COURT FILE NO.: 2802/17
DATE: 2021 11 04
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
THE REGIONAL MUNICIPALITY OF HALTON
Plaintiff
- and -
F. GRECO & SONS LIMITED O/A GRECO CONSTRUCTION, MICHAEL GRECO, JOHN FRANK GRECO, JOHN PAUL GRECO, SIRRON SYSTEMS INCORPORATED, SIRRON SYSTEMS INC., SIRRON GROUP INTERNATIONAL, SIRRON ELECTRICAL CONTRACTING CORPORATION, DAVID ALLAN NORRIS, MEEHAN’S INDUSTRIAL MAINTENANCE LTD., PATRICK VINCENT MEEHAN, JASON MATTHEW MOTE, GIULIO (JULIO) CERELLI, CANIAN PRECISION MACHINE SHOP LIMITED, WAHAN AGHAIAN, ELI ISHKHANIAN and LISA SNOWBALL
Defendants
Talia Gordner, for the Plaintiff
Paul Starkman, for the Defendant, Lisa Snowball
HEARD: June 30, 2021
REASONS FOR DECISION ON RULE 30.10 MOTION
Daley J.
INTRODUCTION
[1] The plaintiff municipality (“Halton”) moves pursuant to rule 30.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for the production of certain financial records in the possession of non-party financial institutions, which are in the name of or connected with the defendant Lisa Snowball (“Snowball”).
[2] This action arises from alleged fraudulent conduct on the part of the defendants and others whereby the plaintiff was defrauded of approximately $23 million as a result of the manipulation of its procurement processes.
[3] This is one of several actions involving 55 defendants, who were allegedly involved in a complex series of fraudulent transactions whereby the plaintiff sustained significant losses. The defendants include now former employees of Halton, as well as former approved suppliers and vendors.
[4] The non-party financial institutions who have been serve with this motion do not oppose the relief sought.
[5] The defendant Snowball is the only defendant opposing this motion.
[6] In its fresh as amended statement of claim, the plaintiff asserts many causes of action against the defendant Snowball including fraud, civil conspiracy, breach of employment contract, misuse of confidential information, unlawful manipulation of the plaintiff’s contracting and procurement process, conversion and breach of fiduciary duty.
Evidentiary Record
[7] The plaintiff’s motion is supported by two affidavits from it it’s forensic accountant Edward Nagel (“Nagel”), sworn November 12, 2020, and May 21, 2021, and an affidavit of Ruben Rothstein, sworn May 20, 2021.
[8] The defendant Snowball submitted evidence through her solicitor’s law clerk Tracy Pearce by an affidavit sworn April 27, 2021.
[9] The defendant Snowball is a former employee of Halton who was employed by it from March 20, 2000, to October 24, 2013, and it is alleged that she was in a personal relationship with the defendant David Alan Norris (“Norris”) from 2010 or earlier and this relationship was not disclosed to Halton.
[10] Snowball held the positions as a contract clerk and acting payroll/human resources coordinator during her employment with the plaintiff.
[11] It is alleged that Norris and his companies, collectively described as Sirron Systems, were at all material times approved vendors of the plaintiff and that Norris was the principal, director, employee and officer and owner of Sirron Systems.
[12] On January 21, 2011, it is alleged that Norris purchased certain real property municipally known as 73 Waterford Crescent, Stoney Creek, Ontario (the “Waterford Property”) with defalcated funds unlawfully obtained from the plaintiff.
[13] The defendants Norris and Snowball lived together at the Waterford Property from the date of purchase and on November 22, 2012, Norris transferred title to the Waterford Property to Snowball.
[14] Following the institution of this action, as the plaintiff was found by the court to have an interest in the Waterford Property, an order was granted allowing for the registration of a Certificate of Pending Litigation (“CPL”) against the title to that property.
[15] In June 2019 Snowball brought a motion seeking an order discharging the CPL and in the court’s reasons of June 7, 2019, it was stated that while the Waterford Property was in the process of being sold by the parties, Snowball, Halton and the proposed purchaser agreed that the CPL on the property’s title be vacated and re-registered on a new property purchased by Snowball municipally known as 494 Barton St., Unit 32, Hamilton, Ontario (the “Barton Property”).
[16] Thus, on her motion Snowball was seeking an order discharging the CPL as registered against the Barton Property. The court dismissed the motion and although several proceedings, in the nature of appeals, were instituted by Snowball, the CPL in favour of the plaintiff remains registered against the Barton Property: Halton (Regional Municipality) v. F. Greco & Sons Limited (Greco Construction), 2021 ONCA 446.
[17] Although I have considered the reasons for decision of the court with respect to Snowball’s proceedings seeking to have the CPL discharged, I have not accepted as facts any factual findings or conclusions reached by the court in denying the request to discharge the CPL. It is notable that Snowball introduced into the evidentiary record the decision of the court dismissing the motion to discharge the CPL.
[18] On June 21,2019 following a trial before a judge and jury, the jury found the defendant Norris guilty of 3 offences, namely guilty of defrauding the plaintiff of over $5,000, municipal corruption, and paying secret commissions to a municipal official. On February 28, 2020, the trial judge, Chozik J., released her reasons for decision as to sentence with respect to Norris and his co-accused David Ohashi, where Norris was given a conditional sentence of two years less a day.
[19] The plaintiff engaged the services of Edward D. Nagel and his forensic accounting firm, Nagel + Associates Inc., in 2015 to conduct an investigation with respect to the underlying circumstances of the fraud which is alleged in this action and in the related actions. The accountant and his firm were tasked with quantifying the plaintiff’s losses, as well as locating, tracing, and recovering the unlawfully taken funds. The investigation remains ongoing at this time.
[20] On this motion the plaintiff seeks production of the defendant Snowball’s bank records in the possession of the non-party financial institutions for the period of October 2000 to the date of the hearing of this motion.
[21] In his affidavit of November 12, 2020, Nagel deposes as to the following facts:
(a) Snowball was employed with the plaintiff from 2000 to 2013.
(b) Snowball is Norris’ former girlfriend.
(c) the alleged fraudulent scheme carried out by Norris and Sirron Systems spanned the period from 2001 to 2017 and involved fraudulent payments to those defendants in the sum of $12.3 million.
(d) between January 2010 and December 2016, the defendant Snowball received payments from Sirron Systems in the sum of at least $1.1 million, it being alleged by the defendant Snowball that these monies were a repayment of loans that Snowball had provided to Norris and Sirron Systems.
[22] In his affidavit sworn November 12, 2020, Nagel states that in his opinion Snowball did not have the financial means to fund loans totaling $1.1 million to Norris and Sirron Systems and he further expresses the opinion and belief that Snowball was probably concealing Norris’ and Sirron Systems’ shares of fraudulent payments received through her accounts and on that basis he states that the financial records sought are required to confirm the true purpose of the transactions and to determine whether there are additional payments from Sirron Systems to Snowball that have thus far not been identified.
[23] During the proceedings relating to the defendant Snowball’s motion seeking to have the CPL discharged, she filed affidavit evidence and was cross-examined on the same. The evidence adduced on behalf of Snowball on this motion includes some financial records produced by Snowball in those proceedings and in his supplementary affidavit of May 21, 2021, Nagel reviews and comments on several of the financial records produced by the defendant. He notes in his affidavit several corrections concerning the financial record evidence adduced and also states that the financial record disclosure is limited only to selected accounts and time periods specifically relied upon Snowball on her motion to discharge a CPL. He deposes that the records produced are insufficient for the forensic accountants to conduct and complete a comprehensive financial investigation and as such the records sought on this motion from the non-party financial institutions are necessary and relevant.
[24] In his initial affidavit of November 12, 2020, Nagel states that financial records relating to the defendant Snowball are required from the following non-party financial institutions: the Toronto-Dominion Bank, the Royal Bank of Canada, the Bank of Montréal, the Bank of Nova Scotia, the Canadian Imperial Bank of Commerce, the Empire Life Insurance Company, Meridian Credit Union, Canadian Tire Bank and Edward Jones.
[25] At para. 44 of his affidavit of November 12, 2020, Nagel sets forth details as to what he expects would be identified when the financial institutions’ records relating to the defendants, including Snowball, are produced, and compared with Halton’s own internal records. It is anticipated that the records will disclose fraudulent payments, kickbacks and transactions between the defendants that would have benefited them and other financial activities that could not otherwise reasonably be discovered.
[26] At para. 49 of his affidavit Nagel states that the financial records in question are required to determine how and the extent to which the defendants retained, transferred, or spent monies fraudulently taken from the plaintiff and in particular the records are expected to identify information such as account numbers, institutions and locations associated with the defendants’ accounts not currently known to the plaintiff or its accountants. Furthermore, it is expected that the financial records and questions would also identify information relating to the defendants’ purchase and/or sale of assets acquired with the defalcated funds. The records are required for the purpose of identifying, locating, quantifying, and tracing the fraudulent schemes proceeds and ultimately for the plaintiff to be able to obtain recovery of those funds from the defendants.
Positions of the Parties
Position of the Plaintiff:
[27] The plaintiff seeks an order requiring the third-party financial institutions to produce certain financial records relating to the defendant Snowball on the basis that those records are relevant to a material issue at stake in this action and it would be unfair for the plaintiff to proceed to trial without having discovery of those records. It is further the position of the plaintiff that production of these records is necessary in advance of examination for discovery in order to allow for meaningful discovery and to avoid multiple and lengthy attendances on re-examinations related to undertakings that may have been given regarding the production of documents.
Position of the Defendant Snowball:
[28] The defendant Snowball opposes the plaintiff’s motion on several grounds, including that the evidence adduced by the plaintiff on this motion does not meet the requirements of rule 30.10 as to both the relevance and necessity of the documents sought and with respect to the alleged unfairness to the plaintiff if the matter were to proceed to trial without discovery of these documents.
[29] Notably the defendants Norris and Sirron Systems did not oppose the order sought on this motion requiring production of their financial records from the third-party financial institutions.
[30] The defendant Snowball further submits that the plaintiff’s motion should be dismissed since an order requiring production of the third-party financial institutions’ records would violate her constitutionally protected privacy interest in those records.
[31] The defendant has further raised certain evidentiary objections as to the admissibility of the Nagel affidavits and she has also submitted that the Reasons for Sentence of Chozik J. are admissible as evidence on this motion and that the findings of fact made by the trial judge are admissible-although not binding on this court – must be considered in weighing the evidence as a whole on the motion.
LEGAL FRAMEWORK
[32] The applicable legal framework on a motion whereby a party seeks production of information or records in the hands of a third-party was outlined by me in my reasons for decision in Regional Municipality of Halton v. Ohashi, 2021 ONSC 6780, and for the completeness of these reasons for decision, paragraphs [33] to [42] inclusive from that decision are fully set out below.
[33] The plaintiff’s motion for the production of documents from the non-party financial institutions is brought pursuant to rule 30.10 (1) of the Rules of Civil Procedure which provides as follows:
30.10 (1) The court may, on motion by a party, order production for inspection of a document that is in the possession, control or power of a person not a party and is not privileged where the court is satisfied that,
(a) the document is relevant to a material issue in the action; and
(b) it would be unfair to require the moving party to proceed to trial without having discovery of the document.
[34] This rule requires that the moving party satisfy both branches of the rule.
[35] As to the examination of the first branch of the rule, which requires the moving party to demonstrate that the document is relevant to a material issue in the action, reference to the pleadings and the allegations made is necessary.
[36] Relevance exists as a relationship between an item of evidence and the proposition sought to be established. It cannot exist in the abstract: Zimmerman v. McNaull, 2021 ONSC 3436, 155 O.R. (3d) 680, at para. 59.
[37] A piece of evidence is relevant to a proposition in issue if, as a matter of common sense and human experience, the evidence makes the proposition slightly more or less probable than it would be without the evidence: R. v. Luciano, 2011 ONCA 89, 273 O.A.C. 273, at para. 204.
[38] It has been held that when production of documents is sought and they are in the hands of a non-party, the test for relevance is higher than in the discovery context: Walker v. Doxtator, 2018 ONSC 2112, at para. 12.
[39] As to materiality, an issue material to the action is one which, if determined in favour of the party, would influence the court toward finding in favour of such party in the action: Ontario (Attorney General) v. Ballard Estate et al., [1995] O.J. 1854 (Gen. Div.), at para. 11.
[40] The evidentiary burden resting on a party seeking an interim preservation order pursuant to rule 45.01 is significantly lower than the evidentiary burden resting on a party seeking production of documentation from a non-party pursuant to rule 30.10 (1). Preservation orders have been granted in this action and the related actions.
[41] Orders providing for the disclosure and production of records in the hands of non-parties pursuant to rule 30.10 are exceptional remedies in the context of civil litigation and such orders are not routinely granted and, on such motions, a robust review of the considerations under this rule is called for.
[42] The second branch of rule 30.10 (1) requires that the moving party demonstrate that it would be unfair to proceed to trial without production of the records in question. In Ontario (Attorney General) v. Ballard Estate, 1995 3509 (ON CA), 129 D.L.R (4th) 52 (“Ballard”), the Court of Appeal set out six factors to be considered by the court in determining whether the second part of the test under this rule has been satisfied. The factors are as follows:
(a) the importance of the documents in the litigation.
(b) whether production at the discovery stage of the process, as opposed to production at trial, is necessary to avoid unfairness to the moving party.
(c) whether the discovery of the defendants with respect to the issues to which the documents are relevant is adequate, and if not, whether responsibility for that inadequacy rests with the defendants.
(d) the position of the non-parties with respect to production.
(e) the availability of the documents or their informational equivalent from some other source which is accessible to the moving parties.
(f) the relationship of the non-parties from whom production is sought to the litigation and the parties to the litigation. Non-parties who have an interest in the subject matter of the litigation and whose interests are allied with the party opposing production should be more susceptible to a production order than a true “stranger” to the litigation: Ballard, at p. 56-57.
PRELIMINARY EVIDENTIARY ISSUES
(A) Defendant’s Objection to Admissibility of the Nagel Affidavit
[43] The defendant submits that the Nagel affidavits filed on behalf of the plaintiff must be struck for noncompliance with rules 4.06 (2) and 39.01 (4). It is the position of the defendant that the affidavits are not based on the deponent’s personal knowledge and fail to provide details of his findings and to produce documents relevant to the evidence offered.
[44] Nagel states in this affidavit that he and his firm were retained by the plaintiff to conduct an investigation of the alleged fraudulent schemes and that he has personal knowledge of the matters in his affidavits. Furthermore, in his affidavits, he offers an opinion regarding the fraudulent scheme based on a review of relevant and available financial and other records.
[45] It is urged on behalf of the plaintiff that the Nagel affidavits are compliant with the requirements of rule 30.10 (1) in that they explain the nature, scope and status of the forensic accounting investigation and provide evidence as to why the financial records sought are relevant and necessary.
[46] Having considered the submissions made on behalf of the defendant in opposing the admissibility of the Nagel affidavits, the complaints made really relate to the sufficiency of the evidence adduced in the affidavits and not their admissibility. Notably, the defendant elected not to cross-examine Nagel on his affidavits.
[47] It is clear from the Nagel affidavits that the accountant’s investigation of the alleged fraudulent scheme is ongoing and that there are various documents, including the financial records that are sought on this motion, that are not presently available to the accountants These records would allow them to complete their review of the alleged fraudulent schemes for the purposes of identifying all persons involved in the schemes, quantifying the funds allegedly taken or defrauded, tracing the funds and identifying those who have benefited from the fraudulent scheme.
[48] There is no requirement that a moving party on a motion under rule 30.10 prove the allegations contained in the statement of claim. The sufficiency of the evidence adduced on the motion is a matter for the court to consider and weigh in determining the outcome of the motion.
[49] For these reasons, the defendant’s request that the Nagel affidavits be struck is denied.
(B) Admissibility of Sentencing Judge’s Reasons
[50] This evidentiary issue was also considered and ruled upon in my decision in Halton v. Ohashi, at paras. [50] to [68]. The same submissions were made by both counsel for the defendant and the plaintiff in both motions. For the purpose of completeness and clarity those paragraphs are now included in these reasons, subject to the necessary modifications in terms of the proper reference to the parties in this action.
[51] It was submitted on behalf of the defendant that the findings of fact made by the court as set out in the Reasons for Sentence released by Chozik J. are admissible in evidence in response to the plaintiff’s motion. The defendant’s purpose in seeking the admissibility of the Reasons for Sentence is to, among other things, demonstrate that the findings of the sentencing court did not support the allegation, as alleged in this action, that the fraud involved many millions of dollars.
[52] It is notable that it was the defendant who adduced the evidence with respect to the charges brought against Norris and the resulting convictions.
[53] The rule in Hollington v. F. Hewthorn & Co., [1943] 1 K.B. 587, [1943] 2 All E.R. 35, provided that proof of a previous conviction was not admissible in a civil case as evidence of the underlying facts upon which the conviction was based. This evidentiary rule was displaced by the provisions of s. 22.1 of the Ontario Evidence Act, R.S.O. 1990, c. E.23, which provides as follows:
22.1 (1) Proof that a person has been convicted or discharged anywhere in Canada of a crime is proof, in the absence of evidence to the contrary, that the crime was committed by the person, if,
(a) no appeal of the conviction or discharge was taken and the time for an appeal has expired; or
(b) an appeal of the conviction or discharge was taken but was dismissed or abandoned and no further appeal is available.
[54] Section 22.1 provides that where a person has been convicted of an offence and the commission of that offence is relevant to an issue in a civil action, then, whether that person is a party to the action, proof of the conviction or the finding of guilt is admissible in evidence for the purpose of proving that person committed the offence.
[55] The conviction is admissible not only as evidence against the party convicted, but also against any other party to the proceeding, whether the person convicted is a party in the subsequent proceeding: Q. v. Minto Management Ltd. (1984), 1984 2118 (ON SC), 46 O.R. (2d) 756 (“Q v. Minto”), leave to appeal refused, (1984), 44 C.P.C. 6 at 13 (SCC).
[56] Although a conviction of an offence constitutes prima facie proof of that offence, an acquittal of an offence in a criminal proceeding is inadmissible in a subsequent civil proceeding as proof that the party did not commit the offence: Rizzo v. Hanover Insurance Co., 1993 8561 (ON CA), 14 O.R. (3d) 98 (C.A), at paras. 6–7; cited with approval in R. v. Mahalingan, 2008 SCC 63, [2008] 3 S.C.R. 316, at para. 136.
[57] At the conclusion of the criminal trial of Norris, the trial judge granted directed verdicts of acquittal on three counts and left with the jury the three remaining counts in the indictment, which this defendant was convicted of. The directed verdicts of acquittal are inadmissible on this motion as proof that the defendant Norris did not commit the offence as alleged.
[58] Furthermore, the reasons for a directed verdict of acquittal are irrelevant to a subsequent civil suit for damages based on the same alleged misconduct. A judicial finding to be made by a criminal court is whether the case has been proved beyond a reasonable doubt. That burden of proof is the touchstone of the criminal trial and is the lens through which the facts are viewed, and findings made. Any findings by the trial judge must be understood in that context: Polgrain Estate v. Toronto East General Hospital, 2008 ONCA 427, 90 O.R. (3d) 630, at para. 24.
[59] It was further submitted on behalf of the defendant Snowball that the sentencing judge’s Reasons for Sentence are admissible in evidence on this motion based on the decision of the Supreme Court of Canada in British Columbia (Attorney General) v. Malik, 2011 SCC 18, [2011] 1 S.C.R. 657 (“Malik”).
[60] In Malik, the accused made a Rowbotham application to the court in 2003 for state funding of the legal costs of his defence of certain criminal charges associated with the bombing of two aircraft. The application was dismissed on the basis that Malik failed to establish his eligibility for funding under the relevant test.
[61] Following the denial of that application, the province of British Columbia entered into an agreement with Malik and his counsel whereby he would be provided with temporary financial assistance to cover his defence costs until such time as he could liquidate assets in order to raise the necessary funds.
[62] In 2007, when Malik failed to comply with the payment terms under this temporary funding agreement with the province, the province instituted an action against him, and it also sought and obtained an ex parte Anton Piller order. The motion material submitted by the province on the ex parte motion included the court’s decision in dismissing Malik’s Rowbotham application, which was accepted in evidence by the court as prima facie proof based on the findings made by the application judge.
[63] Malik was unsuccessful in setting aside the Anton Piller order on the basis that the motions judge improperly admitted in evidence the findings from the Rowbotham decision. The matter proceeded to the Supreme Court of Canada where the court concluded that the motions judge had not erred in admitting into evidence the findings in the Rowbotham decision.
[64] It was urged by counsel for the defendant Snowball, in the present matter, that based on the court’s decision in Malik, the reasons for decision of the sentencing judge in respect of the convictions registered against Norris must be admitted in evidence on this motion. It was not submitted that the findings of the sentencing judge were conclusive and binding upon this court on this motion, but simply that the sentencing decision and the findings made by the sentencing judge should be admitted and considered as part of the evidentiary record as a whole.
[65] In Malik, Binnie J., for the court, stated the following:
[7] In my view, for the reasons that follow, a judgment in a prior civil or criminal case is admissible (if considered relevant by the chambers judge) as evidence in subsequent interlocutory proceedings as proof of its findings and conclusions, provided the parties are the same or were themselves participants in the prior proceedings on similar or related issues. It will be for that judge to assess its weight. The prejudiced party or parties will have an opportunity to lead evidence to contradict it or lessen its weight (unless precluded from doing so by the doctrines of res judicata, issue estoppel or abuse of process).
[49] In my view the chambers judge did not err in treating as admissible the Rowbotham decision on the interlocutory applications. The earlier proceeding had been initiated by Mr. Malik and involved the other respondents. The same series of family transactions, and allegations of asset manipulation, had earlier been examined by a judge of the Supreme Court of British Columbia. The underlying issue in the Rowbotham case, as it is here, is whether the Malik family was playing games with the Province (and the B.C. courts) with respect to their financial affairs. The question in that case was whether Mr. Malik was without financial resources to fund his defence. The issue in this case is whether Mr. Malik is without funds to pay his debt to the Province as a result of asset manipulation and fraudulent dealings within the Malik family as initially explored in the Rowbotham application, and according to the Houston affidavit, has continued ever since. These issues cannot be answered at an eventual trial without access to the underlying documents. The history of dealings between the Province and the Malik family justifies serious concern whether such evidence would be made available by the Malik family in the ordinary course of discovery.
[52] More significantly in this case, for the reasons already discussed, I do not regard a prior judicial decision between the same or related parties or participants on the same or related issues as merely another controversy over hearsay or opinion evidence. The court’s earlier decision was a judicial pronouncement after the contending parties had been heard. It had substantial effect on their legal rights. It would have been wasteful of litigation resources and potentially productive of mischief and inconsistent findings (as discussed in Toronto (City) v. C.U.P.E., Local 79) to have required the chambers judge to put aside Stromberg-Stein J.’s judgment and require the Province to litigate the Rowbotham facts de novo on an interlocutory motion. Of course the Hollington v. F. Hewthorn & Co. doctrine and its civil offshoots are not just about hearsay. They are also about inadmissible opinion evidence — opinion piled on hearsay. But for the reasons already discussed I would decline to give effect to the arguments made in Hollington v. F. Hewthorn & Co. They give rise to unnecessary inefficiencies and any alleged unfairness can be addressed on a case-by-case basis according to the circumstances.
[66] In my view, the decision in Malik is distinguishable from the facts and circumstances in the present case.
[67] Firstly, Halton was not a party in the criminal prosecution of Norris. It was simply the victim of his criminal conduct and as such the plaintiff had no standing before the court, at the trial of that defendant. Similarly, Halton had no standing or right to participate in, review, or appeal the judicial findings made by the trial judge in her sentencing decision. Apart from victim impact submissions, it played no other role at the trial or sentencing hearing.
[68] Secondly, even if the sentencing decision was admitted in evidence and certain findings of fact made by the sentencing judge were considered as part of the evidentiary record, that decision does not constitute a prior judicial decision between the same or related parties on the same or related issues. The present motion is brought for a narrow purpose under rule 30.10, namely, for the production of financial records in the hands of third parties and nothing more.
[69] In the result, I have concluded that the sentencing judge’s decision relating to the convictions registered against Norris is admissible in evidence for a limited purpose, namely, as evidence that he was found guilty of the three offences involving crimes of dishonesty, including fraud, involving the plaintiff as a victim. None of the factual findings made by the sentencing judge contained in her reasons for decision are otherwise admissible on this motion.
ANALYSIS
[70] The plaintiff must satisfy both branches of rule 30.10 (1), by establishing that the documents sought are “relevant to a material issue in the action” and by demonstrating that it would be “unfair to require the moving party to proceed to trial without having discovery of the document.”.
[71] The defendant Snowball has opposed the plaintiff’s motion on two principal grounds. Firstly, on the basis that the plaintiff’s failed to satisfy the two branches of rule 30.10 (1) and, secondly, on the basis that quite apart from the requirements of that rule, the defendant’s constitutionally protected privacy rights favoured dismissal of the plaintiff’s motion.
ASSESSMENT OF PLAINTIFF’S POSITION UNDER RULE 30.10 (1)
[72] The first branch of this rule requires the moving party to demonstrate that the records are relevant to a material issue in the action and as such the statement of claim must be examined with respect to the threshold question of relevancy.
[73] Relevancy is engaged where a piece of evidence is connected to a proposition in issue, if, as a matter of common sense and human experience, the evidence makes the proposition slightly more or less probable than it would be without the evidence: Luciano, at para 204.
[74] Further, relevance arises where the information sought is logically probative of a material issue in the action: Walker, at para 12.
[75] In support of the allegations made in the statement of claim in this action, the plaintiff has adduced evidence from the forensic accountant that prima facie demonstrates that there were several transactions involving the defendant Snowball and the defendant Norris spanning the period from October 2000 to the return of the plaintiff’s motion in June 2021.
[76] It is the uncontradicted evidence adduced on behalf of the plaintiff that Snowball was Norris’ former girlfriend and a former Halton employee, who held a position with the plaintiff from 2000 to 2013.
[77] Furthermore, it is common ground that the defendant Norris was convicted of three criminal offences on June 21, 2019, namely of fraud over $5,000, municipal corruption and paying secret commissions to a municipal official, all the offences involving the plaintiff as the victim of these crimes.
[78] In accordance with section 22.1 of the Evidence Act proof of those convictions is admissible in evidence for the purpose of prima facie proof that Norris committed these offences.
[79] Similarly, proof of these convictions is admissible as against the defendant Snowball: see Q v. Minto.
[80] Further, the uncontradicted evidence adduced by the plaintiff is that between January 2010 and December 2016 Snowball received payments from Sirron Systems totaling at least $1.1 million and it is the opinion evidence offered by Nagel that Snowball was likely concealing monies unlawfully obtained by Norris/Sirron Systems through a fraudulent scheme involving the plaintiff as the victim.
[81] The court’s order granting leave to register a CPL in respect of real property owned by the defendant Snowball, which was undisturbed on appeal, is also evidence of relevance and materiality connecting the defendant Snowball and the records sought from the third-party financial institutions as the evidence in support of the granting of leave to register the CPL was founded on the alleged involvement of Snowball with Norris in the transfer of funds which may have been obtained unlawfully by him through his relationship with the plaintiff, and its employees and procurement process.
[82] The granting of an order allowing for the registration of a CPL is not a determination that the plaintiff has an interest in the land in question but is only a determination that the plaintiff has a reasonable claim to an interest in that land. The genuineness of that interest remains to be determined on the merits during the trial of the underlying action. Thus, other than for the fact that the plaintiff obtained a CPL which was registered against real property owned by Snowball, the evidence adduced on behalf of this defendant relating to the CPL and her steps taken to have it discharged has not been considered by me, from an evidentiary standpoint, as a basis for the determination of the outcome of the plaintiff’s present motion.
[83] The statement of claim sets out detailed particulars as to the alleged fraudulent activities of Norris and Sirron Systems and the financial interaction between those entities and Snowball. However, full particulars of the financial or monetary harm allegedly caused to the plaintiff and the benefits allegedly received by Snowball, Norris and Sirron Systems are not detailed due to the lack of financial records.
[84] Although the defendant submits that the time span over which records are sought, namely from October 2000 to the date of the hearing of this motion in June 2021, is overly broad, the evidence is that Snowball held the position of construction services clerk with the plaintiff from 2000 to 2013 and following that as stated in the Nagel affidavit of November 12, 2020 Snowball was in receipt of at least $1.1 million during the period January 2010 to December 2016 paid to her by the businesses controlled by Norris including Sirron Systems. The evidence adduced on behalf of the plaintiff demonstrates that the time period during which records are sought, although lengthy, is a relevant time period as there is an overlap between Snowball’s term of employment with the plaintiff and the alleged fraudulent conduct involving Norris and his companies and their financial interaction with Snowball.
[85] The circumstances of this case are such that the level of relevance to a material issue at stake in the action has been significantly heightened by the fact that Norris was convicted of fraud and as such his guilt of that offence has been prima facie establish within the context of this action and this motion. Furthermore, the conviction of fraud relates directly to the plaintiff as the victim of that unlawful conduct. Also, given that the convictions registered against Norris are also admissible as against the defendant Snowball, the evidence sought in the form of the financial records in the hands of the third-party financial institutions are highly relevant and material to the action as framed by the statement of claim and further as supported by the evidence adduced by the plaintiff as to Snowball’s relation and connection with Norris and his companies.
[86] The records in question are logically probative of the allegations that the defendant Snowball defrauded the plaintiff and participated in a fraudulent scheme with the defendant Norris, as a result of which she in turn received significant financial benefits which would likely be disclosed in the records sought. The records are relevant as to identifying what monies may have been taken, who was involved in the alleged frauds and where the monies may be located. Furthermore, the banking records may also be exculpatory of any alleged misconduct on the part of the defendants. The issues of relevance and materiality are addressed in the Nagel affidavits and there is no evidence offered by the defendant Snowball to the contrary.
[87] In the affidavit filed on behalf of Snowball, in response to the plaintiff’s motion, it is asserted that certain financial records and documentary disclosure was made by her in the record filed related to her motion to discharge the CPL. In response to that evidence, the plaintiff has filed affidavit evidence outlining the nature of the documents produced by Snowball and in that evidence, Nagel states that it is his opinion that the disclosure is selective and inadequate for the purpose of a proper financial and accounting review as required. Thus, the disclosure of certain records provided in the CPL motion record does not approach even the most basic financial disclosure as required by the accountants.
Second Branch of Rule 30.10(1) - Would Non-Production Prior to Oral Discoveries Be Unfair
[88] The six factors in Ballard must be examined when considering whether the plaintiff has satisfied this second branch of the rule.
[89] Importance of the Documents in the Litigation – having regard to the allegations made in the statement of claim, the uncontradicted evidence of the plaintiff’s forensic accountant, and notably the fraud convictions against the defendant Norris and the evidence of the defendant Snowball’s financial and personal interaction with him, the financial records sought from the third-party financial institutions are important to this litigation as they will be probative of the financial activities of these defendants and as such consideration of this factor favours disclosure of the records. Further, it is the evidence of Nagel that the accountants will be unable to complete a comprehensive financial investigation of the alleged fraudulent scheme without the financial records so as to be able to assess the full nature and extent of the scheme, including determining what other parties participated in it, the identity of financial accounts and assets in the hands of the defendant Snowball, the extent of the benefits received by that defendant, and quantification of the plaintiff’s losses resulting from the alleged fraudulent scheme.
[90] Whether the Production of Documents Pre-Discovery Is Necessary – I have concluded that pre-discovery production of the records is required in this case in order to allow the plaintiff’s forensic accountant to conduct is further investigation and to provide an expert opinion on the nature and extent of the fraud alleged and on the defendant Snowball’s potential liability.
[91] Given the large and complex fraudulent schemes as alleged, the amounts allegedly taken from the plaintiff and the timeline of the alleged fraudulent scheme, I have reached the conclusion that pre-discovery production of the records in question is necessary and proper. It would be unfair to require the plaintiff to proceed to trial without production of the financial records at this pre-discovery stage, as the records may be necessary to assist in establishing liability of the defendants, not only after judgment but for tracing purposes as well: Popov v. Jones, 2011 ONSC 665, at para 8; aff’d, 2011 ONSC 3594.
[92] Furthermore, in exercising this discretion in the circumstances, I have concluded that it will be far more economical and practical for all parties involved that these records be produced prior to discovery in order to avoid multiple undertakings, possible motions, and further attendances on examinations for discovery relating to the records in question.
[93] Whether examinations for discovery of the defendant Snowball without prior production of documents is adequate – for the reasons outlined above, I have further concluded that discovery of the defendant Snowball at this stage, without production of the documents in question, would be inadequate and as such this conclusion favours production of the records at this time.
[94] Position of the responding third-party financial institutions – the third-party financial institutions do not oppose the plaintiff’s motion for production.
[95] Relationship of the third-party financial institutions to the litigation – the financial institutions, who are respondents on this motion, are not strangers to this action. It has been held that where a bank receives funds allegedly procured by fraud or where such funds may have been transferred out of that bank, the bank is “involved in the events” and as such this factor favours production of the financial records: Popov, at para 103.
[96] In conclusion, I have determined therefore that the plaintiff has satisfied both branches of rule 30.10 (1) and as such is entitled to an order pursuant to that rule requiring the third-party financial institutions to produce the records requested, relating to the defendant Snowball, as identified in the notice of motion.
Scope of The Defendant Snowball’s Privacy Rights in Financial Records
[97] It was submitted on behalf of the defendant Snowball that apart from the plaintiff’s failure to comply with the requirements of rule 30.10 (1), in any event, the defendant has a privacy interest in the financial records in question which stands above the plaintiff’s disclosure rights in this litigation.
[98] As was submitted on behalf of the Ohashi Defendants in the motion brought by the plaintiff Halton for production of financial records pursuant to rule 30.10 (1) – see Halton v. Ohashi, at paras. [94] – [105] – counsel on behalf of Snowball submits that she has a privacy interest in the financial records given that they may reveal intimate and personal information about her, her lifestyle, or her experiences and as such the plaintiff’s motion must be dismissed.
[99] For the reasons set out in my decision in Halton v. Ohashi at the paragraphs referenced immediately above, which I have incorporate in these reasons, I have concluded that the defendant Snowball has no privacy interest in the records such that the plaintiff’s request for production of them should be denied.
[100] The defendant Snowball as offered no evidence of prejudice in the event the plaintiff’s motion was granted. However, she has submitted that her privacy rights stand above the plaintiff’s disclosure rights in this litigation.
[101] The defendant relies upon the decision of the Supreme Court of Canada in Sherman Estate v. Donovan, 2021 SCC 25, 458 D.L.R. (4th) 361, and the provisions of the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5 (the “PIPEDA “).
[102] Contrary to the submissions made on behalf of the defendant Snowball, the PIPEDA does not provide protection from the production of the financial records sought. Under Part 1 – Protection of Personal Information in the Private Sector – of the legislation, section 7 (3) (c) expressly exempts the application of the legislation to private information in the form of records ordered to be produced by a court pursuant to the court’s rules.
[103] While counsel for the defendant Snowball submitted that she was entitled to constitutional privacy protection, presumably pursuant to s. 8 of the Canadian Charter of Rights and Freedoms, Constitution Act, 1982, he did not expressly say so. The protections afforded under this section deal principally with Canadian citizens’ freedom from unlawful search and seizure by a governmental authority. The protections afforded by the section generally do not relate to civil disputes between citizens or corporations, where there is no governmental action involved.
[104] Furthermore, defendant’s reliance upon the court’s decision in Sherman Estate is misplaced. The court’s decision did not alter in any way the law with respect to the open court principle, as well as the necessity for full and fair disclosure in litigation as measured against the privacy interests of individual litigants.
[105] The decision in Sherman Estate added further clarity to the open court principle and restated that the public openness in legal proceedings will only yield in circumstances where there is a serious risk to an important public privacy interest. Individual privacy interests, such as privacy interests that may arise from the disclosure of otherwise private information in a civil legal proceeding, will not override the presumption of openness in the administration of justice by the courts.
[106] Kasirer J., on behalf of the court, considered when the court may conclude that a significant public interest is engaged such that the court would place an individual litigant’s privacy rights over and above the open court principle. In Sherman Estate, at paras. 33 and 34, he noted the following:
[33] Personal information disseminated in open court can be more than a source of discomfort and may result in an affront to a person’s dignity. Insofar as privacy serves to protect individuals from this affront, it is an important public interest relevant under Sierra Club. Dignity in this sense is a related but narrower concern than privacy generally; it transcends the interests of the individual and, like other important public interests, is a matter that concerns the society at large. A court can make an exception to the open court principle, notwithstanding the strong presumption in its favour, if the interest in protecting core aspects of individuals’ personal lives that bear on their dignity is at serious risk by reason of the dissemination of sufficiently sensitive information. The question is not whether the information is “personal” to the individual concerned, but whether, because of its highly sensitive character, its dissemination would occasion an affront to their dignity that society as a whole has a stake in protecting.
[34] This public interest in privacy appropriately focuses the analysis on the impact of the dissemination of sensitive personal information, rather than the mere fact of this dissemination, which is frequently risked in court proceedings and is necessary in a system that privileges court openness. It is a high bar — higher and more precise than the sweeping privacy interest relied upon here by the Trustees. This public interest will only be seriously at risk where the information in question strikes at what is sometimes said to be the core identity of the individual concerned: information so sensitive that its dissemination could be an affront to dignity that the public would not tolerate, even in service of open proceedings.
[107] In my view, the issues at stake on the plaintiff’s motion do not give rise to or in any way engage public or privacy interests such that the defendant Snowball’s privacy rights would overtake the open court principle with the result that her financial records, in the hands of the third-party financial institutions, will would be insulated from disclosure in this litigation.
[108] It is important to note that Snowball offered no evidence in support of her submission that the disclosure of the financial records would in any way constitute a breach of privacy.
[109] The defendant referred to several decisions of this court where the production of third-party records had been sought and denied. Notably, the decisions in Stewart v. Kempster, 2012 ONSC 7236, 114 O.R. (3d) 151, and Knox v. Applebaum Holdings Limited, 2013 ONSC 7895, as cited by counsel, did not address issues of privacy but related to the two-part test in rule 30.10 (1) and specifically the question of relevancy.
[110] I have therefore concluded that there is no right to privacy being asserted by the defendant Snowball that would warrant any special protection in the circumstances of this case. The potential invasion of privacy that may arise from the production of the financial records will be completely of a personal privacy concern and will not engage any public interest that would justify nondisclosure of the records. Further, the records produced would be protected by the deemed undertaking rule: Longo v. Tricom Security Services Inc., 2020 ONSC 4160.
[111] Neither under the principles set out by the Supreme Court of Canada in Sherman Estate v. Donovan, 2021 SCC 25, 458 D.L.R. (4TH) 361 or pursuant to the provisions of the Personal Information Protection and Electronic Documents Act S.C. 2000, c. 5 does the defendant have any privacy interest that warrants constitutional protection pursuant to the Canadian Charter of Rights and Freedoms, Constitution Act, 1982. See paras [96] – [105] of Halton v. Ohashi.
Conclusion
[112] For the reasons set out, an order shall issue directing the non-parties Canadian Imperial Bank of Commerce, the Toronto-Dominion Bank, the Royal Bank Of Canada, the Bank of Montréal and the Bank of Nova Scotia and the Imperial Life Insurance Company, Meridian Credit Union and Canadian Tire Bank and Edward Jones and any of their non-party as may be reasonably necessary to give full effect to this order to immediately produce to the plaintiff the Financial Records , as defined within the notice of motion, relating to bank and other accounts in the name of or in connection with the defendant Snowball for the period October 2000 to the date of the hearing of this motion, namely June 30, 2021.
[113] As to the costs of this motion, counsel for the plaintiff shall deliver costs submissions of no longer than three pages, plus a costs outline within 20 days from the date of release of these reasons, followed by similar submissions on behalf of the defendant Snowball within 20 days thereafter. No reply submissions shall be filed.
Daley J.
Released: November 4, 2021
COURT FILE NO.: 2802/17
DATE: 2021 11 04
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
REGIONAL MUNICIPALITY OF HALTON
- and -
F. GRECO & SONS LIMITED O/A GRECO CONSTRUCTION, MICHAEL GRECO, JOHN FRANK GRECO, JOHN PAUL GRECO, SIRRON SYSTEMS INCORPORATED, SIRRON SYSTEMS INC., SIRRON GROUP INTERNATIONAL, SIRRON ELECTRICAL CONTRACTING CORPORATION, DAVID ALLAN NORRIS, MEEHAN’S INDUSTRIAL MAINTENANCE LTD., PATRICK VINCENT MEEHAN, JASON MATTHEW MOTE, GIULIO (JULIO) CERELLI, CANIAN PRECISION MACHINE SHOP LIMITED, WAHAN AGHAIAN, ELI ISHKHANIAN and LISA SNOWBALL
REASONS FOR DECISION ON RULE 30.10 MOTION
Daley J.
Released: November 4, 2021