Court File and Parties

COURT FILE NO.: CV-18-604510 MOTION HEARD: 20210513 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Frank Mastrandrea and Steel City Advisors Inc., Plaintiffs AND: Giampaolo Group of Companies, Giampaolo Group Inc., Global Electric Electronic Processing Inc., Geep Barrie Inc., Venture Steel Inc., Ma Talco Inc., Giampaolo Investments Limited, Riverstone Golf & Country Club Inc., and Triple M Metal LP, Defendants

BEFORE: Master Jolley COUNSEL: David Bannon and David Alli, Counsel for the Moving Party Defendants Behzad Hassibi, Counsel for the Responding Party Plaintiffs

HEARD: 13 May 2021

REASONS FOR DECISION

[1] The plaintiffs have sued the defendants for damages for wrongful dismissal and breach of contract. Mr. Mastrandrea was examined for discovery on 26 July 2019 and, in the course of that examination, refused five questions which are the subject of this motion by the defendants. I accept and have adopted the law related to the scope of examinations for discovery as set out in Ontario v. Rothmans Inc. 2011 ONSC 2504 at paragraph 129.

Refusal 1, Question 284-285 – Produce Frank and Jane Mastrandrea’s income tax returns for 2013 to the date of trial

[2] The defendants seek production of the income tax returns of Frank Mastrandrea and his wife, Jane Mastrandrea from 2013 to trial. Mr. Mastandrea has produced his income tax returns, but argues that the returns of his wife are irrelevant.

[3] The defendants argue that this information is relevant as it will demonstrate that their initial structure of the relationship as one of independent contractor was not a “ruse” by the defendants, as alleged by the plaintiffs, but an arrangement entered into at the behest of the plaintiffs because that structure benefited the plaintiffs by allowing Mr. Mastrandrea to income split through various corporate means. Under the contracting arrangement, the defendants paid Steel City Advisors Inc. (“Steel City”). Steel City in turn paid a family trust which then paid dividends to both Jane and Frank, it is alleged.

[4] The defendants plead that Jane was an employee of Steel City and that this independent contractor arrangement allowed Frank to employ not only her but other employees and consultants. Frank has advised that Jane was not an employee of Steel City, did not provide services to the defendants and did not receive any direct income from Steel City.

[5] I do not find this question meets the relevance threshold. First, if the consulting arrangement were Mr. Mastrandrea’s idea, as the defendants suggest, they are free to argue that such an arrangement came with flexibility and benefits that were not available to him had he been an employee. This included hiring other consultants or employees, directing the income to a family trust and having the family trust disburse dividends to Jane, if, indeed, that happened. Those benefits existed whether or not Mr. Mastrandrea took advantage of them. Second, the fact that Mr. Mastrandrea may have taken advantage of the structure in place does not assist the court in determining whether the structure was put in place at his behest or whether he was simply taking advantage of the structure insisted on by the defendants. Lastly, I find that whether or not Mrs. Mastrandrea received income from a family trust that received income from Steel City that received income from the defendants is too far removed to warrant an order requiring disclosure of documents belonging to a non-party, even if I assume they are readily available to Mr. Mastrandrea.

[6] The refusal is upheld.

Refusal 2 – Question 36-38 - Produce the financials for the family trust that owns Steel City up to the date of trial

[7] Mr. and Mrs. Mastrandrea are the sole beneficiaries of the family trust, which was funded exclusively by Steel City. The financial statements for Steel City have been produced and there is evidence that Steel City directed all of those funds to the family trust. The defendants argue that the financial records of the family trust are relevant to the plaintiffs’ damages claim and they require those productions to fully understand the full financial picture of Steel City.

[8] Mr. Mastrandrea has deposed that the family trust is a passive investment holding company. The only funds it received were from Steel City. It does not earn income, other than investment income. If the information sought is said to relate to mitigation of damages, as the defendants argue, the plaintiffs have produced the income tax returns of Mr. Mastrandrea and the financial statements and tax returns of Steel City, the only entity that earned income. Looking through the lens of the pleadings, the defendants have not established the relevance of the family trust financial statements.

[9] The refusal is upheld.

Refusal 3 – Questions 1060-1063 – advise whether there was any impact on Mr. Mastrandrea’s pension if he had been terminated for cause at Dofasco

[10] This and the following two refusals were premised on the defendants’ understanding that Mr. Mastrandrea sought damages connected with his Dofasco pension. The defendants argued in their factum that this question was relevant as Mr. Mastrandrea was claiming damages connected to that alleged pension loss. They argued that Mr. Mastrandrea had been alienating his coworkers and had key responsibilities stripped away from and insinuated that his employment was not secure. They argued on this motion that if Mr. Mastrandrea’s employment at Dofasco was at risk of being terminated for cause, he may have suffered a pension loss independent of any actions of the defendants.

[11] Plaintiffs’ counsel confirmed that Mr. Mastrandrea is not claiming any pension loss related to Dofasco. The pension payment claimed in paragraph 1(a) of the statement of claim does not relate to the Dofasco pension but relates to pension payments allegedly owing by these defendants to Mr. Mastrandrea.

[12] The defendants then pivoted during the motion to argue that the question was still relevant as it might demonstrate that Mr. Mastrandrea was the one pushing for this relationship as he feared Dofasco would soon terminate him for cause. This theory is not pleaded and pleadings determine the relevance of discovery questions. While paragraph 22 of the statement of defence does raise the motivation behind Mr. Mastrandrea looking to leave, there is no suggestion in the defence that Mr. Mastrandrea felt he was at risk of or concerned about being terminated for cause after 31 years of service. The only concern otherwise pleaded about the relationship relates to Mr. Mastrandrea’s alleged concern that Dofasco would be upset if it found that he was communicating with the defendants.

[13] While the defendants also argued that the pension concern and pension shortfall would shed light on the characterization of the $750,000 payment referred in the agreement between these parties, that amount has been paid and there is nothing in the defence to challenge what the plaintiffs say was the genesis of the figure.

[14] The refusal is upheld.

Refusal 4 – Question 112 - Produce Mr. Mastrandrea’s pension statement updating the status of his pension annually under any pension plan (from the year before his departure from ArcelorMittal to present date)

[15] There is no claim for any loss in Mr. Mastrandrea’s Dofasco pension as a result of his departure to the defendants. As a result, and for the reasons set out in relation to refusal 3, above, this refusal is upheld.

Refusal 5 – Question 120 - Produce a copy of Mr. Mastrandrea’s pension plan text

[16] For the reasons noted above, this is not relevant based on the pleadings and the refusal is upheld.

Costs

[17] The plaintiffs are entitled to their costs of the motion. I do not accept their argument that costs should be on a substantial indemnity basis because the questions were not relevant. Considering all the factors of Rule 57.01, the amount sought by the defendants had they succeeded on the motion, and what is fair and reasonable in all the circumstances, I order the defendants to pay to the plaintiffs costs in the all inclusive amount of $6,000 on a partial indemnity basis.

Master Jolley

Date: 20 May 2021