiffs’ counsel first sought to examine Arabian as the defendants’ discovery witness on March 22, 2018, YRCC 715’s counsel did not object to him being the witness until June 28, 2019. Even then, counsel’s objection was that Arabian may be removed from the Board, having been asked to step down owing to a conflict of interest. Although counsel also referred to the fact that Arabian “did not join the Board until long after this litigation was commenced”, he did not specifically raise the sufficiency of Arabian’s knowledge until he filed the materials for this motion.

2. Does Arabian’s conduct in relation to issues that have arisen between the plaintiff Torok and YRCC 715 give rise to a conflict of interest between him and the corporation?

[49] The Code of Ethics for condominium directors requires that Directors “not disclose to any person . . . information decided by the Board to be confidential or privileged or which reasonably ought to be deemed confidential”. YRCC 715 alleges that Arabian has acted in a conflict of interest by communicating confidential information discussed at Board meetings with the plaintiff Torok. However, YRCC 715 relies only on a bald statement of confidentiality, and has provided no evidence that the information provided to Torok is not information that he would be entitled to as a unit owner.

[50] The information contained in the email messages relied upon by the defendants relates to a proposed increase in condominium maintenance fees, garbage collection, and the use of the common parking lot, all matters of legitimate interest to the unit owners. There is no reason that any of this information would be confidential to the Board, and unavailable to unit owners. The fact that Arabian, as a director of the corporation, had an obligation to act in its best interests, would not preclude him from providing Torok with information that he had a right to as a unit owner and the fact that he did so does not create a conflict of interest. Arabian should not be disqualified as the plaintiffs’ choice of discovery witness simply for providing them with information that they were entitled to in any event.

3. Is SK, as a former director of YRCC 715, still eligible to be selected as the corporation’s discovery witness?

[51] Based on Scott Transport, supra , the plaintiff submits that SK, as a former director of YRCC 715, is not an eligible discovery witness because his answers would not bind the corporation. However, in Scott Transport , the plaintiff wanted to compel the examination of the corporate defendant’s former president, and there was no obligation on the part of the corporation to agree to be bound by the answers of a former officer. In this case, YRCC 715 has volunteered its former director SK as its discovery witness. Rule 2.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which allows the court to “dispense with compliance with any rule at any time”, enables the court to exercise its discretion to dispense with the requirement in rule 31.03(2)(a) that a corporate representative be a current officer, director or employee, and to allow a corporation’s former director to be its discovery witness.

[52] The decision of Corbett J. in Thorne, which allowed the parties to select a corporation’s former employee as its discovery witness, is consistent with the court having discretion under rule 2.03 to allow a corporate discovery witness who is not a current officer, director or employee. The court may therefore consider SK, a former director of YRCC 715, as a possible discovery witness for the corporation. It should also be noted that plaintiffs’ counsel, in her letter of July 10, 2019 (see paragraph [23] above), expressed her intention to examine Arabian as YRCC 715’s discovery witness regardless of whether he was removed from the Board at the July 16, 2019 unit owners’ meeting, thus implicitly acknowledging that a former officer or director may be a corporation’s discovery witness.

[53] The additional factor in this case is that, at SK’s cross-examination on his affidavit, counsel for YRCC 715 stated that SK’s answers could not bind the corporation, which raises the final issue to be considered.

4. Is SK rendered ineligible to be YRCC 715’s discovery witness as a result of his counsel’s admission at his cross-examination that his answers do not bind the corporation?

[54] Although, as concluded above, a former director of a corporation may still be its discovery witness, that individual must be able to give answers that bind the corporation. On defendants’ counsel’s own admission at SK’s cross-examination on his affidavit in support of this motion, SK could not give answers that would bind the corporation, having lost the authority to do so when he was voted off the YRCC 715 Board on July 16, 2019. Significantly, the defendants’ counsel acknowledged at the motion that this election was never challenged. Despite SK’s approval as YRCC 715’s discovery witness on November 13, 2018, counsel’s statement that his answers could not bind YRCC 715 on cross-examination because he was no longer a director necessarily means that SK could not give answers binding on the corporation at examinations for discovery. This acknowledged lack of capacity to speak for YRCC 715 disqualifies SK from being its discovery representative.

Decision

[55] YRCC 715 has the onus to satisfy the court that the plaintiffs’ selection of Arabian as their discovery witness is inappropriate. The court should not lightly interfere with this choice. I accept that SK is a more knowledgeable witness than Arabian with respect to some of the issues in the plaintiffs’ action but Arabian does have some knowledge and it is open to the examining party to choose a less knowledgeable witness.

[56] With respect to Arabian’s alleged conflict of interest, the information that he provided to Torok should have been available to Torok as a unit owner in any event. The fact that the information may be helpful to Torok in his action does not mean that Arabian should not have provided it to him and does not create a conflict of interest such as to disqualify Arabian from being YRCC 715’s discovery witness.

[57] Further, even with the knowledge that Arabian had provided information to Torok, a majority of the unit owners voted to remove SK from the Board on July 16, 2019 and to re-elect Arabian as president of the corporation’s Board of Directors on August 7, 2019. These elections have not been challenged. Although the fact that SK is not currently an officer, director or employee of YRCC 715 does not in itself disqualify him from being its discovery witness, its counsel’s recent acknowledgement, in the context of this motion, that SK does not have authority to bind the corporation, would render meaningless his examination on behalf of the corporation. Considering once again their relative degrees of knowledge of the issues in the action, the fact that SK would be more knowledgeable than Arabian with respect to many of those issues is outweighed by the fact that he simply no longer has any authority to speak for the corporation.

[58] I therefore conclude that the moving parties have not met their onus to demonstrate that Edgar Arabian should be replaced by Senthuran Krishnakulasingham (“SK”) as the discovery witness for YRCC 715. The motion is therefore dismissed.

[59] Costs: Counsel filed costs outlines at the conclusion of the hearing and I informed them that if they could not agree on the issue of costs, they could make written submissions. Failing agreement, the plaintiffs shall file their submission within 20 days and the defendants within 20 days thereafter. Submissions shall not exceed three pages. To assist counsel with their discussions, I currently see no reason to award costs other than to the successful party on a partial indemnity basis. The gap between the plaintiffs’ partial indemnity figure for fees of $20,541.00 and the defendants’ corresponding figure of $17,511.75 should not pose an insurmountable obstacle to resolution.

MASTER A. GRAHAM DATE: February 26, 2020