Court File and Parties
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Nexus Solutions Inc. on behalf of itself and all other creditors of Vladimir Krougly, Plaintiff
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Vladimir Krougly, Limesoft Inc., Sergiy Bateyshchykov, also described as Serge Bays, Daria Krougly, also described as Darya Bateyshchykova and Advanced Consulting and Technology Group Inc., Defendants
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Limesoft Inc., Plaintiff by counterclaim
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Nexus Solutions Inc., Defendant by counterclaim
BEFORE: MITROW J.
COUNSEL: W. Scott Gallagher for the Plaintiff William W.N. Fawcett for the Defendants
HEARD: April 13, 2022
ENDORSEMENT
INTRODUCTION
1The Plaintiff brings a motion for disclosure. It is important to set out the exact relief sought, which is as follows:
a) an order seeking leave to bring this motion;
b) an order compelling the Defendants to produce full contents of the emails sent and received from the email address nexus@actgroup.ca, in searchable email format;
c) an order compelling the Defendants to produce the emails sent and received from the further 26 email addresses now discovered by the Plaintiff, in searchable email format;
d) an order compelling each of the Defendants, Vladimir Krougly, Daria Krougly and Serge Bays, to attend for discovery to answer questions concerning the emails received and sent from the above email addresses;
e) costs of this motion on a substantial indemnity scale to be paid forthwith;
f) such further and other relief as counsel may advise and this Honourable Court may deem just.
2For reasons that follow, the Plaintiff’s motion is dismissed.
PRELIMINARY ISSUE
3As is discussed in more detail later in these reasons, the position of the Plaintiff (sometimes referred to as “Nexus”) in support of its motion, in terms of the relief sought in its factum, is different than the relief sought in its motion.
4The Defendants submit that the Plaintiff “moved the goalposts” in abandoning the relief sought in its motion and that, instead, the Plaintiff sought orders that were not claimed in its motion.
5The Defendants submit, in such circumstances, that the motion should be dismissed on that basis. I agree with that submission.
6The Defendants did, erring on the side of caution, also address the motion on its merits, taking the position that the motion also should be dismissed on the merits.
7In the circumstances, background details are set out below to the extent required to provide the necessary context for the order made below.
BACKGROUND
A. Some Context
8This case has a lengthy litigation history. The action was commenced in 2011. It has been sent down for trial for November 2022.
9There was also a motion brought by the Defendants in relation to disclosure, but that motion was resolved pursuant to a consent order made at the outset of the hearing of the motions, leaving only the Plaintiff’s motion to be argued. The consent order required the Plaintiff to provide disclosure as specified therein within 30 days, with costs of the motion reserved to the trial judge.
10This action involves a claim by the Plaintiff that the Defendant, Vladimir Krougly (“Mr. Krougly”), while an employee of the Plaintiff, was involved in the development and marketing of competing software produced in conjunction with the Defendant, Advanced Consulting and Technology Group Inc. (“ACT Group”).
11The issues raised in the Plaintiff’s motion ventured deeply into information technology, computer software and digital forensic investigations of data on computer hard drives. Both parties retained experts, whose affidavits or reports, complete with voluminous exhibits and schedules, were filed as part of the material on the motions.
12The Plaintiff’s initial motion record alone was close to 300 pages. The Defendants’ responding motion record was 2,985 pages. However, in relation to the Defendants’ motion that settled, it is noted that the Plaintiff filed a responding motion record in 2 volumes totalling 3,147 pages.
13In totality, in relation to the motions, there were well over 7,000 pages filed in Caselines, including motion records, facta and transcripts.
14While there are many pages of documents that comprise what I would describe as computer code in the form of schedules or exhibits to the experts’ reports, nevertheless, the overall volume of material filed on these motions, which are in effect brought “on the eve of trial,” is flagrantly excessive. Litigants, and counsel, have a responsibility to the court to file, on motions, only material that is germane and necessary for the court to decide the motions.
15This means that digital document dumps, as in the case at bar, should not occur on motions, or ever. Furthermore, proportionality and common sense should prevail. Filing a motion record as one document, containing thousands of pages, can make it awkward and time-consuming to locate relevant pages within that document.
B. The Plaintiff’s Evidence
16The Plaintiff’s evidence is that the Plaintiff recently discovered that Mr. Krougly, a former employee of Nexus, had transferred in excess of 10,000 emails on December 2 and 3, 2010, prior to his departure from Nexus on or about January 4, 2011.
17It is alleged that these were confidential Nexus emails and that the email transfers were sent to an email address that had the domain “@actgroup.ca”, which is owned by the Defendant, ACT Group. It is alleged that a specific email that was used was nexus@actgroup.ca.
18A main focus of the Plaintiff’s motion was to have production of the emails sent to, and received from, this email.
19The Plaintiff expressed a concern that emails that were migrated to nexus@actgroup.ca could be used by ACT Group potentially to solicit the customers of Nexus, who might assume that Nexus was affiliated with ACT Group.
20The evidence of the Plaintiff is that in October 2021, an 11-year-old internal Nexus email from August 2010 was received by Nexus via Defendants’ counsel. When asked how this email was obtained, the Defendants explained that this email was taken from a copy of the hard drive on the desktop computer of Mr. Krougly. This copy of the hard drive had been provided by the Plaintiff to the Defendants in or about November 2011, according to the Defendants.
21The Plaintiff rejected this explanation and caused a search of the hard drive to be made by an expert retained by the Plaintiff, following which the Plaintiff concluded that there were thousands of the Plaintiff’s emails that allegedly were migrated to an email account “nexus@actgroup.ca” from Mr. Krougly’s desktop, and that these transfers took place on or about December 2 and 3, 2010.
22The Plaintiff’s expert deposed that the forensic analysis conducted by him on the hard drive of Mr. Krougly’s desktop computer while at Nexus, indicated that emails were migrated to an account “nexus@actgroup.ca”. Part of the analysis included examining a deleted log file, which could not be completely restored. However, the Plaintiff’s expert deposed that the text within the deleted file appeared to be fully intact and was recovered into a text file known as “Recovered.xml”.
23The Plaintiff’s expert concluded, using the Recovered.xml file and other information, that there was a successful transfer of thousands of emails from the desktop to nexus@actgroup.ca, the latter being a Google account according to the Plaintiff’s expert.
24This migration of emails occurred at least on December 2 and 3, 2010, with possible updates through January 3, 2011.
25Further, the Plaintiff’s expert reviewed logs from Mr. Krougly’s desktop and ascertained that a tool – Google Apps Migration for Microsoft – was installed on December 2, 2010 and uninstalled January 3, 2011. This tool is used for migrating Outlook data, including emails, into Google applications. The Plaintiff’s expert concluded that this Google tool was used to migrate data from Mr. Krougly’s desktop to the aforesaid Google account.
26The Plaintiff’s expert identified a further 26 email addresses with the domain @actgroup.ca, and the Plaintiff demanded disclosure as to emails sent to, and received from, those alleged additional email addresses.
C. The Defendants’ Evidence
27The only Defendant to provide evidence was Mr. Krougly.
28Mr. Krougly deposed that he had no recollection of creating a “nexus@actgroup.ca” email account or attempting to migrate emails from his work account at Nexus to that nexus@actgroup.ca account.
29Mr. Krougly recalled, on his last day of work in early January 2011, that he wanted to download copies of emails that were personal, and not Nexus related.
30There was never a “nexus@actgroup.ca” email address to the best of Mr. Krougly’s knowledge. He explains that the domain @actgroup.ca is used by his company, ACT Group. He lists the four current email addresses used by ACT Group with that domain, with only two of them being actively used, according to Mr. Krougly.
31On December 2, 2010, Mr. Krougly transferred the @actgroup.ca email accounts to Google. He deposed that, prior to that point, the @actgroup.ca email accounts were managed through “hostpapa.ca”.
32Mr. Krougly lists the 12 @actgroup.ca accounts existing, according to his evidence, as at December 2, 2010. He provides detail as to the nature and use of each account.
33Mr. Krougly’s narrative includes five additional accounts with the @actgroup.ca domain that had been used by December 2, 2010. However, these accounts are described as “FTP” addresses, which Mr. Krougly explains is a protocol to transfer large files and that there are no emails with the FTP addresses.
34The Defendants’ evidence is that the Plaintiff already has all the emails that it alleges were migrated to the nexus@actgroup.ca account according to its motion.
35In November 2011, an expert retained by the Plaintiff, Jeff Parmet, released a report based on his review of Mr. Krougly’s desktop and laptop used by Mr. Krougly while he was an employee of Nexus.
36Mr. Parmet concluded that Mr. Krougly had copied his Nexus emails to a DVD. As evidence of same, Mr. Parmet had located three “.pst files” in the Windows “burn” directory of Mr. Krougly’s desktop hard drive.
37A .pst file is used to store emails or other information and .pst files can be used to transfer emails from one computer to another.
38The precise location of the three .pst files on the hard drive was identified by Mr. Parmet.
39At a cross-examination on September 6, 2011, the Plaintiff undertook to, and subsequently did, produce an image of Mr. Krougly’s desktop hard drive (an “image,” being a copy of the data contained in the hard drive, as explained by Mr. Krougly).
40The significance of the three .pst files is that they can be compared to the Recovered .xml files identified by the Plaintiff’s expert as discussed earlier.
41Mr. Krougly compared the entries from the three .pst files with the entries in the Recovered .xml files provided by the Plaintiff’s expert (see the comparison table at paragraph 49 of Mr. Krougly’s affidavit). There is significant correlation between the .pst files and the Recovered .xml files.
42In relation to burning the DVD, Mr. Krougly deposes that he was preparing to burn his Nexus emails onto a DVD, on January 3, 2011, as he had a number of personal emails in his work account. He was planning to take all his Nexus emails, rather than sorting through the emails to locate just his personal emails.
43However, prior to burning that DVD, Mr. Krougly deposes that he reconsidered because he had been asked to sign, and did sign, a letter dated January 3, 2011 acknowledging that he had returned all of Nexus’ property. Mr. Krougly deposes that he then decided not to burn the DVD as he was concerned that he could be in breach of the letter.
44Mr. Krougly also deposes that he has previously responded to the Plaintiff’s allegation that he took Nexus emails when he left in January 2011. This was the allegation made by the Plaintiff’s expert, Mr. Parmet, as discussed earlier.
45As a result, the Defendants, at that time, had their own expert, Dr. Reid Holmes, review Mr. Parmet’s findings.
46As to the .pst files noted by Mr. Parmet, Dr. Holmes did not believe that the presence of those files demonstrated that the DVD was burned. It was Dr. Holmes’ evidence that the “Windows 7” burn utility only stores files in the burn directory when preparing a burn task and that, once the task successfully completes, then those files are deleted from disc. The presence of these files, according to Dr. Holmes, suggests that any DVD creation task was not successful.
47In relation to the “@actgroup.ca” emails, it is the Defendants’ position, in relation to the current 4 email addresses with that domain, and the 12 email addresses with that domain that existed in 2010, as identified by the Defendants, that all relevant emails either have been produced or there are no relevant emails.
48Regarding the five FTP addresses, as quoted earlier, there are no emails.
49The Defendants deny the existence of any other “@actgroup.ca” emails identified by the Plaintiff’s expert. The Defendants rely on the report of their expert, Steven Rogers, and raise the issue that the Plaintiff has failed to prove on a balance of probability that such emails actually existed.
DISCUSSION
50Under the heading “Orders Sought” in its factum, other than costs, the Plaintiff seeks the following order:
a) that the motion of the Defendants seeking certain disclosure and first returnable January 28, 2022 is stayed;
b) that the Defendants shall bring no further motion seeking disclosure, including the motion returnable January 28, 2022 without first obtaining leave of the court; and
c) that the Defendants pay into court the sum of $50,000 for security for costs concerning the trial now scheduled for November 2022; this money shall remain paid into court pending further order of the court.
51It is noted that the Defendants’ motion referred to above is the motion that resulted in the previously mentioned consent order for disclosure by the Plaintiff, with costs reserved to the trial judge. This would render moot the request for a stay of that motion.
52The Plaintiff’s factum is a document that lacks clarity and focus. Under the heading “Issues and the Law,” it is difficult to discern any clear and succinctly stated issue related to the relief claimed in the Plaintiff’s motion.
53In paragraph 84 of its factum, the Plaintiff refers to an “issue” that the Defendants were in surreptitious possession of emails and “may have” used their contents to contact Nexus customers or “may have” used nexus@actgroup.ca to send and receive further emails from and after December 3, 2010.
54I find that the Plaintiff’s evidence, and its factum, drifted from simple disclosure, as sought in its motion, to a significantly broader issue, namely whether the information sought to be disclosed was in possession of the Defendants by some improper or “surreptitious” manner.
55This attempt to stigmatize and brand the Defendants’ conduct ranges far outside the scope of the Plaintiff’s disclosure motion and is an issue for trial.
56The moving party on a motion is obligated to state the precise relief sought. Rule 37.06(a) states:
37.06 Every notice of motion (Form 37A) shall,
(a) state the precise relief sought …
57I agree with the submissions of the Defendants in paragraph 44 of their factum: that this requirement is not a mere formality, that a court may grant only relief sought in a motion absent unusual circumstances, and that the “basket clause” referring to such other relief as may be just, can have no application where a party seeks entirely different relief. See McCain Food Limited v. J.R. Simplot Company, 2021 FC 890, at paras. 37-40, relied on by the Defendants.
58At paragraph 23 of the Plaintiff’s factum, the Plaintiff accepts that most of Mr. Krougly’s chart is correct. This appears to constitute an admission that there is congruence between the .pst files and the Recovered .xml files. In effect, the Plaintiff has conceded that it has all the emails that were the potential subject of an alleged transfer because the .pst files were on an image of the desktop hard drive that the Plaintiff had given to the Defendants. As the Defendants submit, they cannot be asked to produce what they have received from the Plaintiff.
59The foregoing would render moot the Plaintiff’s request in its motion to produce emails in relation to the alleged nexus@actgroup.ca account.
60I find that the Plaintiff abandoned the relief sought in its motion and, instead, sought relief as claimed in its factum, none of which bears any resemblance to the relief sought in the motion. This was prejudicial and unfair to the Defendants and compromised their ability to respond to the order sought by the Plaintiff.
61Accordingly, I would dismiss the Plaintiff’s motion on the basis that the Plaintiff has abandoned the relief sought in its motion and, instead, has sought relief not claimed in its motion.
62Alternatively, had it been necessary to deal with the relief sought by the Plaintiff in its motion on the merits, I would also have dismissed the motion for the following reasons:
a) the Plaintiff was already in possession of the emails that the Plaintiff sought to be produced in relation to the alleged email address nexus@actgroup.ca; even though the Defendants denied any knowledge of the nexus@actgroup.ca email account, the relevant emails were in possession of the Plaintiff as the Plaintiff had provided to the Defendants an image of Mr. Krougly’s hard drive that contained the emails that were the subject of the disclosure motion;
b) the fact that the Defendants did not acknowledge the existence of the nexus@actgroup.ca email account was not relevant in relation to the disclosure issue;
c) the Plaintiff’s disclosure motion involved disclosing emails that the Plaintiff claimed were wrongfully transferred to the nexus@actgroup.ca account; the focus of the disclosure motion was to identify the emails that could have been transferred had a transfer occurred – it was outside the scope of the disclosure motion and an issue for trial as to whether the Defendants did actually transfer those emails to nexus@actgroup.ca;
d) in relation to the emails sent and received from the additional 26 email addresses alleged by the Plaintiff, the existence of a number of those email addresses was admitted by the Defendants and, regarding those admitted email addresses, I find that any relevant emails have been produced; and
e) the evidentiary record is insufficient to prove on a balance of probabilities, the onus of which was on the Plaintiff, as to whether the balance of the 26 email addresses identified by the Plaintiff did, in fact, exist.
63The order below reserves the costs of the Plaintiff’s motion to the trial judge, given the close proximity of the Plaintiff’s motion to the trial date. Also, this is consistent with the consent order reserving the costs of the Defendants’ disclosure motion to the trial judge.
ORDER
64For the foregoing reasons, I make the following order:
The Plaintiff’s motion is dismissed.
Costs of the motion are reserved to the trial judge.
“Justice Victor Mitrow”
Justice Victor Mitrow
Date: June 15, 2022