Court File and Parties

COURT FILE NO.: CV-18-591679 MOTION HEARD: 2021-02-19 WRITTEN SUBMISSIONS FILED: 2021-02-23 REASONS RELEASED: 2021-02-24 SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

PREMIUM HOST INC. Plaintiff

- and-

PARAMOUNT FRANCHISE GROUP INC., PARAMOUNT FRANCHISE INC., 2302733 ONTARIO INC., MICHEL GAGNON, MOHAMAD FAKIH and HOLLY GRAHAM Defendants

BEFORE: MASTER M.P. McGRAW

COUNSEL: D. Altshuller and L. Di Genova E-mail: daltshuller@teplitskycolson.com -for the Defendants

A. Boudreau E-mail: aboudreau@sotosllp.com -for the Plaintiffs

REASONS RELEASED: February 24, 2021

Reasons For Endorsement

I. Introduction

[1] There are two motions: i.) a motion by the Defendants to compel 5 Plaintiffs/Defendants by Counterclaim to answer refusals arising from examinations for discovery; and ii.) a motion by the Defendants Paramount Franchise Group Inc., Paramount Franchise Inc., 2302733 Ontario Inc. and Mohamad Fakih (collectively, the “Franchisor”) to compel these 5 Plaintiffs/Defendants by Counterclaim in their capacities as shareholders (the “Shareholders”) of the Plaintiffs Versatile Holdings Inc. (“Versatile”), Everest Group Inc. (“Everest”) and Premium Host Inc. (“Premium”, collectively, the “Corporate Plaintiffs”) to answer refusals arising from cross-examinations on their affidavits (the “Affidavits”) filed on the Franchisor’s motion seeking security for costs against the Corporate Plaintiffs.

[2] There are significant timing issues with these motions. The security for costs motion is returnable before Master Sugunasiri on March 1, 2021 and a trial of this action and 2 related actions is currently scheduled to commence on March 15, 2021. A case conference is scheduled for March 5, 2021 where the Defendants intend to seek an adjournment of the trial. The timing issues are compounded by the fact that approximately 214 refusals remain in dispute, 111 refusals on the security for costs motion and 93 from examinations for discovery. The Defendants have filed a five-volume Motion Record of over 3,000 pages on the refusals motions.

II. Background

[3] In 2015, the Shareholders incorporated the Corporate Plaintiffs to operate two Paramount Restaurant franchises in Toronto and one in Mississauga (collectively, the “Franchises”). The 5 Shareholders whose Affidavits and cross-examinations are at issue are Sardar Samiuddin Khan (“Sami”) and his spouse, Zarmina Khan (“Zarmina”); Shahid Saleem Khawaja (“Shahid”) and his spouse Nida Shahid (“Nida”); and Yousaf Khan (“Yousaf”). There is a sixth Shareholder, Gul Nawaz Sheikh whose Affidavit and cross-examination are not at issue.

[4] In October-November 2017, the Corporate Plaintiffs delivered Notices of Rescission under s. 6(2) of the Arthur Wishart Act (Franchise Disclosure) (Ontario) and ceased operating the Franchises. Premium commenced this action by Statement of Claim issued on February 7, 2018 seeking, among other things, validation of its Notice of Rescission and damages. RBC commenced two actions for the repayment of funds advanced to Versatile, Everest and others and Versatile and Everest brought Third Party Claims against the Franchisor for validation of their Notices of Rescission and damages. In total, the Corporate Plaintiffs seek to recover in excess of $8,000,000. The Franchisor and others have brought Counterclaims. The 3 actions are being tried together.

[5] Examinations for discovery were conducted on July 23, September 22-23, and October 6, 7, 8 and 9, 2020. The Shareholders swore the Affidavits on November 15, 2020 and cross-examinations were held on December 3, 2020.

[6] Telephone case conferences were held before me on December 2 and 9, 2020 to speak to the motions and provide case management as the parties continued to exchange documents and positions. In my Endorsement dated December 9, 2020, counsel were directed to schedule another telephone case conference before me during the week of January 4 or January 11, 2021.

[7] Counsel have advised that they attended a pre-trial conference on January 11, 2021 where the Defendants’ request to adjourn the trial date was denied. Counsel did not arrange a telephone case conference with me until February 11, 2021. They advised that while some refusals had been resolved, a significant number remained in dispute. Therefore, I scheduled the February 19 attendance to review the refusals to determine which had been or could be resolved, provide case management and identify which refusals required rulings or directions.

[8] At the commencement of the attendance, counsel advised that the security for costs motion was still scheduled to proceed on March 1 but that a case conference had been scheduled for March 5 where the Defendants again intend to seek an adjournment of the trial. Since the security for costs motion is still scheduled to proceed on March 1, the February 19 attendance was devoted exclusively to reviewing the refusals from the cross-examinations so that any additional productions and/or information could be provided as soon as possible. The motion to compel answers to refusals from the examinations for discovery was adjourned sine die.

[9] As set out in my Interim Endorsement dated February 19, 2021, I reviewed the refusals with counsel, provided case management and heard their submissions. Given the circumstances, Factums were not filed, however, during the attendance Defendants’ counsel referred to case law regarding the financial disclosure obligations of shareholders against whom security is not being sought. This case law had not been provided to Plaintiffs’ counsel or the court. As both counsel wished to make legal submissions, which I agreed would be helpful, counsel agreed to file written submissions on February 22-23.

III. The Law and Analysis

Generally

[10] Rule 39.02 (1) of the Rules of Civil Procedure provides that a party to a motion who has served every affidavit on which the party intends to rely and has completed all examinations of witnesses under rule 39.03 may cross-examine the deponent of any affidavit served by a party who is adverse in interest on the motion.

[11] Perell J. summarized the principles of cross-examination on an affidavit filed on a motion in Ontario v. Rothmans Inc., 2011 ONSC 2504:

142 Case law has determined what are proper questions for a cross-examination on an affidavit. Once again, relevancy is a key determinant of a proper question, and relevancy is determined by reference to the matters in issue in the motion in respect of which the affidavit has been filed and by the matters put in issue by the deponent's statements in the affidavit. The scope of the cross-examination for an application or motion only coincidentally will be commensurate with the scope of an examination for discovery.

143 The case law has developed the following principles about the scope of the cross-examination of a deponent for an application or motion:

▪ The scope of a cross-examination of a deponent for an application or motion is narrower than an examination for discovery: BOT Construction (Ontario) Ltd. v. Dumoulin, [2007] O.J. No. 4435 (S.C.J.) at para. 6.

▪ A cross-examination is not a substitute for examinations for discovery or for the production of documents available under the Rules of Civil Procedure: BOT Construction (Ontario) Ltd. v. Dumoulin, supra at para. 7; Westminer Canada Holdings Ltd. v. Coughlan, [1989] O.J. No. 252 (Master), aff'd [1989] O.J. No. 3038 (H.C.J.).

▪ The examining party may not ask questions on issues that go beyond the scope of the cross-examination for the application or motion: Thomson v. Thomson, [1948] O.W.N. 137 (H.C.J.); Toronto Board of Education Staff Credit Union Ltd. v. Skinner, [1984] O.J. No. 478 (H.C.J.) at para. 12; Westminer Canada Holdings Ltd. v. Coughlan, [1989] O.J. No. 3038 (H.C.J.).

▪ The questions must be relevant to: (a) the issues on the particular application or motion; (b) the matters raised in the affidavit by the deponent, even if those issues are irrelevant to the application or motion; or (c) the credibility and reliability of the deponent's evidence: Superior Discount Limited v. N. Perlmutter & Company; Superior Finance Company v. N. Perlmutter & Company, [1951] O.W.N. 897 (Master) at p. 898; Re Lubotta and Lubotta [1959] O.W.N. 322 (Master); Wojick v. Wojick, [1971] 2 O.R. 687 (H.C.J.); Toronto Board of Education Staff Credit Union Ltd. v. Skinner, [1984] O.J. No. 478 (H.C.J.) at para. 11; BASF Canada Inc. v. Max Auto Supply (1986) Inc., [1998] O.J. No. 3676 (Master) at paras. 6, 10-11; Caputo v. Imperial Tobacco Ltd., [2002] O.J. No. 3767 (Master) at paras. 14-15; BOT Construction (Ontario) Ltd. v. Dumoulin, [2007] O.J. No. 4435 (S.C.J.) at para. 4; Shannon v. BGC Partners LP, 2011 ONSC 1415 (Master) at para. 8.

▪ If a matter is raised in, or put in issue by the deponent in his or her affidavit, the opposite party is entitled to cross-examine on the matter even if it is irrelevant and immaterial to the motion before the court: Wojick v. Wojick and Donger, [1971] 2 O.R. 687 (H.C.J.), at p. 688; Ferring Inc. v. Richmond Pharmaceuticals Inc. [1996] O.J. No. 621 (Div. Ct.) at paras. 14 and 15; Logan v. Canada (Minister of Health), [2001] O.J. No. 6289 (Master); Guestlogix Inc. v. Hayter, 2010 ONSC 5570 at para. 16.

▪ The proper scope of the cross-examination of a deponent for an application or motion will vary depending upon the nature of the application or motion: Blum v. Sweet Ripe Drink Inc. (1991), 47 C.P.C. (2d) 263 (Ont. Master); Moyle v. Palmerston Police Services Board (1995), 25 O.R. (3d) 127 (Div. Ct.).

▪ A question asked on a cross-examination for an application or motion must be a fair question: Superior Discount Ltd. v. N. Perlmutter & Co., [1951] O.W.N. 897 (Master) at p. 898; Canadian Bank of Commerce (CIBC) v. Molony, [1983] O.J. No. 221 (H.C.J.) at para. 3; Seaway Trust Co. v. Markle, [1988] O.J. No. 164 (Master); BASF Canada Inc. v. Max Auto Supply (1986) Inc., [1998] O.J. No. 3676 (Master) at para. 6. (See discussion below.)

▪ The test for relevancy is whether the question has a semblance of relevancy: Re Lubotta and Lubotta [1959] O.W.N. 322 (Master); Rodriques v. Madill, [1985] O.J. No. 1666 (Master).

▪ The scope of cross-examination in respect to credibility does not extend to a cross-examination to impeach the character of the deponent: Moyle v. Palmerston Police Services Board (1995), 25 O.R. (3d) 127 (Div. Ct.).

▪ The deponent for an application or motion may be asked relevant questions that involve an undertaking to obtain information, and the court will compel the question to be answered if the information is readily available or it is not unduly onerous to obtain the information: Bank of Montreal v. Carrick (1974), 1 O.R. (2d) 574 (Master), aff'd ibid p. 574n (H.C.J.); Mutual Life Assurance Co. of Canada v. Buffer Investments Inc. (1985), 52 O.R. (2d) 335 (H.C.J.) at paras. 9-13; Caputo v. Imperial Tobacco Ltd., [2002] O.J. No. 3767 (Master) at paras. 42, 56; BOT Construction (Ontario) Ltd. v. Dumoulin, [2007] O.J. No. 4435 (S.C.J.) at para. 8; Hinke v. Thermal Energy International Inc., 2011 ONSC 1018 (Master) at paras. 36-37.

▪ The deponent for a motion or application who deposes on information and belief may be compelled to inform himself or herself about the matters deposed: Rabbiah v. Deak, [1961] O.W.N. 280 (Master); Caputo v. Imperial Tobacco Ltd., [2002] O.J. No. 3767 (Master) at paras. 42, 46.

[12] The Defendants are seeking security for costs from the Corporate Plaintiffs in the aggregate amount of approximately $500,000. They are not seeking security from the Shareholders as parties to the actions. The Shareholders are all Defendants by Counterclaim and shareholders of one or more of the Corporate Plaintiffs. In responding to the security for costs motion, the Corporate Plaintiffs assert that they are impecunious. In the Affidavits, the Shareholders also claim that they are impecunious and provide evidence with respect to their assets and inability to provide funds to the Corporate Plaintiffs to post security.

[13] It is important to emphasize two points. First, the Shareholders are not the parties from whom security is sought. Second, this is not the security for costs motion. It is a motion within that motion to determine whether the Franchisor’s questions refused by the Shareholders are proper. The parties have not referred me to any case law with respect to a motion to compel answers to refusals from cross-examinations on a security for costs motion, either by a party against whom security is sought or the shareholder of a corporate plaintiff. This is likely the case because parties do not typically move on refusals on cross-examinations on a security for costs motion (or any motion for that matter). It is usually left to the court hearing the security for costs motion to determine if the parties against whom security is sought and any shareholders of a corporate plaintiff have made sufficient disclosure of their assets when considering whether it is just to order security.

[14] The case law referred to me by the parties provides the following guidance:

i.) a corporate plaintiff who claims impecuniosity must demonstrate that it cannot raise security for costs from its shareholders and associates including by demonstrating that its principals do not have sufficient assets. The corporate plaintiff must provide substantial evidence about the personal means and abilities of its shareholders or others with an interest in the litigation to post security to meet this onus. A bare assertion that no funds are available is not sufficient (Horizon Entertainment v. Marshall, 2019 ONSC 2081 at para. 3; Coastline Corp. v. Canaccord Capital Corp., [2009] O.J. No. 1790 at para. 7);

ii.) parties such as shareholders should not be able to take the benefit of an action, if successful, while avoiding the consequences of standing behind an unsuccessful action. They are required to post security if they have the means or provide detailed financial disclosure to establish that like the corporate plaintiff, they too are unable to do so. Persons who are financing the litigation should also be prepared to either provide security for the costs of the defendants in the event the claim fails or to establish that security cannot be raised (Design 19 Construction Ltd. v. Marks, [2002] O.J. No. 1091 (Ont. S.C.J.) at paras. 11 and 15; Crudo Creative Inc. v. Marin, [2007] O.J. No. 5334 (Ont. Div.) at para. 32);

iii.) where a principal’s evidence raises a strong suspicion that they appear to be hiding assets and income, providing incomplete disclosure of their financial situation, attempting to shelter assets from judgment by transferring title or they have more income/assets than they have disclosed, it militates against a finding of impecuniosity and may cast doubt on the shareholder’s credibility. This includes circumstances where there is insufficient disclosure of funds received through the sale and mortgaging of real property and other assets and explanation as to whether funds could be raised by way of mortgage to post the requested security. It is also relevant whether principals have chosen to pay other creditors particularly those without court orders of judgments (Third World Broadcasting Inc. v. Vision TV: Canada’s Faith Network, 2016 ONSC 7377 at paras. 34-44; 1324789 Ontario Inc. v. Marshall et al., 2020 ONSC 4651 at para. 6; Horizon Entertainment at para. 25);

iv.) information from previous years or even months prior to the swearing of the shareholder’s affidavit is historical and may not be useful in determining the shareholder’s current ability to lend funds to a plaintiff corporation (Third World Broadcasting at para. 35).

[15] Given the fact that this is a refusals motion on a motion and in light of the unrealistic and prohibitive time constraints, Rule 1.04(1) of the Rules of Civil Procedure and proportionality are important considerations. Rule 1.04(1) provides that the Rules of Civil Procedure shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. Rule 1.04(1.1) requires the court to make orders and give directions that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.

[16] It is clear that bare, unsupported assertions by shareholders that they do not have sufficient assets to fund the security of a corporate plaintiff are insufficient and substantial evidence and robust disclosure is required to demonstrate that they are unable to do so. What is less clear is the extent of the disclosure required, including how much documentation and for what time period. The specific disclosure required is ultimately dependent on the circumstances and context of each case including the shareholder’s status as it relates to the corporate plaintiff. While generally, the disclosure obligations of shareholders are not the same as the corporate plaintiff against whom security is sought, in some cases it may not be materially different.

[17] For example, more onerous obligations have been imposed on principals or sole shareholders who stand to benefit most from successful litigation and therefore should bear the most risk. There also appears to be more scrutiny placed on shareholders who are funding the litigation given that it is fair to consider the source of litigation funding as a potential source of security. While the focus should generally be on a shareholder’s current ability to post security, there may be cases where an individual has received substantial funds some time before the security for costs motion where fairness dictates that they should disclose the source and/or use of the funds (Lipson v. Lipson, 2020 ONSC 1324 at paras. 34-36). In other cases, historical financial information going back several months will be irrelevant. This is dependent on the amount, how close to the security for costs motion it was received and if there are any other transactions or disclosure issues to consider. At the same time, a cross-examination on a shareholder’s affidavit is not an examination in aid of execution or a forensic accounting exercise.

[18] In all of this, I am mindful of my limited, discrete role which is to determine whether or not the disputed refusals are proper. This is largely an exercise in determining relevance and proportionality and in some cases, fashioning remedies that are reasonable in circumstances. In doing so, I have been careful not to intrude on the role of the court which will hear the security for costs motion to make its own determinations with respect to disclosure as necessary. Finally, proportionality necessarily limits the amount of disclosure ordered, both generally and in the present circumstances. As counsel acknowledges, even if I were to order significant additional disclosure at this point, it will not be possible to produce everything in time for the motion or at least not in time for it to be of much use. Accordingly, I have considered what is reasonable, proportionate and fair given the time constraints.

[19] My summaries of the parties’ agreements and determinations and directions with respect to the disputed refusals are set out in the following paragraphs. As with most refusals motions, in many cases the Plaintiffs are underdelivering and the Franchisor is entitled to additional information. In many cases, the Franchisor is over-asking such that the extent of financial disclosure sought is overreaching and disproportionate. In all cases, the specific, narrow issue is whether or not the information sought or the questions asked are relevant and proportionate to the court’s determinations on the security for costs motion as to whether the Shareholders have sufficient assets or access to funds to contribute to the Corporate Plaintiffs’ security for costs.

Cross-Examination of Sardar Samiuddin Khan

[20] Sami is a minority shareholder of Versatile and Premium who claims to have limited income and limited ability to work due to health issues. There are approximately 44 refusals remaining from Sami’s cross-examination. The parties agree that Refusals 39, 42, 43, 44, 45, 46, 47, 49, 50, 51, 52, 56, 59, 71, 72, 75, 80 and 81 have been answered, resolved and/or withdrawn.

[21] With respect to Refusals 36, 37 and 38, Sami has agreed to make inquiries and best efforts to produce the statement of adjustments, closing letter and appraisal with respect to the sale of the property located at 5623 Cortina Crescent (“Cortina”). Nothing further is required.

[22] With respect to Refusal 48, I conclude that how much Sami repaid to a private lender in 2015, and Refusal 53, his T4 slips with respect to employment at Shahid’s real estate company 3 years ago, are outdated and irrelevant to his current ability to provide funds for security. Similarly, Refusal 54, copies of Sami’s job applications since July 2019, are irrelevant and disproportionate. His income, which is relevant, has been covered by other productions.

[23] Refusals 55, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69 and 70 mostly relate to Sami’s bank, credit card and line of credit statements. Sami has agreed to produce updated versions of these statements from September 2020 to the present. The Franchisor submits that he should produce updated documents going back to August 2019 when the possibility of security was first raised. Given the property transactions, the timing of the security for costs motion and the general circumstances, I am satisfied that it is reasonable and proportionate in the circumstances for Sami to produce additional bank, TFSA, credit card and line of credit statements from March 2020 to the present.

[24] With respect to Refusal 73, Sami has agreed to make inquiries and best efforts to produce the statement of adjustments and closing letter with respect to the sale of the property located at Rallymaster Heights in Mississauga. This is sufficient.

[25] With respect to Refusal 74, Sami’s 2018 Notice of Reassessment is outdated, not relevant and disproportionate however, I am satisfied that any 2019 Notice of Re-Assessment is relevant and should be produced.

[26] Refusals 77, 78 and 79 all relate to RBC’s Judgment against Versatile, Sami and Nida in the amount of approximately $187,000. Sami admits that he used personal funds to pay at least some of this Judgment in February-March 2020. I am satisfied that given the amount and timing, it is reasonable and proportionate for Sami to advise how much he paid from personal funds to satisfy this Judgment.

Cross-Examination of Zarmina Khan

[27] Zarmina is a minority shareholder of Everest who claims to have limited income, no assets or property and limited available credit and additional funds. There are approximately 7 refusals remaining from Zarmina’s cross-examination. The parties agree that Refusals 12, 16 and 17 have been answered and/or resolved.

[28] Refusal 11 relates to Cortina and is satisfied by the forthcoming productions from Sami.

[29] Similar to Sami above, Refusals 13, 14 and 15 are requests for additional bank and TFSA statements and tax returns/notices of assessment. Zarmina is prepared to update any documents she has already provided from September 2020 to the present. As above, the Franchisor advises that it would be content with updated documents going back to August 2019. I am satisfied that it is reasonable and proportionate in the circumstances for Zarmina to produce additional bank and TFSA statements going back to March 2020 and, to the extent not already produced, updated credit card and line of credit statements to confirm her current available credit.

Cross-Examination of Shahid Saleem Khawaja

[30] Shahid is the majority shareholder of Everest and Premium who claims that his only asset is his home which has little to no equity available and no other available credit or funds. There are approximately 37 refusals remaining from Shahid’s cross-examination. The parties agree that Refusals 41, 43, 44, 45, 46, 54, 64, 66, 67, 68, 69, 70, 73, 74, 75, 78, 79 and 80 have been answered, resolved and/or withdrawn.

[31] Refusals 42, 48, 49, 50, 51 and 52 are all related to Shahid Khawaja Real Estate Inc. (“SKRE”). Shahid is the sole shareholder and submits that he has disclosed all income and payments that he has received from SKRE. Given that Shahid controls SKRE and confirmed that he is funding the litigation, I am satisfied that additional disclosure is required. As a principal of two of the Corporate Plaintiffs who is funding the litigation and stands to benefit if the litigation is successful, perhaps the most of all of the Shareholders, his ability to access funds from SKRE is relevant. I acknowledge that SKRE is one more step removed from the Corporate Plaintiffs and not a party or a shareholder. However, given Shahid’s control over SKRE’s affairs, it is relevant as a source of potential security available to a majority shareholder and principal of two Corporate Plaintiffs.

[32] The Franchisor is not pursuing questions regarding how much Shahid has paid to fund this litigation, which is privileged. However, the Franchisor has also asked if SKRE is funding the litigation. Shahid refuses on the basis of relevance given that SKRE is not a party. I reject this submission given that the issue on the motion is whether Shahid has the means to fund security for costs. Whether Shahid is using SKRE to fund the litigation and if SKRE has funds which he can access are relevant to his ability to fund security for the Corporate Plaintiffs. The Franchisor also seeks SKRE’s minute books, bank statements, general ledgers, tax returns and financial statements from 2018-2020. While more information regarding SKRE is required, the bulk of this request is overreaching, disproportionate and in some cases irrelevant to the narrow issue of Shahid’s ability to access funds to pay for the Corporate Plaintiffs’ security for costs. It is unnecessary and the Franchisor is not entitled to this level of disclosure from SKRE. I conclude that a reasonable, proportionate and relevant resolution is for Shahid to advise if he has used funds from SKRE to fund the litigation and if he is able to obtain funds from SKRE to pay security for costs, and if not, to explain why not with supporting documentation from SKRE. Similarly, I also conclude regarding Refusal 47 that Shahid should advise if he has a controlling interest in any other companies. I am satisfied that Shahid is not required to answer Refusal 72 regarding the amount of commissions he earned in 2020 except to the extent to which this information has not already been provided in disclosing his income. I also reject the Franchisor’s request in Refusal 76 for the amounts of the down payment and monthly lease payments and a copy of the lease for the 2014 Bentley Flying Spur. This is a business expense of SKRE and therefore not relevant.

[33] In Refusals 55 and 56, the Franchisor requests how much Shahid transferred to family members in Pakistan in 2020 with supporting records. Shahid has advised that he sends at least $36,000 per year to his family. Given the partial answer and amount, it is reasonable and relevant that Shahid provide an estimate of the amount he sent to his family in 2020.

[34] Refusals 53, 57, 58, 59, 60, 61 and 62 are additional requests for Shahid’s bank and credit card statements. Similar to the other Shareholders, Shahid has agreed to provide the documentation from September 2020 to the present while the Franchisor seeks the documentation from August 2019 to the present. As above, I am satisfied that production of the documentation from March 2020 is sufficient.

[35] I reject the Franchisor’s request in Refusal 63 to produce the financial information which Shahid submitted to VWR Capital in May 2020 when he consolidated his debts so that they can compare it to his disclosure on this motion for the purposes of impeaching his credibility. There is no basis for this request which is irrelevant and disproportionate. In any event, it appears that many of the same documents have already been produced. However, Shahid has agreed to produce a statement from VWR Capital showing how the proceeds of the mortgage were allocated in satisfaction of Refusal 65.

[36] With respect to Refusal 77, Shahid has advised that he paid $785,000 of his own funds to satisfy debts of Versatile and Everest owed to RBC in February-March 2020. Given the timing and significant amount, I am satisfied that the source of the funds is relevant and proportionate and should be provided.

[37] With respect to Refusal 81, I conclude that Shahid is not required to provide further disclosure regarding Nida’s income from SKRE. Nida is a Shareholder, swore an Affidavit and was cross-examined. No supporting documentation is required.

Cross-Examination of Nida Shahid

[38] Nida is the majority shareholder of Versatile who claims that she is a stay at home mother with limited income, no assets or property, no available funds and no ability to obtain additional credit. There are approximately 17 refusals remaining from Nida’s cross-examination. The parties agree that Refusals 27, 44 and 46 have been answered or resolved.

[39] As with the other Shareholders, Refusals 28, 29, 32, 36, 38, 39, 40, 41 and 45 relate to bank and credit card statements. Nida agrees to produce statements from September 2020 to the present while the Franchisor requests them from August 2019. Similarly, I am satisfied that Nida should produce the statements from March 2020 to the present. With respect to Refusal 47, given the timing and amounts, it is also reasonable and proportionate that Nida identify the source of funds for payments totaling $24,100 which she made on her credit card in October and September 2020.

[40] In Refusals 30, 31, 33 and 34, the Franchisor requests the source of deposits to Nida’s account of $50,000 on September 2, 2020 and $20,000 on November 2, 2020 and wire transfers of U.S.$8,694 on May 14, 2020 and U.S. $6,700 on June 15, 2020. These are significant amounts totaling over $85,000. Nida has advised that they may have been related to funding for real estate transactions. Given the timing, amounts and partial answer provided, I am satisfied that it is relevant to the issues on the motion and proportionate that she advise as to the source of all 4 deposits. However, I am not satisfied that it is reasonable or proportionate for Nida to advise with respect to Refusal 37 why Shahid deposited $1,000 into her account on October 5, 2020.

[41] With respect to Refusal 42, Nida has agreed to produce the statement of adjustments and disposition of proceeds from the sale of a property located in Milton. Nothing further is required.

[42] With respect to Refusal 48, how much Nida owes to her parents and friends is not relevant or proportionate.

Cross-Examination of Yousaf Khan

[43] Yousaf is a minority shareholder of Everest who claims that his only asset is his residence in which all equity has been mortgaged, he has no additional funds, limited available credit and his current income is insufficient to cover monthly expenses. There are approximately 6 refusals remaining from Yousaf’s cross-examination. All 6 remain at issue.

[44] Similar to the other Shareholders, Refusals 11, 12, 13 and 14 are related to Yousaf’s bank and credit card statements. As above, I am satisfied that Yousaf should produce statements from March 2020 to the present to the extent to which they have not already been produced.

[45] With respect to Refusals 15 and 16, Yousaf advises that he has produced all documentation with respect to his mortgage. Nothing further is required.

III. Disposition and Costs

[46] Order to go directing the Shareholders to make best efforts to answer the refusals and produce the documents and information as set out above. If the parties require any clarification or further directions they may schedule a telephone case conference with me.

[47] The motion to compel refusals from examinations for discovery remains adjourned sine die. Counsel may schedule a telephone case conference with me to speak to this motion once it is known if the trial is still proceeding on March 15.

[48] If the parties cannot agree on the costs of this motion they may speak to a process and timetable for filing written submissions after the disposition of the motion with respect to refusals from examinations for discovery.

Released: February 24, 2021

Master M.P. McGraw