DOMINION CAPITAL LLC v. POLI et al, 2021 ONSC 8397

COURT FILE NO.: CV-20-00652136-0000

MOTION HEARD: 20210920

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DOMINION CAPITAL LLC, plaintiff

AND:

SEAN POLI, WALID (PETER) ABBOUD, DAVID RENDIMONTI, TIMOTHY MCCUNN, HUGH NOTMAN, LAWRENCE CANNON, MICHAEL LEMIEUX, MICHAEL MUELLER, RICHARD VICKERS, WILLIAM MACKINNON, OWEN KENNEY, KENT HOGGAN, KENNETH KNOX, CALVIN STILLER, ROBERT LEAKER, STEVEN ARCHAMBAULT, PATRICK MCGRADE, PAUL G. SMITH, ROBIN CROSSMAN, REX POWERS, PHIL NERI, WILLIAM BLOCKER and DELISSE FINE CUISINE INC., Defendants

BEFORE: Associate Justice R. Frank

COUNSEL: Benoit M. Duchesne, Counsel for the defendants/moving parties, Sean Poli, David Rendimonti, Timothy McCunn, Hugh Notman, Lawrence Cannon, Michael Mueller, William MacKinnon, Kenneth Knox, Calvin Stiller, Robert Leaker, Steven Archambault, Patrick McGrade and Paul G. Smith

Elliot Birnboim and Michael Crampton, Counsel for the plaintiff/responding party

HEARD: September 20, 2021

REASONS FOR DECISION

A. INTRODUCTION

[1] There are two motions before the court. This first is a motion by the defendants Sean Poli, David Rendimonti, Timothy McCunn, Hugh Notman, Lawrence Cannon, Michael Mueller, William MacKinnon, Kenneth Knox, Calvin Stiller, Robert Leaker, Steven Archambault, Patrick McGrade, Paul G. Smith and Michel Lemieux (the “Moving Party Defendants”), seeking the following relief:

a. an Order extending the time for the Moving Party Defendants to deliver their statement of defence to 20 days after their receipt of the particulars demanded from the Plaintiff in their demand for particulars dated April 9, 2021;

b. an Order requiring the Plaintiff to provide particulars as demanded by the Moving Party Defendants in the April 9, 2021 demand for particulars;

c. an Order requiring the Plaintiff to produce the documents requested to be inspected by the Moving Party Defendants; and

d. an Order setting a timetable Order that includes a date by which the Plaintiff must peremptorily initiate any motion for the removal of the Moving Party Defendants’ lawyers of record (the “Removal Motion”).

[2] For the reasons outlined below, the motion for particulars and for inspection of documents is granted in part, along with certain ancillary relief. The portion of the motion seeking a timetable for a Removal Motion is dismissed.

[3] The second motion before the court is a motion by the Plaintiff seeking an order validating service of the statement of claim on the defendant, Owen Kenney. For the reasons outlined below, that motion is granted.

B. BACKGROUND FACTS

[4] The Plaintiff’s claim arises from a USD$15million loan from the Plaintiff to Eureka 93 Inc. (“Eureka”) and its subsidiaries, including Vitality CBD Natural Health Products Inc. (“Vitality”). The loan was to be secured by the assets of Eureka and its subsidiaries.

[5] In this action, the Plaintiff is seeking damages for negligence, oppression and misrepresentation. The Plaintiff alleges that, at the time the loan was being negotiated and following the advances under the loan, the directors and officers of Eureka and Vitality either had actual knowledge or were negligent in failing to inform themselves about matters which included:

a. dissipation of the loan proceeds to suspect parties;

b. improper loans to Vitality in suspicious circumstances; and

c. inflated valuations of Vitality’s inventory that had been included in Vitality’s financial statements, presented to the Plaintiff, and incorporated into the applicable loan documents (the “Loan Documents”).

[6] The Plaintiff alleges that the actions of the directors and officers of Eureka and Vitality, including the Moving Party Defendants, were oppressive and unfairly disregarded the Plaintiff’s interests because they allowed the borrowers to dissipate their assets and they failed to protect the Plaintiff’s security. In support of its claim, the Plaintiff pleads that on the day the first tranche of the loan came due, Eureka and three of its subsidiaries began insolvency proceedings by filing notices of intention to make a proposal (the “Insolvency Proceedings”).

[7] The Plaintiff commenced this action on November 27, 2020. The Moving Party Defendants were served with statement of claim between January 18, 2021 and April 9, 2021, other than Mr. Lemieux who was served while this motion was pending.

[8] On April 9, 2021, the Moving Party Defendants served a notice of intent to defend. At the same time, they served a demand for particulars and request to inspect documents (the “Demand for Particulars”). The Plaintiff has not delivered any answers to the Demand for Particulars and has not produced the requested documents for inspection.

C. LAW AND ANALYSIS

(1) Demand for Particulars

(a) Submissions of the parties

[9] The position of the Moving Party Defendants is that Rule 25.06(8) requires the Plaintiff to provide full particulars of all its allegations of misrepresentation or intent. Specifically, they submit that the full particulars of the allegations of misrepresentation must include details of who made the representation, to whom it was made, and how, when and where it was made. The Moving Party Defendants submit that they are not required to guess about the claims being made and that the Plaintiff is required to plead with sufficient precision and particularity for them to know the case they have to meet. They also assert that it is not determinative as to whether the Moving Party Defendants require the full particulars to plead.

[10] The Plaintiff’s position is that the Demand for Particulars is a tactical delay. The Plaintiff acknowledges that an elevated level of particularity is required for pleadings of misrepresentation but submits that its pleading well surpasses this threshold. It argues that the statement of claim contains sufficient detail of the allegations of misrepresentation and intent, including quotes from some of the documents the Moving Party Defendants have requested to inspect.

[11] The Plaintiff also argues that the Moving Party Defendants have knowledge of the particulars they seek and have not put forward any evidence that they require the requested particulars to plead. Further, the Plaintiff asserts that, in addition to the Moving Party Defendants’ personal knowledge, their legal counsel, Gowlings WLG (“Gowlings”), is well‑positioned to prepare a responsive pleading because it already has an intimate understanding of the facts giving rise to the Plaintiff’s claim and “full institutional knowledge of the documents and particulars” because it represented Eureka in the Insolvency Proceedings.

[12] Prior to the hearing of the motion, and without conceding that any of the particulars requested are appropriate or necessary to plead, the Plaintiff offered to answer a number of the requested particulars on the condition that that the Moving Party Defendants would agree to deliver their statement of defence within 15 days of receiving the particulars. The Moving Party Defendants did not accept that offer.

(b) Legal background, discussion and analysis

[13] Rule 25.06(1) requires a statement of claim to contain a concise statement of the material facts on which the party relies for its claim. This obligation has been described as follows:

…Each defendant named in a statement of claim should be able to look at the pleading and find an answer to a simple question: What do you say I did that has caused you, the plaintiff, harm, and when did I do it?

The requirement for a proper pleading remains that set out in r. 25.06(1). As applied to a tort claim, the rule requires a plaintiff to set out the materials facts specific to each defendant that support a claim against the defendant that it owed a duty of care to the plaintiff, and by reason of specified conduct, breached that duty and caused injury or harm to the plaintiff. …[^1]

[14] Pursuant to Rule 25.06(8), where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.

[15] Rule 25.10 provides that where a party demands particulars and the opposite party fails to supply them within seven days, the court may order particulars to be delivered. The requirements of this rule have been described as follows:

Rule 25.10 has generally been interpreted to require particulars of a pleading only when the particulars sought are not within the knowledge of the party seeking them and when they are necessary to enable that party to plead. In Obonsawin v. Canada, 2001 28431 (ON SC), [2001] O.J. No. 369 (S.C. J.), Epstein J. (as she then was) had occasion to comment on when particulars should be ordered. At paragraph 33 she stated as follows:

In terms of the general principles, the test for when particulars should be ordered is that set out in the decision in Physicians' Services. In that case the court applied the principles laid down in cases such as Fairbairn v. Sage, 1925 403 (ON CA), 56 O.L.R. 462, [1925] 2 D.L.R. 536 in which it was held that particulars for pleading will only be ordered when (1) they are not within the knowledge of the party demanding them, and (2) they are necessary to enable the other party to plead. While other cases such as Champagne v. Kapuskasing Plumbing & Heating Ltd. (1996), 48 C.P.C. (3d) 111 (Ont. Div. Ct.), help explain why particulars are ordered such as to define the issues, to prevent surprise at trial, to enable adequate preparation for trial, and to facilitate the hearing, I am of the view that the Physicians' Services case remains the authority as to when the court should order particulars.”

However, Rule 25.06(8) specifically requires that where a pleading alleges fraud, full particulars must be provided. This is a well established principle that has been consistently followed in many decisions of this court. See for example: Lana International Ltd. v. Menasco Aerospace Ltd., 1996 7974 (ON SC), 1996 CarswellOnt 1534 (Ont. G.D.) at paragraphs 21 and 22 and Vicor Mechanical Ltd. v. Pegah Construction Ltd., 2009 CarswellOnt 7682 (S.C.J. – Master) at paragraphs 8 and 9. In my view it is not proper for a plaintiff who is pleading fraud to make general allegations of such conduct and thereafter argue, as the plaintiff has done here, that particulars are not needed because the defendants know all about it or that full particulars will be provided on some yet to be determined date prior to trial. See Region Plaza Inc. v. Hamilton-Wentworth (Regional Municipality), 1990 6761 (ON SC), 1990 CarswellOnt 701 (Ont. S.C.) at paragraph 20.

I would also repeat what I said in D’Aguanno v. VIPR Industries Inc., 2010 ONSC 3369, 2010 CarswellOnt 3937 (S.C.J. – Master) at paragraph 7:

Ordinarily, I would agree with the plaintiffs’ argument that particulars will only be ordered where the party seeking the particulars swears an affidavit that states that he or she is unable to plead without them and they are not otherwise within his or her knowledge. However, I do not view that requirement as mandatory when the allegations in question are in the nature of fraud, misrepresentation or breach of trust. Rule 25.06(8) specifically requires full particulars of such allegations. See Lana International Ltd. v. Menasco Aerospace Ltd., 1996 7974 (ON G.D.). In my view the allegations in issue on this motion fall into those categories and the absence of such evidence from the moving defendants is not fatal to their motions.[^2]

[16] The Plaintiff argues that an order requiring delivery of particulars is discretionary and that even where there are allegations akin to fraud or misrepresentation the court should consider the factual matrix in deciding whether to exercise its discretion to order delivery of particulars. In support of its position, the Plaintiff relies on Reichmann v. Koplowitz in which Master Muir held as follows:

…it is important to remember that an order for particulars is a discretionary one. The court must make the order that is just in the circumstances of each case. See Fairbairn v. Sage (1925), 1925 403 (ON CA), 56 O.L.R. 462 (C.A.) at page 471. The plaintiff and Mark are partners (as well as being siblings). It appears that Mark has been the property manager for the Partnership since at least 2000. He prepared the annual statements. The factual background set out in the statement of claim would seem to indicate that the information necessary to plead would be within the knowledge of the defendants. Moreover, there is no evidence from Mark that such particulars are not within his knowledge and that he is unable to plead to the statement of claim without them.[^3]

[17] I accept the Plaintiff’s submission that the statement of claim in this case contains more than bald allegations of wrongdoing and provides some detail of the alleged misrepresentations. However, I do not accept the Plaintiff’s argument that all of the particulars of the alleged misrepresentations and intent are sufficiently clear from: (a) a combination of the personal knowledge of the Moving Party Defendants; (b) the documents, memos and affidavits in their possession;[^4] and (c) the institutional knowledge that their legal counsel (Gowlings) has as a result of having represented Eureka (which is not a defendant in this action) in the Insolvency Proceedings.

[18] The circumstances of this case are not as straightforward as those in Reichman where Master Muir was “satisfied that the statement of claim, when read together with the particulars provided, does in fact meet the minimum level of required fact disclosure, even accepting that some of the allegations are in the nature of fraud or misrepresentation.”[^5] Here, the requested particulars have not been provided. Further, although none of the Moving Party Defendants swore an affidavit confirming that they are unable to plead absent these particulars, the case law is clear that this is not a mandatory requirement when the allegations in question are in the nature of misrepresentation. In my view, given the complexity of the allegations, the Moving Party Defendants should not be required to “connect the dots” to determine the nature and content of the alleged representations. Rather, the Plaintiff should be required to provide certain of the requested particulars, including identification of the specific misrepresentations and material facts with respect to intent that it says are particularized in the documents referenced in the pleading, as well as those in any memos and affidavits that it relies on from different proceedings or from corporate records of non-parties such as Eureka or its related companies.

[19] As currently drafted, the statement of claim does not satisfy the elevated level of particularity required under Rule 25.06(8) for pleadings of misrepresentation and intent. As a result, I am exercising my discretion to order some of the requested particulars in order to clarify or confirm which representations are alleged to have been made orally, which are alleged to come from documents, and where the impugned representations are found in the documents. If any representations are alleged to have been made orally, then the Plaintiff needs to provide the particulars of the “from whom”, “to whom” and “how, when and where” of the alleged representations.[^6]

[20] Finally, the Plaintiff asserts that the Moving Party Defendants should have brought a motion to strike rather than a motion for particulars. In this regard, it relies on the following statement of Justice Perell in Pennyfeather v. Timminco Limited:

Before particulars are ordered, the pleadings themselves should satisfy the requirements of the rules…. When a pleading fails to meet the requirements of the rules, the appropriate remedy is not particulars but the striking out of the pleading, usually with leave to amend…[^7]

[21] In my view, the current circumstances are distinguishable from those in Pennyfeather and the above principle is not applicable in this case. This is not a situation where the proper relief is a motion to strike the pleading because it fails to disclose a cause of action. Rather, the proper remedy is the delivery of particulars.[^8]

[22] My specific rulings on the requested particulars are set out below in the section titled “(3) Rulings on the Demand for Particulars”.

(2) Requests to inspect documents

(a) Submissions of the parties

[23] The Moving Party Defendants’ position is that their request to inspect documents was timely and that the Plaintiff is required to produce the requested documents pursuant to Rule 30.04(2). They submit that the documents they seek are critical because some of the allegations of misrepresentation appear to relate to documents alleged to have been provided to the Plaintiff at various points in time. They say that the documents sought to be inspected are specific and should be produced.

[24] The Moving Party Defendants take issue with the Plaintiff’s position that the documents need not be produced for inspection because they are in the possession of the Moving Party Defendants, or available to them. First, the Moving Party Defendants make a distinction between documents they may have and those that were in the possession of Eureka or its related companies, or their counsel, in connection with the Insolvency Proceedings or otherwise. Further, they say that given the nature of the allegations, it is important for them to have confirmation of the specific documents being relied on to determine their precise content (e.g. to determine if each of the documents is complete, whether they included any attachments, etc.).

[25] The Plaintiff asserts that the requested documents are in the possession of the Moving Party Defendants and that documents in the possession of any of the Moving Party Defendants can be shared amongst them. The Plaintiff asserts that the documents were previously “exchanged” during the Insolvency Proceedings and that some were attached to affidavits sworn by at least one of the Moving Party Defendants and filed in connection with the Insolvency Proceedings. The Plaintiff also takes the position that the documents are already in the possession of Gowlings given its involvement in the Insolvency Proceedings.

[26] Despite its objections, the Plaintiff offered to produce the documents in question on the condition that the Moving Party Defendants would agree to provide a statement of defence within 15 days of their receipt.

(b) Legal background, discussion and analysis

[27] Rule 30.04(2) provides as follows:

(2) A request to inspect documents may also be used to obtain the inspection of any document in another party’s possession, control or power that is referred to in the originating process, pleadings or an affidavit served by the other party.

[28] Pursuant to Rule 30.04(5), the court may at any time order production for inspection of documents that are not privileged and that are in the possession, control or power of a party.

[29] In Timminco Ltd. v. Asensio, Brown J. (as then was) reviewed the history of Rule 30.04(2), which he described as follows:

The rule traces its origins back to the nineteenth century English rules of court, and it appeared as Rule 350 in our pre-1985 Rules of Practice. In Quilter v. Heatly (1883), 23 Ch. D. 42 the English Court of Appeal held that the rule was "intended to give the opposite party the same advantage as if the documents referred to had been fully set out in the pleadings": quoted with approval in Durall Construction Ltd. v. H.J. O'Connell Ltd., 1973 696 (ON SC), [1973] 3 O.R. 59 (Master); see also Kenning v. Odaguchi, [1992] O.J. No. 1416 (Master). Requests to inspect operate, in addition, to enable parties to review documents referred to in another's pleading to assist in preparing a responding pleading and to aid the requesting party in determining if the other's pleading discloses a reasonable cause of action or defence: Montreal Trust Co. of Canada v. Toronto-Dominion Bank (1992), 40 C.P.C. (3d) 389 (Ont. Ct. Gen. Div.).

Nevertheless, it is not a pre-condition to an order for inspection that the documents be required for pleading: 1483881 Ontario Inc. v. KPMG, LLP, [2003] O.J. No. 2993, 2003 CarswellOnt 2866 (Master), para. 7. In fact, the service of a request to inspect does not automatically extend the time for filing a defence. Where a request has been made and refused, courts have taken into account the necessity to inspect the documents before pleading over in considering whether to extend the time for filing a responding pleading: 1483881 Ontario Inc., supra., para. 10.[^9]

[30] Unlike Rule 30.04(1) which is part of the discovery process that takes place after the pleadings are completed, “Rule 30.04(2)… has for its purpose the inspection of documents prior to pleading. In other words where a party refers to a specific document in pleading, that document is thereby incorporated into the pleadings. Where that occurs the opposite party is entitled to inspect the described document prior to pleading in response.”[^10] Under Rule 30.04(2), reference to a document in an originating process gives rise to a right of inspection without any requirement to demonstrate that the requested documents are necessary for the purpose of pleading.[^11]

[31] Despite the broad language in Rule 30.04(2), there are certain limitations on the right to inspect documents, which have been described as follows:

A rule 30.04(2) request will be denied where the originating process, pleading, or affidavit does not refer to a specific document; general references to non-specific documents do not give rise to a right to inspect under the rule.”

Courts may refuse to enforce a request to inspect made pursuant to rules 30.04 (1) or 30.04 (2) by refusing to order the production of the document pursuant to rule 30.05 (5) based on immateriality, irrelevance, prejudicial effect overcoming probative value, disproportionality, untimeliness (i.e., premature documentary discovery), and privilege. Courts may refuse to enforce a request to inspect documents when the document requested is a public document or is a document already available to the party seeking production.[^12]

[32] Based on the above principles, the court has discretion to deny a request to inspect made pursuant to Rule 30.04(2). The court may also postpone inspection until a later stage in the litigation.[^13]

[33] In the circumstances of this case, I do not accept the Plaintiff’s submission that I should exercise my discretion to deny the request for inspection because the documents are already in the possession and control of the Moving Party Defendants, or for any other reason.

[34] First, the Plaintiff improperly blurs the distinction between (1) documents that are in the possession of the individual Moving Party Defendants and (2) documents that are in the possession of corporate entities that are not parties to this action, or documents that may be found in the legal brief of the lawyers who represented those companies in distinct proceedings. In any event, even if the documents may be in the possession of the Moving Party Defendants, or any of them, I am of the view that the Plaintiff should nevertheless be required to produce the documents for inspection given the nature of the allegations of misrepresentation in this action. The documents are specifically referenced in the statement of claim and are critical to the issues in the action. Production for inspection is appropriate so that there is no uncertainty about the identity of any of the referenced documents or their content, including, for example, the version being referenced, whether they include any attachments, etc. Further, production of the documents is also relevant in light of the particulars I am ordering to be delivered with respect to allegations of misrepresentation contained in specific documents. The production of the documents will help ensure that the pleadings have clearer and more accurate references to the specific documents and relevant portions thereof that are relied on by the Plaintiff with respect to the allegations of misrepresentation.

[35] My specific rulings on the Moving Party Defendants’ requests to inspect documents are set out in the following section titled “(3) Rulings on the Demand for Particulars”.

(3) Rulings on the Demand for Particulars

[36] The following are my rulings on each of the specific demands for particulars and requests to inspect. They follow the numbering found in the “Aide Memoire” that was prepared and submitted by the Plaintiff. A copy of the Aide Memoire is attached as Appendix “A” to these Reasons.

[37] Aide Memoire (AM) #1

I accept the submission of the Plaintiff that the “pitch” is not one of the alleged misrepresentations and that, as such, the test under Rule 25.06(8) does not apply. This pleading is sufficiently clear and the Moving Party Defendants have failed to provide any affidavit evidence that further particulars are required for them to plead.

Disposition: No further particulars are required.

[38] AM #2

Disposition: For the reasons outlined in the section above titled “(1) Demand for Particulars”, the Plaintiff shall identify the “documents” referenced in paragraph 10 of the statement of claim and where the representations are found in those documents. With respect to the request to inspect, the referenced documents shall be produced for inspection along with any attachments and referenced documents.

[39] AM#3

Disposition: The Plaintiff shall identify where the alleged representations are found in the applicable documents. With respect to the request to inspect, the referenced documents shall be produced for inspection.

[40] AM#4

Disposition: Regarding the particulars, the Plaintiff shall identify where the alleged representations are found in the applicable documents. With respect to the request to inspect, the Loan Documents shall be produced for inspection.

[41] AM#5

Disposition: If the representation referred to is in a document or documents, the Plaintiff shall identify such document(s) and where the representation is found in the document. If the representation is not in a document, the Plaintiff shall provide particulars as to who made the representation, when it was made, how the alleged representation was made, to whom it was made, and where it was made.

[42] AM#6

Reading the statement of claim as a whole, it is sufficiently clear that the pleading in this paragraph is “detailed below” in the statement of claim.

Disposition: Subject to the orders outlined below that are applicable with respect to any of paragraphs 21-26 and 30-34 of the statement of claim, no further particulars are required.

[43] AM#7

Disposition: Same as for AM#6.

[44] AM #8

For AM#8(a)-(d): I do not accept the Moving Party Defendants’ assertion that they need to know which alleged representations apply to which directors. “Misrepresenting Directors and Officers” is defined in paragraph 4 of the statement of claim.

However, it is not sufficient for the Plaintiff to make broad references to contracts containing representations or memos in the motion record(s) that the Plaintiff asserts provide particulars. The Moving Party Defendants are not required to guess as to which aspects of those documents contain the alleged misrepresentations or the particulars of them. That is something the Plaintiff must identify more clearly.

Disposition: No particulars are ordered to be provided except as follows. The Plaintiff shall identify which parts of any contracts or other documents relied on by the Plaintiff include the alleged contractual misrepresentations. The particulars of any alleged representations contained in any memos in the motion record(s) shall also be identified directly.

For AM#8(e):

Disposition: Regarding the request to inspect, the Plaintiff shall produce for inspection all of the documents containing the alleged misrepresentations (contractual or otherwise).

[45] AM #9

For AM#9(a): The Moving Party Defendants argue that they require the particulars of the information that would have raised their suspicions (as alleged by the Plaintiff in paragraph 22 of the statement of claim). The Plaintiff asserts that the requested particulars are express in paragraph 22 and 22(a). In oral argument, the Plaintiff also asserted that this is further detailed in a memorandum included in the motion materials. As above, to the extent further particulars are identified in a memorandum contained in the motion materials, those details should be provided directly in a response to the Demand for Particulars.

Disposition: The Plaintiff shall identify the particulars of any alleged representations contained in any memos in the motion record(s) that it relies on.

For AM#9(b):

Disposition: The Moving Party Defendants concede that this is a discovery question.

[46] AM#10

Disposition: No further particulars are ordered.

[47] AM#11

For AM#11(a): This pleading is sufficiently clear.

Disposition: No further particulars are required.

For AM#11(b):

Disposition: A copy of the Vitality Canada draft Consolidated Financial Statements referred to in this paragraph shall be produced for inspection.

[48] AM#12

For AM#12(a) and (b): This pleading is sufficiently clear.

Disposition: No further particulars are required.

[49] AM#13, 14 and 15

Disposition: The Moving Party Defendants confirmed at the hearing of the motion that these demands for particulars are withdrawn and to be dealt with at the examinations for discovery.

[50] AM #16

For AM#16i: The Moving Party Defendants seek particulars of the “information” referred to as the “information in their power” in paragraph 33(b) of the statement of claim. I do not accept the Plaintiff’s submission that the Moving Party Defendants clearly know the information they had, and that this is clear from the pleading and from the memo produced at Exhibit “G” to the Gross affidavit in the responding motion record. The memo is not part of the pleading.

Disposition: The Plaintiff shall provide particulars of the “information” referred to in paragraph 33(b) of the statement of claim.

For AM#16ii:

Disposition: This request to inspect is dismissed. The document is a public document and therefore one of the exceptions to the type pf documents a party is ordinarily required to produce for inspection.

[51] AM#17

Disposition: The Moving Party Defendants confirmed at the hearing of the motion that this Demand for Particulars is withdrawn and to be dealt with at the examinations for discovery.

[52] AM#18

The Moving Party Defendants seek particulars as to who made the representation, “that payment of Surety’s unsecured debt was to be made ‘from 25% of Vitality production sales and/or customer deposits’”. The Plaintiff has confirmed that this pleadings is a partial repetition of the quote in the pleading at paragraph 30 of the statement of claim which comes from Schedule 3.1(bb) attached to the March Securities Purchase Agreement and which is part of the Loan Documentation, as defined in the statement of claim.

Disposition: To the extent the referenced document is not already part of the documentation that has been ordered to be produced, it shall be produced for inspection.

[53] AM#19

For AM#19(a) and (b):

Disposition: The term “Misrepresenting Directors and Officers” is already defined and no further particulars are required to identify the directors alleged to have made the representations referred to in this paragraph. With respect to paragraph 43(a) of the statement of claim, the Plaintiff shall provide particulars of the alleged representations. If the representations are found in the Loan Documents or any other documents, the Plaintiff shall identify the documents and where the representations are found in the documents. To the extent the documents are not already part of the documentation that has been ordered to be produced, they shall be produced for inspection. If the representations are alleged to have been made orally, then the Plaintiff shall provide the particulars of the alleged representations, who made the representations, to whom they were made, as well as how, when and where they were made.

[54] AM#20

Disposition: Same as AM#19.

[55] AM #21

For AM#21(a):

Disposition: Same as AM#19

For AM#21(b) and (c): As the Directors and Officers are all listed in paragraph 3 of the statement of claim, no further particulars are required to identify the directors and officers alleged to have been involved in the conduct alleged in paragraph 43(c). The impugned allegations are not allegations of misrepresentation. They are allegations of dissipation and misuse of security. As such, the test under Rule 25.06(8) does not apply in the circumstances. The Moving Party Defendants failed to provide any affidavit evidence that further particulars are required for them to plead.

Disposition: No further particulars are required.

[56] AM #22

For AM#22(a):

Disposition: As the Directors and Officers are all listed in paragraph 3 of the statement of claim, no further particulars are required to identify the directors and officers alleged to have been involved in the conduct alleged in paragraph 43(d). The Plaintiff takes the position that the deliberate acts, negligence, and lack of supervision are particularized throughout the claim. If the Plaintiff relies on allegations found elsewhere in the statement of claim, it shall provide the specific cross-references to such allegations. To the extent any deliberate acts, negligence, or lack of supervision are not included in the allegations found elsewhere in the statement of claim, the Plaintiff shall provide the particulars of the alleged conduct, whose conduct/failures it was, and how, when and where the conduct/failures occurred.

For AM#22(b):

Disposition: To the extent not already contained in the statement of claim, the Plaintiff shall provide particulars of the sections of all statutes it relies on in support of its claim.

[57] AM#23

The impugned allegations are not allegations of misrepresentation. They are allegations of dissipation and enrichment. As such, the test under Rule 25.06(8) does not apply in the circumstances. The Moving Party Defendants failed to provide any affidavit evidence that further particulars are required for them to plead.

Disposition: No further particulars are required.

[58] AM#24 (a)

For AM#24(a):

Disposition: The Plaintiff shall confirm through its answers to this demand for particulars whether the capitalized term “Misrepresentations” encompasses misrepresentations alleged elsewhere in the statement of claim. If so, the relevant paragraphs shall be identified. If this pleading of misrepresentation alleges additional misrepresentations, then the Plaintiff shall provide the particulars of the alleged representations, who made the representations, to whom they were made, as well as how, when and where they were made. If the representations are found in any documents, the Plaintiff shall identify the documents and where the representations are found in the documents. To the extent the documents are not already part of the documentation that has been ordered to be produced, they shall be produced for inspection.

For AM#24(b):

Disposition: The Moving Party Defendants confirmed at the hearing of the motion that this demand for particulars is withdrawn and to be dealt with at the examinations for discovery.

[59] AM#25

This pleading is sufficiently clear as to the alternative claims being made.

Disposition: No further particulars are required in that regard.

[60] AM#26, 27, 28 and 29

The Moving Party Defendants advised that these demands for particulars should be dealt with together.

Disposition: With respect to any references to the capitalized term “Misrepresentations”, the Plaintiff shall confirm through its answers to these demands for particulars whether the capitalized term “Misrepresentations” encompasses misrepresentations alleged elsewhere in the statement of claim. If so, the relevant paragraphs shall be identified. If any of these pleadings of misrepresentation allege additional misrepresentations, then the Plaintiff shall provide the particulars of the alleged representations, who made the representations, to whom they were made, as well as how, when and where they were made. If the representations are found in any documents, the Plaintiff shall identify the documents and where the representations are found in the documents. To the extent the documents are not already part of the documentation that has been ordered to be produced, they shall be produced for inspection.

This pleading is sufficiently clear as to the alternative claims being made. No further particulars are required in that regard.

For AM#26(a):

Disposition: No further particulars are required with respect to the pleading of “special relationship”.

For AM#29(a):

Disposition: No further particulars are required with respect to the pleadings of reliance.

[61] AM #30 and 31

Disposition: The Moving Party Defendants confirmed at the hearing of the motion that these demands for particulars are withdrawn and to be dealt with at the examinations for discovery.

(4) Request for timetable for Removal Motion

[62] One of the Gowlings partners acted as lawyer of record for Eureka in the Insolvency Proceedings. The Plaintiff has advised the Moving Party Defendants that it may call the Gowlings partner as a witness at the trial of this matter to give evidence about certain contentious issues. The Plaintiff has advised the Moving Party Defendants that, should that occur, it will be taking the position that there would be grounds for the removal of Gowlings as the Moving Party Defendants’ lawyer of record. The Plaintiff has advised that the appropriate time to address this issue would be “at or just prior to the pre-trial”.

[63] The Moving Party Defendants submit that delaying the Plaintiff’s motion to remove Gowlings would be unduly prejudicial to them and that the court should order the Plaintiff to bring their motion for disqualification within a finite time period in order to ensure the integrity of the adversarial nature of this litigation. They argue that a timetable or deadline for such a motion should be set so that a determination as to whether counsel is disqualified from acting due to a conflict of interest can be dealt with at an early stage in this action.

[64] The Plaintiff’s position is that it is not seeking Gowlings’s removal at this time and it has simply put the Plaintiff on notice of the possibility of such a motion in the future in order to provide the Moving Party Defendants with “fair warning” and avoid being accused of bringing such a motion for tactical purposes, should the motion eventually be required.

[65] The Plaintiff submits that the requested timetable is improper and unnecessary because the Removal Motion would be premature. It asserts that, given the importance of allowing parties to choose their counsel, one of the considerations in determining such a motion will be the stage the proceeding has reached when removal is sought. In this regard, the Plaintiff submits that the appropriate time to consider the potential conflict for Gowlings is only once the issue has ripened and the matter is ready for trial.

[66] In my view, there is no basis to require the Plaintiff to bring the Removal Motion at this time. However, in declining to set a timetable for such a motion at this time, I am in no way pronouncing on whether such a motion is appropriate or when it would be appropriate for the Plaintiff to bring it, or whether the timing of such a motion should have a bearing on its outcome. Those are questions to be determined by the Judge who hears and determines the motion, should it ever be brought.

(5) Validation of service on the Defendant Owen Kenney

[67] The Plaintiff filed a supplementary motion record containing evidence that Philip Gross, a consultant acting on behalf of the Plaintiff, has spoken with the defendant Owen Kenney (“Mr. Kenney”) about this action. Specifically, Mr. Gross confirmed that he arranged for a call with Mr. Kenney on September 12, 2021 and that, during the call, he and Mr. Kenney discussed the Plaintiff’s claim. Mr. Gross’s evidence is that Mr. Kenney specifically advised that he had: received a letter from the Plaintiff’s lawyers of record delivering the motion record for a motion to validate service, and that he had previously spoken to the Defendants, Seann Poli and Timothy McCunn, about the Plaintiff’s claim and the possibility of joint representation.

[68] The Plaintiff’s position is that it is plain and obvious that Mr. Kenney has actual knowledge of the Plaintiff’s claim in this action. The Moving Party Defendants take no position on this motion.

[69] Based on the above evidence, I find that Mr. Kenney is aware of the claim and has received a copy of the statement of claim (which was included in the motion record for the motion to validate service). I therefore find that it is appropriate in the circumstances to validate service of the statement of claim on Mr. Kenney.

(6) Time for service of answers to the Demand for Particulars and the statement of defence

[70] The motion records and factums contain a significant amount of correspondence and argument with respect to service of the statement of claim on the various Moving Party Defendants, an indulgence with respect to delivery of the Moving Party Defendants’ statement of defence, and the timing and circumstances of service of the Demand for Particulars.

[71] The Moving Party Defendants’ position is that they should be granted 20 days following the Plaintiff’s delivery of the answers to the particulars time to deliver their statement of defence. The Plaintiff seeks a more abbreviated timeline for delivery of the statement of defence.

[72] In view of the particulars that I am ordering to be delivered and the order that the Plaintiff produce various documents for inspection, and taking into account the upcoming court holidays, it is appropriate: (1) for the Plaintiff to have until January 24, 2022 to deliver the particulars and produce the documents for inspection that have been ordered with respect to the Demand for Particulars; and (2) for the Moving Party Defendants to have 20 days thereafter to deliver their statement of defence.

D. CONCLUSION

[73] The Moving Party Defendants’ motion is granted in part. I order as follows:

a. The particulars ordered to be answered, as outlined above, shall be delivered by no later than January 24, 2022.

b. The documents ordered to produced for inspection shall be made available for inspection by no later than January 24, 2022.

c. The statement of defence of the Moving Party Defendants shall be delivered by no later than 20 days after all of the particulars are answered and all documents ordered to be produced for inspection have been made available for inspection.

d. The portion of the motion seeking an order setting a timetable that includes a date by which the Plaintiff must peremptorily initiate any motion for the removal of the Moving Party Defendants’ lawyers of record is dismissed.

[74] If the parties cannot agree on costs of the Moving Party Defendants’ motion, they may make written submissions, limited to three pages, exclusive of attachments, as follows:

a. from the Moving Party Defendants by January 17, 2022; and

b. from the Plaintiff within 14 days of receipt of the Moving Party Defendants’ submissions.

[75] With respect to the Plaintiff’s motion to validate service, I order as follows:

a. service of the statement of claim on Owen Kenney is validated and effective as of December 20, 2021.

b. a copy of the statement of claim and order validating service shall be emailed to Mr. Kenney at okenney@mail.com, and a copy shall also be sent to Mr. Kenney’s attention by email to Mr. Mark Parker at mark@parkerheitzcosgrove.com.

c. There shall be no costs of this motion.

R. Frank Associate J.

Date: December 20, 2021

APPENDIX "A"

Court File No. CV-20-00652136-0000

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

DOMINION CAPITAL LLC

Plaintiff

and

SEANN POLI, WALID (PETER) ABBOUD, DAVID RENDIMONTI, TIMOTHY MCCUNN, HUGH NOTMAN, LAWRENCE CANNON, MICHAEL LEMIEUX, MICHAEL MUELLER, RICHARD VICKERS, WILLIAM MACKINNON, OWEN KENNY, KENT HOGGAN, KENNETH KNOX, CALVIN STILLER, ROBERT LEAKER, STEVEN ARCHAMBAULT, PATRICK MCGRADE, PAUL G. SMITH, ROBIN CROSSMAN, REX POWERS, PHIL NERI, WILLIAM BLOCKER and DELISSE FINE CUISINE INC.

Defendants

AIDE MEMOIRE OF THE PLAINTIFF

(Motion for Particulars; returnable May 19, 2021)

Demand (#)

Claim (para)

Offered to Answer?

Position

1. With respect to paragraph 8 of the Statement of Claim:

1(a): To provide full particulars of the content of the “pitch” referenced at that paragraph;

8. In an initial call, Eureka’s “pitch” was that it had signed a Letter of Intent to merge with Vitality Canada in a reverse takeover transaction (the “RTO”). Purportedly, Vitality Canada, together with its subsidiaries, had significant and valuable unsecured assets. These assets included an apparently completed CBD production facility

Yes

The answer to the demand is included in the Claim itself:

8. In an initial call, Eureka’s “pitch” was that it had signed a Letter of Intent to merge with Vitality Canada in a reverse takeover transaction (the “RTO”). Purportedly, Vitality Canada, together with its subsidiaries, had significant and

00479825-1

Demand (#)

Claim (para)

Offered to Answer?

Position

1(b): To provide particulars as to what “significant and valuable unsecured assets” were purportedly represented to the Plaintiff.

located at 254 Truss Road, Eureka, Montana, USA (the “Montana Facility”), owned by Vitality Canada’s subsidiary, Vitality LLC, which also purported to own a USD$400million inventory of hemp biomass (the “Hemp Biomass”) ready for CBD extraction.

valuable unsecured assets. These assets included an apparently completed CBD production facility located at 254 Truss Road, Eureka, Montana, USA (the “Montana Facility”), owned by Vitality Canada’s subsidiary, Vitality LLC, which also purported to own a USD$400million inventory of hemp biomass (the “Hemp Biomass”) ready for CBD extraction.

2. With respect to paragraph 10 of the Statement of Claim:

2(a): To provide the particulars in relation to the “documents” referenced in the first sentence of that paragraph. Further, to make those documents available for inspection.

2(b): To make available for inspection the “documents” and “financial statements” referenced in this paragraph.

10. After a review of documents provided by Eureka and Vitality Canada, including their financial statements, representatives of the Plaintiff were invited to physically inspect the Montana Facility with Robert Leaker (“Leaker”), then an Officer of Vitality Canada. As detailed below, Leaker showcased several tons of Hemp Biomass located at the Montana Facility and valued as an asset worth USD$44million in Vitality Canada’s consolidated financial statements.

Yes – 2(b)

“Documents” are necessarily in the Defendants’ possession.

The “financial statements” are attached to the affidavit sworn by Mr. Poli.

The pleading makes the identity of these documents (in the Defendants’ possession) explicitly clear:

10. After a review of documents provided by Eureka and Vitality Canada, including their financial statements, representatives of the Plaintiff were invited to physically inspect the Montana Facility with Robert Leaker (“Leaker”), then an Officer of Vitality Canada. As detailed below, Leaker showcased several tons of Hemp Biomass located at the Montana Facility and valued as an asset worth USD$44million in Vitality Canada’s consolidated financial statements.

11. Leaker made no mention made of:

(a) Any legal impairment regarding the Hemp Biomass;

(b) Any storage issues; or,

(b) Any inability on the part of Vitality Canada or its

Demand (#)

Claim (para)

Offered to Answer?

Position

subsidiaries to extract CBD.

3. With respect to paragraph 12 of the Statement of Claim:

4. Based upon these representations, on its own behalf and as collateral agent for other investors (collectively, with Dominion, the “Noteholders”), the Plaintiff advanced USD$15million (the “Loan”) in two tranches of secured debt financing to Eureka (as noted, then known as LiveWell Canada Inc.) evidenced by two series of convertible debenture notes (the “Notes”):

(a) On or about February 14, 2019, USD$3million was advanced pursuant to a Securities Purchase Agreement dated February 14, 2019 (the “February Purchase Agreement”). Eureka and its subsidiaries’ obligations under the February Agreement were secured by a Security Agreement dated February 14, 2019 (the “February Security Agreement”).

(b) On or about March 22, 2019, USD$12million was advanced pursuant to a Securities Purchase Agreement dated March 20, 2019 (the “March Purchase Agreement”). Of the USD$12million, USD$6million was held in escrow subject to certain conditions for release. Eureka and its subsidiaries’ obligations under the March Purchase Agreement were secured by a Security Agreement dated March 20, 2019 (the “March Security Agreement”). Eureka never satisfied the conditions for release of the final USD$3.6million and those funds were ultimately returned to the Plaintiff.

Yes – 3(a)

Paragraph 12 clearly refers to the preceding allegations particularized in paragraphs 10 and 11.

The documents requested Demands 3(b)-3(d) are in Gowlings possession from the insolvency proceedings. The document requested in Demand 3(d) is attached to Mr.

Poli’s affidavit (Responding Record, p 73).

12. Based upon these representations [i.e. the allegations in paragraphs 10-11, above], on its own behalf and as collateral agent for other investors (collectively, with Dominion, the “Noteholders”), the Plaintiff advanced USD$15million (the “Loan”) in two tranches of secured debt financing to Eureka (as noted, then known as LiveWell Canada Inc.) evidenced by two series of convertible debenture notes (the “Notes”):

(a) On or about February 14, 2019, USD$3million was advanced pursuant to a Securities Purchase Agreement dated February 14, 2019 (the “February Purchase Agreement”). Eureka and its subsidiaries’ obligations under the February Agreement were secured by a Security Agreement dated February 14, 2019 (the “February Security Agreement”).

(b) On or about March 22, 2019, USD$12million was advanced pursuant to a Securities Purchase Agreement dated March 20, 2019 (the “March Purchase Agreement”). Of the USD$12million, USD$6million was held in escrow subject to certain conditions for release. Eureka and its subsidiaries’ obligations under the March Purchase Agreement were secured by a Security Agreement dated March 20, 2019 (the “March

3(a): To provide full particulars of the “representations” referenced in the first sentence of that paragraph. More particularly, to provide the specific words used in the alleged representations, who made such representations, to whom such representations were made, when those representations were made, how they were made, how they were false, the inducement included in the alleged representation, and how the Plaintiff changed its position in reliance on the alleged representations.

3(b). To produce for inspection a copy of the Securities Purchase Agreement dated February 14, 2019.

3(c). To produce for inspection a copy of the Security Agreement dated February 14, 2019.

3(d). To produce for inspection a copy of the Securities Purchase Agreement dated March 20, 2019.

3(e). To produce for inspection a copy of the Security Agreement dated March 20, 2019.

Demand (#)

Claim (para)

Offered to Answer?

Position

Security Agreement”). Eureka never satisfied the conditions for release of the final USD$3.6million and those funds were ultimately returned to the Plaintiff.

4. With respect to paragraph 13 of the Statement of Claim:

4(a): To produce particulars as to what documents are encompassed under the phrase “these documents” in the first sentence of this paragraph. Further, to produce for inspection a copy of the “Loan Documents” referenced at paragraph 13 if those documents are different than those documents requested at paragraph 12 above.

13. These documents, including the attachments and referenced documents thereto are referred to herein as the “Loan Documents”. As detailed hereafter, the Loan Documents provided for several contractually-mandated representations and warranties (the “Representations”).

No

“These documents” is clearly a reference to the documents particularized in the preceding paragraph, above, already in the defendants’ possession, and then expressly defined as the Loan Documents.

13. These documents, including the attachments and referenced documents thereto are referred to herein as the “Loan Documents”. As detailed hereafter, the Loan Documents provided for several contractually-mandated representations and warranties (the “Representations”).

14. With respect to paragraph 15 of the Statement of Claim:

5(a): To provide full particulars as to who made the representation that the Plaintiff’s security was to stand in first position, when it was made, the specific words used, how it the alleged representation was made, to whom it was made, and where it was made.

15. Other than the first mortgage registered on the Ottawa Facility and a small purchase mortgage on the Montana Facility, the Plaintiff’s security was represented to stand in first position in each case other than purchase money security interests.

Yes

6. With respect to paragraph 17 of the Statement of Claim:

6(a): To provide particulars as to what representations were made which “induced the formation of the Loan Documents and the Loan

17. The Plaintiff states that, as detailed below, the Corporations a) made misrepresentations which induced the formation of the Loan Documents and the Loan advance; and b) dissipated the Plaintiff’s security. The Plaintiff states that this conduct was wrongful and

Yes – 6(a)

Paragraph 17 is preceded by the heading: Overview of this Claim

17. The Plaintiff states that, as detailed below, the Corporations a) made misrepresentations which induced the

Demand (#)

Claim (para)

Offered to Answer?

Position

advance”. More particularly, to provide particulars as to the specific words used in those representations, by whom were they made, how they were made, and to whom and when those representations were made;

6(b): To provide full particulars as to which of the “Corporations” made the alleged representations;

6(c): To provide particulars as to how each of the corporations dissipated the Plaintiff’s security.

oppressive of the Plaintiff.

formation of the Loan Documents and the Loan advance; and

b) dissipated the Plaintiff’s security. The Plaintiff states that this conduct was wrongful and oppressive of the Plaintiff.

The misrepresentations alleged are then expressly identified under the sub-headings “Misrepresentation #1: Knowledge of Suspicious Circumstances” (paras 21-24), “Misrepresentation #2: The Hemp Biomass Representations” (paras 25-26) and “Misrepresentation #3: Surety Debt Representations” (paras 30-34).

The claim expressly defines “Corporations” in paragraph 3.

The (known) dissipations are expressly identified under the sub-headings “Dissipation #1: The Hemp Biomass Dissipation” (paras 27-29), “Dissipation #2: Montana Facility” (paras 35-39), “Dissipation #3: Dissipation of Loan Proceeds to Surety” and “Dissipation #4: Investment in Delisse”.

7. With respect to paragraph 19 of the Statement of Claim:

7(a): To provide particulars of the misrepresentations referred to therein including who made such misrepresentations, the specific words used to make the misrepresentations, to whom were the misrepresentations made, how they were made, and when were they made;

7(b): To provide particulars as to how the Plaintiff’s

19. The Plaintiff states that, but for the misrepresentations, the Plaintiff would not have suffered the loss as it would not have invested in the Corporations by making the Loan. Furthermore, having invested, the loss was aggravated by the dissipation of the Plaintiff’s security.

Yes – 7(a)

Paragraph 19 continues the “Overview of this Claim”, particularized in the succeeding paragraphs as set out above.

19. The Plaintiff states that, but for the misrepresentations, the Plaintiff would not have suffered the loss as it would not have invested in the Corporations by making the Loan. Furthermore, having invested, the loss was aggravated by the dissipation of the Plaintiff’s security.

Demand (#)

Claim (para)

Offered to Answer?

Position

security was dissipated and what security is being referenced.

8. With respect to paragraph 21 of the Statement of Claim:

8(a): To provide particulars in relation to the following directors and/or officers: Sean Poli, David Rendimonti, Timothy McCunn, Hugh Notman, Lawrence Cannon, Michael Mueller, William MacKinnon, Kenneth Knox, Calvin Stiller, Robert Leaker, Steven Archambault, Patrick McGrade and Paul G. Smith, as to the basis upon which they would individually have “good reason to believe the entirety of the information presented to the Plaintiff to induce the loan, including all contractual representations (and the likelihood of compliance with the contract), was highly suspect”;

8(b): To provide particulars in relation to the following directors and/or officers: Sean Poli, David Rendimonti, Timothy McCunn, Hugh Notman, Lawrence Cannon, Michael Mueller, William MacKinnon, Kenneth Knox, Calvin Stiller, Robert Leaker, Steven Archambault, Patrick McGrade and Paul G. Smith, as to what information they would inidividually have had so as to make the “contractual representations” referred to in that paragraph as “highly suspect”.

8(c): To provide particulars as to what information the following directors and/or officers: Sean Poli,

21. At the time of the advance of the Loan, the Mispresenting Directors and Officers knew or ought to have known that there was good reason to believe the entirety of the information presented to the Plaintiff to induce the Loan, including all contractual representations (and the likelihood of compliance with the contract), was highly suspect and that individual principals behind the corporations with whom they were engaging in an RTO were untrustworthy.

Yes- 8(a) and 8(d)

21. At the time of the advance of the Loan, the Mispresenting Directors and Officers knew or ought to have known that there was good reason to believe the entirety of the information presented to the Plaintiff to induce the Loan, including all contractual representations (and the likelihood of compliance with the contract), was highly suspect and that individual principals behind the corporations with whom they were engaging in an RTO were untrustworthy.

“Misrepresenting Directors and Officers” is defined in paragraph 4.

The basis for belief and information is particularized in paragraph 22, below, which specifically refers to the (known) internal investigation.

The contracts themselves, which are in the defendants’ possession, contain the contractual representations made to Dominion.

The “individual principals” are particularized in paragraph 22, below, along with the information suggesting they were untrustworthy.

This includes Mr. McCunn’s own memo (Responding Record, p 239).

Notwithstanding that “all contractual representations” is already sufficiently particularized to allow responsive

Demand (#)

Claim (para)

Offered to Answer?

Position

David Rendimonti, Timothy McCunn, Hugh Notman, Lawrence Cannon, Michael Mueller, William MacKinnon, Kenneth Knox, Calvin Stiller, Robert Leaker, Steven Archambault, Patrick McGrade and Paul G. Smith, would individually have had in relation to the “individual principals” referenced in paragraph 21 to suggest that they were “untrustworthy”.

8(d): To provide particulars as to who the “individual principals” are as referenced in paragraph 21.

8(e): To provide the particulars of “all contractual representations” alleged in paragraph 21 and produce of the documents in which the contractual representations are contained for inspection;

pleading, the particular representations regarding the Hemp Biomass incorporated into the contracts are further particularized in paragraph 25:

25. The Vitality Canada draft Consolidated Financial Statements, which were attached as a Representation to the March Purchase Agreement, provided that Vitality Canada had inventory, namely, the Hemp Biomass, in the amount of USD$44,025,000.00. The Hemp Biomass was subject to the Plaintiff’s security, without other prior security, as provided for under section 3 of the February Security Agreement and the March Security Agreement.

26. With respect to paragraph 22 of the Statement of Claim:

9(a): To provide particulars in relation to the following directors and/or officers: Sean Poli, David Rendimonti, Timothy McCunn, Hugh Notman, Lawrence Cannon, Michael Mueller, William MacKinnon, Kenneth Knox, Calvin Stiller, Robert Leaker, Steven Archambault, Patrick McGrade and Paul G. Smith, as to what information they individually would have had to come to the view that the involvement of Kenney and Hoggan was “suspicious”;

9(b): To provide particulars as to how Kenney and

22. Shortly prior to the Loan, the Misrepresenting Directors and Officers engaged an internal investigation into the conduct of their RTO partners on the Vitality side, being Owen Kenney (“Kenney”) and Kent Hoggan (“Hoggan”), as well as their involvement with Surety Land Development, LLC (“Surety”). The Misrepresenting Directors and Officers came to the conclusion that Kenney and Hoggan’s involvement with and conduct regarding Surety were “suspicious” and that:

(a) Hoggan and Kenney had been acting beyond their authority in ostensibly binding Vitality’s subsidiaries to purported loan agreements with Surety (the “Surety Debt”), some of which charged levels of interest that

Yes – 9(b)

The particulars requested are express in paragraphs 22 and 22(a).

22. Shortly prior to the Loan, the Misrepresenting Directors and Officers engaged an internal investigation into the conduct of their RTO partners on the Vitality side, being Owen Kenney (“Kenney”) and Kent Hoggan (“Hoggan”), as well as their involvement with Surety Land Development, LLC (“Surety”). The Misrepresenting Directors and Officers came to the conclusion that Kenney and Hoggan’s involvement with and conduct regarding Surety were “suspicious” and that:

(a) Hoggan and Kenney had been acting beyond their authority in ostensibly binding Vitality’s subsidiaries to purported loan agreements with Surety (the “Surety Debt”), some of which

Demand (#)

Claim (para)

Offered to Answer?

Position

Hoggan have been acting beyond their authority.

would be literally criminal in Canada;

(b) Hoggan might be the alter ego of Surety (or vice versa) or, at the very least, deeply connected; and,

(c) Hoggan and Kenney were self-dealing and would benefit from the excessive and extreme interest rates under the loans.

charged levels of interest that would be literally criminal in Canada;

(b) Hoggan might be the alter ego of Surety (or vice versa) or, at the very least, deeply connected; and,

(c) Hoggan and Kenney were self-dealing and would benefit from the excessive and extreme interest rates under the loans.

10. With respect to paragraph 23 of the Statement of Claim:

10(a): To provide particulars with respect to the following directors and/or officers: Sean Poli, David Rendimonti, Timothy McCunn, Hugh Notman, Lawrence Cannon, Michael Mueller, William MacKinnon, Kenneth Knox, Calvin Stiller, Robert Leaker, Steven Archambault, Patrick McGrade and Paul G. Smith, as to what “highly relevant” information these officers and directors individually had and which they failed to disclose.

23. The Misrepresenting Directors and Officers failed to disclose this highly relevant information. Such failure was:

(a) A contractual misrepresentation pursuant to sections 3.1(i), 3.1(j), 3.1(o), 3.1(r), 3.1(z), 3.1(bb), 3.1(gg) and 3.1(hh) of the February Securities Purchase Agreement and March Securities Purchase Agreement; and

(b) An ongoing breach of their duties to the Plaintiff as detailed below.

10(a)

The highly relevant information is particularized in immediately preceding paragraph 22, above.

23. The Misrepresenting Directors and Officers failed to disclose this highly relevant information. Such failure was:

(a) A contractual misrepresentation pursuant to sections 3.1(i), 3.1(j), 3.1(o), 3.1(r), 3.1(z), 3.1(bb), 3.1(gg) and 3.1(hh) of the February Securities Purchase Agreement and March Securities Purchase Agreement; and

(b) An ongoing breach of their duties to the Plaintiff as detailed below.

11. With respect to paragraph 25 of the Statement of Claim:

11(a). To provide particulars as to what security the Hemp Biomass was subject to.

11(b): To produce for inspection a copy of the Vitality Canada draft Consolidated Financial

25. The Vitality Canada draft Consolidated Financial Statements, which were attached as a Representation to the March Purchase Agreement, provided that Vitality Canada had inventory, namely, the Hemp Biomass, in the amount of USD$44,025,000.00. The Hemp Biomass was subject to the Plaintiff’s security, without other prior security, as provided for under section 3 of the February

No

The Claim is express that the Hemp Biomass was subject to the Plaintiff’s security.

The Vitality Canada draft Consolidated Financial Statements are attached to Mr. Poli’s affidavit (Responding Record, p 138).

25. The Vitality Canada draft Consolidated Financial

Demand (#)

Claim (para)

Offered to Answer?

Position

Statements.

Security Agreement and the March Security Agreement.

Statements, which were attached as a Representation to the March Purchase Agreement, provided that Vitality Canada had inventory, namely, the Hemp Biomass, in the amount of USD$44,025,000.00. The Hemp Biomass was subject to the Plaintiff’s security, without other prior security, as provided for under section 3 of the February Security Agreement and the March Security Agreement.

12. With respect to paragraph 26 of the Statement of Claim:

12(a): Tor provide particulars of the representations as set out in the Loan Documents including the specific provisions of those Loan Documents on which the Plaintiff relies as a representation.

12(b): To provide particulars in relation to the following directors and/or officers: Sean Poli, David Rendimonti, Timothy McCunn, Hugh Notman, Lawrence Cannon, Michael Mueller, William MacKinnon, Kenneth Knox, Calvin Stiller, Robert Leaker, Steven Archambault, Patrick McGrade and Paul G. Smith, as to which of these officers and directors made representations, the content of the representations that were made, to whom and when.

26. The Plaintiff states that the foregoing Representations (the “Hemp Biomass Reps”) as set out in the Loan Documents were false as detailed below. The Hemp Biomass never had the value represented.

Yes – 12(b)

The representations are particularized in the immediately preceding paragraph 25, above, and expressly identified as coming from Vitality Consolidated Financial Statements attached to the March Securities Purchase Agreement (and, again, attached to Mr. Poli’s affidavit).

26. The Plaintiff states that the foregoing Representations (the “Hemp Biomass Reps”) as set out in the Loan Documents were false as detailed below. The Hemp Biomass never had the value represented.

27. With respect to paragraph 27 of the Statement of Claim:

13(a): To provide particulars as to how the Hemp

27. In addition or in the alternative, the Plaintiff states that the Hemp Biomass, whatever its true value, was dissipated (the “Hemp Biomass Dissipation”) without regard to the interests of the Corporations or of the Plaintiff in such

No

The Claim is already express that particulars of this dissipation are unknown!

27. In addition or in the alternative, the Plaintiff states that the

Demand (#)

Claim (para)

Offered to Answer?

Position

Biomass referred to therein was dissipated.

assets. The particulars of and events of this dissipation are unknown. However, the Hemp Biomass simply did not exist by the time of the Notices of Intention to Make a Proposal.

Hemp Biomass, whatever its true value, was dissipated (the “Hemp Biomass Dissipation”) without regard to the interests of the Corporations or of the Plaintiff in such assets. The particulars of and events of this dissipation are unknown.

However, the Hemp Biomass simply did not exist by the time of the Notices of Intention to Make a Proposal.

14. With respect to paragraph 29 of the Statement of Claim:

14(a): To provide particulars as to how the corporations failed to safeguard the Hemp Biomass.

29. The Plaintiff states that the Corporations failed to safeguard the Hemp Biomass.

No

These are not proper particulars. There is no way to particularize all of the potential ways the Corporations may have failed to safeguard the Hemp Biomass when the events of this dissipation are unknown other than that the Hemp Biomass disappeared before Eureka and Vitality filed Notices of Intention.

29. The Plaintiff states that the Corporations failed to safeguard the Hemp Biomass.

30. With respect to paragraph 33(a) of the Statement of Claim:

15(a): To provide particulars as to the basis upon which Hoggan and Kenney were prima facie personally liable for the debts to Surety.

33. The Plaintiff states that Surety was a non-arm’s length party not because they were a significant creditor (as identified in Schedule 3.1(r) of the March Securities Purchase Agreement) but because:

(a) Two Eureka directors, Hoggan and Kenney, were prima facie personally liable for debts to Surety pursuant to the terms of the Surety loan documentation and, as a result, benefited from payments to Surety.

No

The particulars are express in the claim and some of the loan documentation (not provided to Dominion before its loan) is, again, attached to Mr. Poli’s affidavit (Responding Record, p 211-216).

33. The Plaintiff states that Surety was a non-arm’s length party not because they were a significant creditor (as identified in Schedule 3.1(r) of the March Securities Purchase Agreement) but because:

(a) Two Eureka directors, Hoggan and Kenney, were prima facie personally liable for debts to Surety pursuant to the terms of the Surety loan documentation and, as a result, benefited from payments to Surety.

Demand (#)

Claim (para)

Offered to Answer?

Position

16[i]. With respect to paragraph 33(b) of the Statement of Claim:

16i: To provide particulars as to the “information” that would have been in the possession of the following directors and/or officers: Sean Poli, David Rendimonti, Timothy McCunn, Hugh Notman, Lawrence Cannon, Michael Mueller, William MacKinnon, Kenneth Knox, Calvin Stiller, Robert Leaker, Steven Archambault, Patrick McGrade and Paul G. Smith that would individually have made them “suspicious” that Hoggan and Kenney were enriched personal beneficiaries.

33. The Plaintiff states that Surety was a non-arm’s length party not because they were a significant creditor (as identified in Schedule 3.1(r) of the March Securities Purchase Agreement) but because:

(b) Despite Vitality Canada’s relationship with Surety being described as non-arm’s length only because Surety was a “key financier”, the Plaintiff states that there was good reason for the Corporations’ Directors and Officers, armed with information in their power, to be suspicious that Hoggan and Kenney were, in fact, enriched personal beneficiaries of the amounts paid to Surety. The Plaintiff relies on the following facts, the full details being known only to the Defendants:

(i) The Corporations made preferential payments to Surety.

(ii) A Utah lawyer, David Steffensen, acted for the Corporations from time to time but also acted for Surety in demanding and enforcing Surety’s alleged loans while in conflict.

(iii) The ready and willing compliance of the Corporations to enter into an improvident agreement for the release of the Montana Facility to Surety.

Yes – 16i

The Defendants clearly know the “information” they had:

33. The Plaintiff states that Surety was a non-arm’s length party not because they were a significant creditor (as identified in Schedule 3.1(r) of the March Securities Purchase Agreement) but because:

33(b). Despite Vitality Canada’s relationship with Surety being described as non-arm’s length only because Surety was a “key financier”, the Plaintiff states that there was good reason for the Corporations’ Directors and Officers, armed with information in their power, to be suspicious that Hoggan and Kenney …

(i) The Corporations made preferential payments to Surety.

(ii) A Utah lawyer, David Steffensen, acted for the Corporations from time to time but also acted for Surety in demanding and enforcing Surety’s alleged loans while in conflict.

(iii) The ready and willing compliance of the Corporations to enter into an improvident agreement for the release of the Montana Facility to Surety.

Lest there be any uncertainty, the memos attached at Exhibit “G” to the Gross Affidavit have been provided and were in the Defendants’ possession.

Demand (#)

Claim (para)

Offered to Answer?

Position

16[ii]. With respect to paragraph 36 of Statement of Claim:

16ii: To provide particulars with respect to Surety’s relationships with the members of the “New Board” including who those relationships are between and the nature of those relationships.

16ii: To produce for inspection a copy of the news release referenced in this paragraph.

36. However, Eureka’s own subsequent news release of December 4, 2019 indicates that Surety purportedly provided two notices of default to Eureka’s “Old Board” in July 2019. None of this was ever communicated to the Plaintiff, either by the “Old Board” or new, until Surety, a related party with relationships to members of Eureka’s “New Board”, sought to enforce its security.

Yes – 16ii

The relationship between Surety, Hoggan and Kenney is particularized in paragraphs 21-22 and 33 of the Claim.

The Eureka news release is, a) a public document, b) released when Mr. Poli was CEO, and c) already included in Dominion’s materials in Eureka’s insolvency proceeding. “New Board” is the terminology used throughout that news release to refer to the current board of Seann Poli, Kent Hoggan, Owen Kenney and William Blocker (see the chart in the Claim at para 3 [Responding Record, p 26]).

36. However, Eureka’s own subsequent news release of December 4, 2019 indicates that Surety purportedly provided two notices of default to Eureka’s “Old Board” in July 2019. None of this was ever communicated to the Plaintiff, either by the “Old Board” or new, until Surety, a related party with relationships to members of Eureka’s “New Board”, sought to enforce its security.

37. With respect to paragraph 39 of the Statement of Claim:

17(a). To provide particulars as to how the corporations “failed to protect the corporation’s interests and the Plaintiff’s secured interest”.

39. To the extent the Surety Debt was not a prior security to the Plaintiff’s interest, the Corporations failed to protect the Corporations[’] interests and the Plaintiff’s secured interest in the Montana Facility. In doing so, the Corporations allowed the security to be dissipated to a non-arm’s length party.

No

This is express in the immediately preceding paragraphs 37-38:

37. Despite the Plaintiff’s written protestation putting Poli, Surety and Eureka’s New Board on notice of the Plaintiff’s objection to this transparent attempt to defeat the Plaintiff’s security, the New Board agreed to transfer of the Montana Facility equipment to Surety and to transfer of the Montana Facility itself pursuant to a “Mutual Release” dated December 4, 2019.

38. At virtually the same time, by an agreement dated December 4, 2019, the New Board approved a share

Demand (#)

Claim (para)

Offered to Answer?

Position

cancellation with the very board members connected to Surety, namely Kenney and Hoggan.

39. To the extent the Surety Debt was not a prior security to the Plaintiff’s interest, the Corporations failed to protect the Corporations[’] interests and the Plaintiff’s secured interest in the Montana Facility. In doing so, the Corporations allowed the security to be dissipated to a non-arm’s length party.

40. With respect to paragraph 40 of the Statement of Claim:

18(a): To provide particulars as to who made the representation, “that payment of Surety’s unsecured debt was to be made ‘from 25% of Vitality production sales and/or customer deposits’”. Further to provide particulars as to when that representation was made.

40. Furthermore, the Plaintiff has since learned that a significant portion of the Loan proceeds were paid to Surety despite such usage being contrary to the representation that payment of Surety’s unsecured debt was to be made “from 25% of Vitality production sales and/or customer deposits.” This payment to Surety was not the intended purpose of the Loan nor was it an authorized usage of the Loan. Indeed, it was a gratuitous and preferential payment given that such amounts were not due to Surety per the above representation about Vitality Canada or its subsidiary’s obligation to Surety.

Yes

The full quotation appears (in bold) in paragraph 30 of the Claim and is from a schedule to the March Securities Purchase Agreement, already in the defendants’ possession and attached to Mr. Poli’s affidavit [Responding Record, p 162].

40. Furthermore, the Plaintiff has since learned that a significant portion of the Loan proceeds were paid to Surety despite such usage being contrary to the representation that payment of Surety’s unsecured debt was to be made “from 25% of Vitality production sales and/or customer deposits.”

Paragraph 30 reads:

30. Per Schedule 3.1(bb) attached to the March Securities Purchase Agreement, the Corporations represented that they had an unsecured debt to Surety:

On November 29, 2018, Vitality and Surety entered into a final settlement whereby the total debt was agreed to be set at

$[18.9million]. This amount will be repaid from 25% of Vitality production sales and/or customer deposits. In

Demand (#)

Claim (para)

Offered to Answer?

Position

addition, Surety was granted 2,000 common shares of Vitality. In return, Surety has released all security.

19. With respect to paragraph 43(a) of the Statement of Claim:

19(a): To provide particulars as to which specific directors and officers (by name) of Eureka and Vitality CBD exercised effective control over the actions of the subsidiaries of Eureka. More particularly, to provide particulars as to what manner they exercised effective control over the actions of the subsidiaries of Eureka;

19(b): To provide particulars as to which “misrepresenting officers and directors” (by name) “contracted for dealings regarding the subsidiary’s assets, made representations about such assets, and made representations about the future conduct of the subsidiary’s business affairs”. More particularly, to provide particulars as to what representations were made by which officer and director, the specific words of the alleged representations, including when, [and] where those representations were made.

43. The Plaintiff notes the following facts relevant to the liability of the liability of the Directors and Officers, including the duty of care owed by the Misrepresenting Directors and Officers and the Dissipating Directors and Officers to the Plaintiff:

(a) The Directors and Officers of Eureka and Vitality CBD exercised effective control over the actions of the subsidiaries of Eureka. Indeed, the Loan Documents contained consolidated corporate financial statements.

The Misrepresenting Officer and Directors contracted for dealings regarding the subsidiaries’ assets, made representations about such assets, and made representations about the future conduct of the subsidiaries’ business affairs.

Yes – 19(b)

20. With respect to paragraph 43(b) of the Statement of Claim:

20(a): To provide particulars with respect to which “misrepresenting directors and officers” (by name) made the representations to the Plaintiff as referenced in this paragraph. More specifically, to provide

43. The Plaintiff notes the following facts relevant to the liability of the liability of the Directors and Officers, including the duty of care owed by the Misrepresenting Directors and Officers and the Dissipating Directors and Officers to the Plaintiff:

Yes

Demand (#)

Claim (para)

Offered to Answer?

Position

particulars as to which director and officer made what specific representation in this regard including full particulars as to the specific words used in the alleged representations, when, where, how and to whom those representations were made.

(b) The Misrepresenting Directors and Officers specifically represented to the Plaintiff that the Loan advances, which were to become the “capital” of the Corporations, were to be monitored by the Directors and Officers to ensure that they were applied in accordance with schedule 4.9 to the March Securities Purchase Agreement (being the “Use of Proceeds”) and as set out in the note 12 to the LiveWell Canada Inc. Condensed Interim Consolidated Financial Statements:

The Board and senior management monitor LiveWell’s capital and capital structure on a regular basis to ensure it is sufficient to achieve LiveWell’s short-term and long- term objectives.

21. With respect to paragraph 43(c) of the Statement of Claim:

21(a): To provide full particulars with respect to the representations referenced at the second sentence of this paragraph. More particularly, to identify which directors and officers (by name) made said representations, the particulars of those representations, the specific words used, the date upon which those representations were made, how they were made and to whom such representations were made;

21(b): To provide particulars with respect to which officers and/or directors dissipated assets as

43. The Plaintiff notes the following facts relevant to the liability of the liability of the Directors and Officers, including the duty of care owed by the Misrepresenting Directors and Officers and the Dissipating Directors and Officers to the Plaintiff:

(c) The Plaintiff’s security was necessarily vulnerable to the bona fides, reasonable care and prudent vigilance of the Directors and Officers. They were duty bound to exercise the utmost candour and care in the representations made to the Plaintiff in the formation of the Loan and in the subsequent management and oversight of the Corporations – and, in particular not to dissipate or misuse

Yes – 21(a)

Demand (#)

Claim (para)

Offered to Answer?

Position

referenced therein and which directors and officers are said to have dissipated assets in this regard.

Further[,] to provide particulars as to how and when those assets were dissipated;

21(c): To provide particulars with respect to what directors and/or officers (by name) misused the security conveyed and to provide particulars as to what manner those directors and/or officers misused the security conveyed.

the security conveyed to the Plaintiff in the Corporations’ assets, let alone in non-arm’s length transactions.

22. With respect to paragraph 43(d) of the Statement of Claim:

22(a): To provide particulars with respect to which directors and/or officers (by name) engaged in “deliberate acts, negligence, or a lack of supervision or care”. More particularly, to provide particulars as to these specific acts in relation to each individual director and/or officer.

22(b): To provide particulars as to what “statutory duties” are referred to therein.

43. The Plaintiff notes the following facts relevant to the liability of the liability of the Directors and Officers, including the duty of care owed by the Misrepresenting Directors and Officers and the Dissipating Directors and Officers to the Plaintiff:

(d) The conduct of the Corporations and the Directors and Officers constituted a frustration of the Plaintiff’s legitimate business expectations about how its investment would be employed – or, more particularly, not defeated through deliberate acts, negligence, or a lack of supervision or care by the Directors and Officers. Plaintiff therefore states that the directors and officers have been in breach of their common law and statutory duties to the Plaintiff and that such breach is oppressive to the interests of the Plaintiff qua creditor and security holder. The Plaintiff states that they are a complainant within the meaning of section 245 of the OBCA. The Defendants (other than Delisse) are liable for oppression as a result of

No

The deliberate acts, negligence, and lack of supervision is particularized throughout the claim (see Demand #6 above for a summary).

43. The Plaintiff notes the following facts relevant to the liability of the liability of the Directors and Officers, including the duty of care owed by the Misrepresenting Directors and Officers and the Dissipating Directors and Officers to the Plaintiff:

(d) The conduct of the Corporations and the Directors and Officers constituted a frustration of the Plaintiff’s legitimate business expectations about how its investment would be employed – or, more particularly, not defeated through deliberate acts, negligence, or a lack of supervision or care by the Directors and Officers. Plaintiff therefore states that the directors and officers have been in breach of their common law and statutory duties to the Plaintiff and that such breach is oppressive to the interests of the Plaintiff qua creditor and

Demand (#)

Claim (para)

Offered to Answer?

Position

their unfair disregard for the Plaintiff’s legitimate expectations.

security holder. The Plaintiff states that they are a complainant within the meaning of section 245 of the OBCA. The Defendants (other than Delisse) are liable for oppression as a result of their unfair disregard for the Plaintiff’s legitimate expectations.

Additional statutory duties are also expressed in paragraph 43(f), which reads:

(f) The Misrepresentations and Dissipations was a breach of the respective directors and officers’ statutory duty pursuant to subsection 134(1) of the Ontario Business Corporations Act, RSO 1990, c B.16 [OBCA]:

Standards of care, etc., of directors, etc.

134 (1) Every director and officer of a corporation in exercising his or her powers and discharging his or her duties to the corporation shall,

(a) act honestly and in good faith with a view to the best interests of the corporation; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

23. With respect to paragraph 43(e) of the Statement of Claim:

23(a): To provide particulars of what non-arms length parties are referenced, and which assets are as

43. The Plaintiff notes the following facts relevant to the liability of the liability of the Directors and Officers, including the duty of care owed by the Misrepresenting Directors and Officers and the Dissipating Directors and Officers to the Plaintiff:

Yes

Demand (#)

Claim (para)

Offered to Answer?

Position

referenced in this paragraph.

(e) The conduct of the Officers and Directors was particularly egregious in that, in each case, the Dissipation enriched non-arm’s length parties with assets specifically secured in favour of the Plaintiff.

24. With respect to 43(g), of the Statement of Claim:

24(a): To provide particulars of the “Misrepresentations” referenced to therein including by whom such representations were made (by name), details as to the content of the specific representations made, to whom those representations were made and when those representations were made;

24(b): To provide particulars as to “such funds” as referenced therein.

43. The Plaintiff notes the following facts relevant to the liability of the liability of the Directors and Officers, including the duty of care owed by the Misrepresenting Directors and Officers and the Dissipating Directors and Officers to the Plaintiff:

(g) Furthermore, while the Misrepresentations were made to induce the Plaintiff to advance a Loan to Eureka, such funds were not to be utilized by Eureka itself but were instead to be utilized by Eureka’s operating subsidiaries – including but not limited to Vitality LLC, USA Biofuels, LLC, Livewell, LiveWell Foods Quebec Inc., Artiva, O- Hemp Inc., Acenzia Inc. and Mercal Capital Corp. The full particulars of such usage are within the knowledge of the Defendants. Accordingly, when so representing on behalf of the borrower Eureka, not only were the Misrepresenting Directors and Officers demonstrating a separate identity to Eureka but, by virtue of the Eureka’s contractual representations, they had a "special relationship" giving rise to a duty of care to the Plaintiff.

Yes

25. With respect to paragraph 44, full particulars as to which alleged misrepresentations were “negligent”

26. In addition to their breach of the statutory duties as aforesaid, and as detailed herein, the Mispresenting

No

The Claim is clear that deliberate misrepresentation is an alternative pleading of the misrepresentations

Demand (#)

Claim (para)

Offered to Answer?

Position

and which were “deliberate”, including the specific words used in each alleged misrepresentation, who mad each misrepresentation, when the misrepresentations were made, how they made, and to whom they were made.

Officers and Directors are liable to the Plaintiff for negligent or alternately deliberate misrepresentation to the Plaintiff given that:

(a) By virtue of the foregoing facts, there is a special relationship between the Plaintiff and the Misrepresenting Directors and Officers;

(b) The Misrepresentations are false or alternately misleading;

(c) The Misrepresenting Directors and Officer made the Misrepresentations negligently, or alternately, deliberately;

(d) The Plaintiff was entitled to reasonably rely upon the Misrepresentations;

(e) The Plaintiff did rely upon the Misrepresentations when entering the Loan Agreements; and,

(f) The reliance was detrimental to the Plaintiff as, but for such Misrepresentations, the Plaintiff would not have advanced the Loan.

particularized throughout the Claim.

44. In addition to their breach of the statutory duties as aforesaid, and as detailed herein, the Mispresenting Officers and Directors are liable to the Plaintiff for negligent or alternately deliberate misrepresentation to the Plaintiff given that:

(a) By virtue of the foregoing facts, there is a special relationship between the Plaintiff and the Misrepresenting Directors and Officers;

(b) The Misrepresentations are false or alternately misleading;

(c) The Misrepresenting Directors and Officer made the Misrepresentations negligently, or alternately, deliberately;

(d) The Plaintiff was entitled to reasonably rely upon the Misrepresentations;

(e) The Plaintiff did rely upon the Misrepresentations when entering the Loan Agreements; and,

(f) The reliance was detrimental to the Plaintiff as, but for such Misrepresentations, the Plaintiff would not have advanced the Loan.

26. With respect to paragraph 44(a) of the Statement of Claim:

26(a): To provide particulars of the “special relationship” between the Plaintiff and the directors

44. In addition to their breach of the statutory duties as aforesaid, and as detailed herein, the Mispresenting Officers and Directors are liable to the Plaintiff for negligent or alternately deliberate misrepresentation to the

No

These are not proper particulars. The Claim pleads a legal conclusion based on the material facts alleged.

44. In addition to their breach of the statutory duties as aforesaid, and as detailed herein, the Mispresenting Officers

Demand (#)

Claim (para)

Offered to Answer?

Position

and officers.

Plaintiff given that:

(a) By virtue of the foregoing facts, there is a special relationship between the Plaintiff and the Misrepresenting Directors and Officers;

and Directors are liable to the Plaintiff for negligent or alternately deliberate misrepresentation to the Plaintiff given that:

(a) By virtue of the foregoing facts, there is a special relationship between the Plaintiff and the Misrepresenting Directors and Officers;

27. With respect to paragraph 44(b) of the Statement of Claim:

27(a): To provide full particulars of the “Misrepresentations” that are referenced therein, including the particulars of the content of those “Misrepresentations”, who made such representations, when they were made and to whom.

44. In addition to their breach of the statutory duties as aforesaid, and as detailed herein, the Mispresenting Officers and Directors are liable to the Plaintiff for negligent or alternately deliberate misrepresentation to the Plaintiff given that:

(b) The Misrepresentations are false or alternately misleading;

Yes

The allegations are particularized throughout the claim (see the summary in Demand #6, above).

44. In addition to their breach of the statutory duties as aforesaid, and as detailed herein, the Mispresenting Officers and Directors are liable to the Plaintiff for negligent or alternately deliberate misrepresentation to the Plaintiff given that:

(b) The Misrepresentations are false or alternately misleading;

28. With respect to paragraph 44(c) of the Statement of Claim:

28(a): To provide full particulars with respect to the representations that are said to have been made negligently or alternately deliberately and to indicate by whom, to whom and when such representations were made.

44. In addition to their breach of the statutory duties as aforesaid, and as detailed herein, the Mispresenting Officers and Directors are liable to the Plaintiff for negligent or alternately deliberate misrepresentation to the Plaintiff given that:

(c) The Misrepresenting Directors and Officer made the Misrepresentations negligently, or alternately,

Yes

See Demand 25, above: Alternative pleading with regards to all misrepresentations particularized throughout Claim.

Demand (#)

Claim (para)

Offered to Answer?

Position

deliberately;

29. With respect to paragraph 44(d) and (e) of the Statement of Claim:

29(a): To provide full particulars with respect to specific reliance placed upon the alleged representations by the Plaintiff.

44. In addition to their breach of the statutory duties as aforesaid, and as detailed herein, the Mispresenting Officers and Directors are liable to the Plaintiff for negligent or alternately deliberate misrepresentation to the Plaintiff given that:

(d) The Plaintiff was entitled to reasonably rely upon the Misrepresentations;

(e) The Plaintiff did rely upon the Misrepresentations when entering the Loan Agreements; and

No

30. With respect to paragraph 45 of the Statement of Claim:

30(a). To provide particulars as to which directors and/or officers (by name) “knew or ought to have known that their silence rendered inaccurate or incomplete the misrepresentations” as alleged.

45. Alternately, the Mispresenting Directors and Officers are vicariously liable for failing to supervise and monitor the representations of the Corporations and the other Misrepresenting Directors and Officers and are liable for the Misrepresentations. Indeed, to the extent that any or all of the Misrepresenting Directors and Officers were merely silent in the face of the Plaintiff’s obvious reliance on the Misrepresentations, the Misrepresenting Directors and Officers knew or ought to have known that their silence rendered inaccurate or incomplete the Misrepresentations and have thereby breached their duty to the Plaintiff.

No

The Claim pleads vicarious liability for all “Misrepresenting Directors and Officers” as defined in paragraph 4.

45. Alternately, the Mispresenting Directors and Officers are vicariously liable for failing to supervise and monitor the representations of the Corporations and the other Misrepresenting Directors and Officers and are liable for the Misrepresentations. Indeed, to the extent that any or all of the Misrepresenting Directors and Officers were merely silent in the face of the Plaintiff’s obvious reliance on the Misrepresentations, the Misrepresenting Directors and Officers knew or ought to have known that their silence rendered inaccurate or incomplete the Misrepresentations and have thereby breached their duty to the Plaintiff.

Demand (#)

Claim (para)

Offered to Answer?

Position

31. With respect to paragraph 47 of the Statement of Claim:

31(a). To provide particulars as to how the directors and/or officers (by name) have failed “to supervise, monitor and prevent the Dissipations by the Corporations and the Dissipating Directors and Officers”.

47. Alternately, the Dissipating Directors and Officers are vicariously liable for failing to supervise, monitor and prevent the Dissipation by the Corporations and the Dissipating Directors and Officers as are liable for such dissipation.

No

Failure to supervise and monitor are particulars of the failure to prevent the dissipations.

47. Alternately, the Dissipating Directors and Officers are vicariously liable for failing to supervise, monitor and prevent the Dissipation by the Corporations and the Dissipating Directors and Officers as are liable for such dissipation.

May 19, 2021

CHITIZ PATHAK LLP

Barristers and Solicitors

77 King Street West

TD North Tower

Suite 700, P.O. Box 118

Toronto, Ontario M5K 1G8

Elliot Birnboim (LSO# 32750M)

ebirnboim@chitizpathak.com

Michael Crampton (LSO# 74512G)

mcrampton@chitizpathak.com

Tel: (416) 368-6200

Lawyers for the Plaintiff,

[^1]: Burns v. RBC Life Insurance Company, 2020 ONCA 347, at paras. 16 and 19

[^2]: The Bank of Nova Scotia v. The Home Game Inc., 2010 ONSC 4255, at paras. 8‑10

[^3]: Reichmann v. Koplowitz, 2012 ONSC 5063, at para. 11

[^4]: These include an affidavit from one of the Moving Party Defendants (Mr. Poli) that had been filed in the Insolvency Proceedings, a memorandum by another Moving Party Defendant, Mr. McCunn, and other memoranda from Eureka’s books and records

[^5]: Reichmann v. Koplowitz, at para. 10

[^6]: See Lana International Ltd. v. Menasco Aerospace Ltd., 1996 7974 (ON SC); Lysko v. Braley, 2006 11846 (ON CA), at para. 29; and Tataryn v. Diamond & Diamond, 2021 ONSC 2624, at para. 30

[^7]: Pennyfeather v. Timminco Limited, 2011 ONSC 4257 at paras. 51-52

[^8]: Lysko v. Braley, 2006 11846 (ON CA), at para. 34

[^9]: Timminco Ltd. v. Asensio (2009), 2009 9431 (ON SC), at paras. 17 and 18

[^10]: Matta et al v. Inukonda et al, 2012 ONSC 3275, at para. 8

[^11]: Timminco Ltd. v. Asensio (2009), 2009 9431 (ON SC), at paras. 19; 1483881 Ontario Inc. v. KPMG LLP, [2003] O.J. No. 2993, at para. 6; Harris v. Bayerische Motoren Werke Aktiengesellschaft, 2019 ONSC 5958, at para. 43

[^12]: Harris v. Bayerische Motoren Werke Aktiengesellschaft, 2019 ONSC 5958, at paras. 42, 44

[^13]: Harris, at paras. 46, 47, 53 and 55