Greenspan Partners LLP, 2022 ONSC 3653

COURT FILE NO.: CV-15-530713

DATE: 20220617

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 799969 ONTARIO LIMITED, LEO EREZ AND TZVI EREZ, APPLICANTS

AND:

GREENSPAN PARTNERS LLP, RESPONDENTS

BEFORE: W.D. Black J.

COUNSEL: Peter I. Waldmann, for the Applicants

Nancy Tourgis and Melvyn L. Solmon, for the Respondent

HEARD: May 13, 2022

ENDORSEMENT

Overview

[1] This is a motion by the respondent, Greenspan Partners LLP (“Greenspan”), to strike and expunge certain evidence delivered by the applicants 799969 Ontario Limited, Tzvi Erez, and Leo Erez (collectively referred to herein as “Erez”), within the application in which Erez seeks to assess Greenspan’s accounts.

[2] Tzvi Erez was a client of Greenspan’s. He was charged with multiple counts of fraud and was ultimately sentenced after pleading guilty to certain of those charges. Leo Erez is Tzvi Erez’s father and 799969 Ontario Limited is Leo Erez’s company.

[3] The application within which this motion is brought was commenced by Notice of Application issued June 18, 2015. The initial affidavit included with the application was from a law student, but Tzvi Erez swore an affidavit pertaining to the application on August 21, 2015.

[4] The materials Greenspan seeks to strike and expunge are the affidavits of Tzvi Erez and Hila Meisels, sworn April 5, 2021. These materials were contained in a supplementary motion record delivered by Erez, which was served shortly before the application was originally to be heard on April 13, 2021, as well as various paragraphs of further affidavits of Tzvi Erez delivered after that date.

Summary of Concerns about Affidavits in Supplementary Motion Record

[5] Among other concerns, the affidavits in the supplementary motion record:

(a) Were delivered more than six years after the issuance of the Notice of Application;

(b) Were delivered without seeking leave to do so;

(c) Were delivered after Tzvi Erez and Leo Erez were cross-examined, in 2021, on their affidavits sworn at or shortly after the issuance of the Notice of Application in 2015;

(d) Comprise 1229 pages;

(e) Include what Greenspan describes as “spurious, unsubstantiated and scandalous allegations” against Edward Greenspan, who passed away on December 24, 2014 (and relatedly, Greenspan complains that the application itself was not issued until after Mr. Greenspan’s death);

(f) Include allegations against Vanessa Christie — who was at the time of the relevant underlying events Mr. Greenspan’s colleague, but was appointed to the Ontario Court of Justice in September of 2017 and then to this Court on June 22, 2019 — claiming that she was complicit in forcing Tzvi Erez to plead guilty, to which allegations Her Honour is now not in a position to respond (for clarity, when referring to timeframes before Her Honour’s appointment hereafter, I will refer to Justice Christie as “Ms. Christie”);

(g) Are in substance a reply application record delivered 4.5 years after the responding application record;

(h) Were delivered months after a case conference before Justice Dow on December 16, 2020, after which His Honour confirmed by endorsement that “the parties have completed their exchange of affidavit material”; and

(i) Contain evidence that was available to Erez before the issuance of the application in 2015, including transcripts of surreptitious recordings of discussions with Mr. Greenspan, Ms. Christie and others that were never previously disclosed.

Legal Bases Argued to Strike this Evidence

[6] Greenspan argues that the supplementary motion record (and the two affidavits therein) should be struck and expunged inasmuch as:

(a) It is improper for a party to serve material to attempt to “shore up” evidence given by that party on cross-examination;

(b) It is improper for a party to split its case;

(c) It is prejudicial to Greenspan given its late delivery, being more than 5.5 years after the affidavit of Ms. Christie in Greenspan’s responding record and well after Her Honour’s appointment to the bench;

(d) No leave was sought; and

(e) It constitutes an abuse of process, particularly given its late delivery as well as its contents.

Relevant Background Facts

A. The Greenspan Firm

[7] Greenspan is a law firm licensed to practice law in Ontario and at all material times has specialized exclusively in the field of criminal defence.

[8] Mr. Greenspan was a widely known and well-respected senior member of the Bar.

[9] Ms. Christie joined Greenspan as an associate and then became a partner before her appointment to the Ontario Court of Justice in September of 2017. She was subsequently appointed to this Court.

B. 2007 Charges Against Tzvi Erez

[10] In 2007, Tzvi Erez was charged with certain criminal offences related to uttering forged documents. He pled guilty to some or all of those charges and received a conditional sentence. He was not yet represented by Greenspan at that time.

C. 2009 Charges and Results

[11] In June of 2009, Tzvi was again charged criminally. On September 24, 2009, he signed specific and general retainer agreements (the “retainer”), retaining Greenspan to act for him. The general retainer agreement provided for a retainer payment of $25,000.

[12] Pursuant to this retainer, Greenspan succeeded in negotiating a withdrawal of the June 2009 charges. After the withdrawal was confirmed in October of 2010, Greenspan rendered its final account, which was paid in full. The evidence shows that Leo Erez and his wife, through their various corporate entities, paid the majority of Greenspan’s fees.

[13] It was agreed in the evidence that the account was received under cover letter from Mr. Greenspan and was understood and paid as a final account.

D. The Subject Charges

[14] Just over a year after the June 2009 charges were withdrawn, Tzvi Erez was charged again with multiple counts of fraud (the “subject charges”). While apparently similar and related to the June 2009 charges, the Information for the subject charges showed that they pertained to different complainants.

[15] Tzvi Erez again retained Greenspan to represent him on the subject charges. Greenspan attended at a preliminary hearing in relation to the subject charges, completed in July of 2013. Erez paid a retainer of $160,000 for the preliminary hearing.

[16] Following the preliminary hearing, it was determined that the subject charges would proceed to trial. Erez and Greenspan entered into a further retainer agreement at that time confirming that Greenspan would act for Tzvi Erez on the trial of the subject charges for a fixed fee of $565,000, including trial and sentencing (if applicable) and certain related items, but not including any appeal.

[17] Under this retainer, among other work including preparation for trial, Mr. Greenspan brought an application under s. 11(b) of the Charter of Rights and Freedoms seeking to have the subject charges dismissed for delay. It appears that Tzvi Erez was closely involved in the preparation of his affidavit in support of the s. 11(b) application.

[18] It also appears that Greenspan advised Tzvi Erez to proceed by judge alone and not by judge and jury, and that Tzvi Erez agreed with this advice and instructed Greenspan to act accordingly.

New Disclosure and Change of Plea to Guilty

[19] The s. 11(b) application was dismissed by Justice Forestall and the trial began in May of 2014. Early on in the trial, the Crown apparently made further disclosure to Greenspan, including a collection of emails that are said to have been detrimental to Tzvi’s Erez’s defence on the subject charges.

[20] As a result of this additional disclosure and its problematic impact on Tzvi Erez’s defence, a meeting was held at Greenspan’s offices in which it was determined that Tzvi Erez would plead guilty and attempt to obtain a favourable sentence. A contemporaneous written memorandum stated that “it was discussed and eventually determined by Tzvi and Tzvi alone, that he would plead guilty and then focus all efforts on sentencing submissions and an attempt to obtain a favourable sentence”.

[21] A pre-trial was held before Justice McMahon at which sentencing parameters were discussed. Shortly thereafter, Tzvi Erez signed a direction providing that he was pleading guilty to the subject charges.

[22] On May 28, 2014, Tzvi Erez appeared before Justice McMahon. In open court, Justice McMahon went through a detailed and thorough plea inquiry to ensure that Tzvi Erez was voluntarily pleading guilty to the charges. After Tzvi Erez’s guilty plea was entered and accepted, Tzvi Erez and Greenspan began working on sentencing submissions.

Surreptitious Recordings

[23] It was during this work on sentencing submissions in the fall of 2014 that Tzvi Erez, apparently without consent or disclosure, surreptitiously taped meetings with Mr. Greenspan and Ms. Christie.

Change of Counsel and Further Proceedings in Relation to Subject Charges

[24] After Mr. Greenspan passed away on December 24, 2014, Tzvi Erez changed counsel and filed an application on December 17, 2015 seeking to set aside his guilty plea.

[25] This application to set aside the plea was heard by Justice McMahon. In the context of that hearing, Tzvi Erez testified, and Ms. Christie testified and was cross-examined by Tzvi Erez’s new counsel. The surreptitiously taped conversations were not disclosed nor put to Ms. Christie in cross-examination.

[26] On March 22, 2016, Justice McMahon gave oral reasons dismissing Tzvi Erez’s application to set aside his guilty plea. In addition to the viva voce testimony of Tzvi Erez and Ms. Christie and various materials relative to the criminal proceedings, Justice McMahon had before him the materials filed in the application to assess Greenspan’s accounts.

[27] In relation to that application, His Honour said:

“I have examined Mr. Erez’ affidavit in the civil proceedings against Mr. Greenspan. I find, in parts, it is completely misleading on how the plea discussions happened. In the affidavit he condenses the several days of plea discussions down to two days. Mr. Erez, in that affidavit, leaves a false impression in the affidavit that he signed the plea Direction just five minutes before going into court and pleading guilty before me. In reality the plea Direction was signed 24 hours in advance. He had another day to consider his position. The fact that his prior sworn affidavit was misleading on a material fact, I find negatively impacts my assessment of his credibility.”

[28] Tzvi Erez appealed Justice McMahon’s dismissal of his application to the Court of Appeal for Ontario. That appeal was also dismissed.

[29] Tzvi Erez was ultimately sentenced to eight years in a federal penitentiary on the subject charges. He brought a bail variation application before the Court of Appeal for Ontario, as well as an application to set aside Justice McMahon’s decision on sentencing, both of which were unsuccessful. His further appeal was dismissed on March 14, 2019, and his subsequent application for leave to appeal to the Supreme Court of Canada was also denied.

The Assessment Application

[30] As noted above, the application in which this motion is brought was commenced by Notice of Application issued June 18, 2015, initially supported by the affidavit of a law student but then amended and supplemented by Tzvi Erez’s affidavit of August 21, 2015 as well as Lauren Gabriel’s affidavit sworn September 15, 2015.

[31] The respondents’ record, containing the affidavit of Ms. Christie, was delivered on December 14, 2015.

[32] At the request of Tzvi Erez, the application was put on hold until after his application to set aside his guilty plea was heard.

[33] In September of 2017, Justice Christie was appointed to the Ontario Court of Justice (and in June of 2019 to this Court).

[34] On August 19, 2019, Erez agreed that they would not seek to cross-examine Justice Christie on her affidavit.

December 2020 Case Conference before Justice Dow

[35] On December 16, 2020, the parties attended at a case conference before Justice Dow to set a date for the hearing of the application. At that time, both parties confirmed that they had delivered all of their material and His Honour confirmed as much in his endorsement. Justice Dow scheduled the hearing of the application for April 13, 2021.

[36] The parties agreed to conduct cross-examinations on February 25, March 16, and March 17, 2021.

[37] Counsel for Greenspan cross-examined Leo Erez and Tzvi Erez on February 25 and March 16, 2021, respectively.

[38] The parties had reserved March 17, 2021 for the cross-examination of Julianna Greenspan, at the request of counsel for Erez. While there is some debate about the circumstances and reasons why that cross-examination did not proceed on that day, it is clear that no notice of examination was served nor appointment taken out to conduct that cross-examination, and that it did not ultimately take place. There remains an issue as to whether or not Erez ought to be permitted to cross‑examine Julianna Greenspan at this stage, which I will address below.

Delivery of Supplementary Record

[39] On April 5, 2021, the supplementary motion record containing the impugned material on this motion was served. As noted, in addition to the new affidavit of Tzvi Erez, the supplementary record contained an affidavit of Hila Meisels, the sister of Tzvi Erez and the daughter of Leo Erez. As also noted, the supplementary record was over 1200 pages long and included, for the first time, the transcripts of the conversations that had been surreptitiously recorded back in the fall of 2014.

[40] It is fair to observe that the information to which the affidavits in the supplementary motion record attested, and the materials those affidavits exhibited, had all been available at the time the application was issued in June of 2015.

[41] On December 15, 2021, Tzvi delivered yet another affidavit entitled “Second Supplementary Affidavit”. Again, this affidavit attached emails from 2014. and in it Tzvi Erez confirms that he had all of this information as of December 9, 2014.

Alleged Purposes for and Problems with Supplementary Materials

[42] Greenspan argues that the delivery of the supplementary motion record (and presumably the Second Supplementary Affidavit) is contrary to Erez’s representations to Justice Dow in December of 2020 that all affidavits had been delivered. Therefore, Greenspan argues that the supplementary motion record should be struck on that basis.

[43] In addition, Greenspan notes that the stated purpose for the supplementary motion record was to “shore up” and supplement Tzvi’s evidence on cross-examination. More specifically, Tzvi deposes, in paragraph 3 of his April 5, 2021 affidavit, that:

“During my cross-examination, Tourgis [Greenspan’s lawyer] questioned me regarding previously unexplored topics and events, and therefore, this affidavit further completes events that took place during the time Mr. Greenspan was retained and paid for his services.”

[44] Consistent with the timeframe described in that paragraph, Tzvi Erez’s affidavit deals with events that happened during the retainer with Greenspan, months before the issuance of the application herein and Tzvi Erez’s initial affidavit in August of 2015.

Analysis of Greenspan’s Arguments

[45] Greenspan expresses a concern, which I share, about the propriety and implications of a party delivering supplementary evidence after being cross-examined on their original affidavit. While not technically caught by operation of Rule 39.02(2), which only prohibits delivering new evidence after having cross-examined the party opposite, the potential mischief associated with allowing a party to deliver correcting or supplementary evidence after itself being examined is self-evident.

[46] As Greenspan argues, allowing a party to deliver new affidavit evidence to “patch up” their position after being cross-examined is contrary to the spirit if not the letter of Rule 1.04, and could lead to an endless loop of supplementary materials and cross‑examinations.

[47] In my view, subject to very rare exceptions, it is the expectation that once a party has delivered their evidence and been cross-examined on it, they get no further “kicks at the can”. The rare exceptions I can imagine are circumstances in which new and significantly material information emerges following cross-examination that alters the landscape of a given proceeding. Generally speaking, however, this will not be the case, and in my view attempts to supplement evidence after cross-examination in most cases should not be permitted.

[48] There is no attempt in this case to suggest that the material encompassed by the supplementary motion record or the Second Supplementary Affidavit is new or was previously unavailable. To the contrary, as the above-noted paragraph from Tzvi Erez’s April 5, 2021 affidavit confirms, it is information from the timeframe up to December of 2014, about which Tzvi Erez purports to have been reminded during Ms. Tourgis’ cross-examination of him in early 2021.

[49] Greenspan also argues, pointing to this same evidence, that Erez is effectively splitting their case. That is, by withholding the material and allegations contained in the supplementary motion record until after being cross-examined, in particular the tape recordings, Erez deliberately waited until Greenspan’s response was in place and Greenspan’s cross-examination strategy had been conceived and spent. Erez then delivered materials — some 1229 pages — onto a battlefield where the battle lines had already been drawn and set.

[50] As stated in the Supreme Court of Canada’s decision in R. v. Krause, 1986 39 (SCC), [1986] 2 S.C.R. 466 (at page 473), the rule against case-splitting:

“…prevents unfair surprise, prejudice and confusion which could result if the Crown or the plaintiff were allowed to split its case, that is to put in part of its evidence — as much as it deemed necessary at the outset — then to close the case and after the defence is complete to add further evidence to bolster the position originally advanced. The underlying reason for this rule is that the defendant or the accused is entitled at the close of the Crown’s case to have before it the full case for the Crown so that it is known from the outset what must be met in response.”

[51] Greenspan argues that the abuse of process associated with this tactic is all the worse in this case because of the timing of the supplementary materials. In addition to the case not even being commenced until after the death of Mr. Greenspan, Erez waited until well after Justice Christie was appointed to the bench before delivering their materials. Erez thus effectively precluded a response from the only individuals with detailed and specific knowledge of the events in issue.

[52] Greenspan also argues that Erez ought to have sought leave to file the additional evidence. While recognizing that this is not the precise circumstance covered by Rule 39.02(2) — where leave would be required to file additional material — it is sufficiently similar in spirit and effect that leave ought to have been sought.

Erez’s Response

[53] Mr. Waldmann, counsel for Erez, does not purport to provide an explanation for the several years of delay before the supplementary motion record was filed, nor for the failure to advise Justice Dow that additional material would be forthcoming. While Tzvi Erez was at times occupied with the criminal justice system, the overlap between his criminal matter and this matter, at most, covers only a small portion of the yawning time gap.

[54] Mr. Waldmann instead relies virtually entirely on a well-known general proposition, as stated by Master B. McAfee (as he then was) in Kalair v. The Globe and Mail Inc. (2019 ONSC 6991). Citing the Court of Appeal for Ontario’s decision in H.B. Fuller Company v. Rogers (2015 ONCA 173, 386 D.L.R. (4th) 262), Master McAfee said, at para. 4:

“I am mindful of the tension between two principles of our civil justice system: the preference to have civil actions decided on their merits and the promotion of the timely resolution of actions.”

[55] In that case, Master McAfee chose to set aside a dismissal order because it was “in the interests of justice” to do so. As Mr. Waldmann put it in argument, procedural considerations should not trump the search for truth.

Analysis of Erez’s Position

[56] It is of course hard to argue with the paramount goal of cases being decided on their merits. I accept without reservation that as a general proposition Courts should strive to do so.

[57] However, there are at least a couple of problems with this proposition being used as a cover for Erez’s unexplained, years-long delay in this case.

[58] First, as Ms. Tourgis put it eloquently in her reply submissions, while of course we are always trying to seek the truth in admitting evidence and drawing conclusions, the Rules are there for a reason. The Rules must be followed in seeking truth and justice and should not be flaunted, particularly when, as here, operating outside the Rules causes prejudice to an opposing party.

[59] Second, it is not at all clear that the supplementary materials appreciably enhance the search for truth and justice here.

[60] If those materials contained some important new evidence that might tilt the balance in this application, the exclusion of which could lead to a miscarriage of justice, it would be a closer call.

[61] In my view, however, the supplementary materials largely add bulk as opposed to substance. They consist, by and large, of additional perspectives on and iterations of the same information and events that are already comprehensively discussed in the original application materials.

[62] The transcripts of the surreptitious tape recordings, based on my review, reflect discussions, at times spirited, of the unappealing options Tzvi Erez had in the fall of 2014, once the strength of the Crown’s case against him became apparent.

[63] I see nothing in the materials that is surprising or particularly important to the analysis required to deal with the application, let alone anything game-changing.

[64] The materials will not add value for the parties or the Court. Nor does their admission justify the considerable extra time the parties will require to sort through, absorb, and test them.

Conclusion on Motion to Strike

[65] Accordingly, I grant Greenspan’s motion. I order that the supplementary motion record and the Second Supplementary Affidavit be struck. In addition, the paragraphs in Tzvi Erez’s affidavits of December 15, 2021 and March 23, 2022 identified in Greenspan’s Further Amended Amended Notice of Motion (at paragraphs (a) and (b)) are also struck.

Proposed Cross-Examination of Ms. Greenspan

[66] That leaves the question of whether Erez ought to be permitted to cross-examine Julianna Greenspan. As noted above, no notice of examination was served nor appointment booked to that end.

[67] Troublingly, there is evident merit to the suggestion that Erez chose not to cross-examine Ms. Greenspan in March of 2021 because at that time Erez was already contemplating the delivery of the supplementary motion record and did not wish to be precluded from doing so by Rule 39.02(2).

[68] Again, no particular explanation is offered for the failure to commit to cross-examining Ms. Greenspan at that time, the failure to pursue that examination between then and the delivery of the subsequent materials from Erez (the supplementary motion record in particular), or the renewed interest in examining Ms. Greenspan once those additional materials had been filed.

[69] While the right to cross-examine is close to sacrosanct, Rule 39.02(3) provides that it is to be exercised with reasonable diligence. At best, that was not done here. At worst, the non-exercise of the right to cross-examine was subterfuge to buy time for the supplementary materials. Either way, by failing to pursue their right to cross-examine with reasonable diligence, Erez has in my view forfeited that right.

[70] This application has been outstanding for many years. It is time to get on with it.

Costs

[71] Given the result, Greenspan is entitled to the costs of this motion.

[72] In its costs outline, Greenspan seeks partial indemnity costs of $13,250.60 plus disbursements of $320. There is no costs outline from Erez.

[73] Greenspan’s suggested costs seem generally reasonable. My only qualm is that it appears that a senior partner of Ms. Tourgis was involved in this matter at the outset, and it thus seems likely that there was at least some overlap between the efforts of two fairly senior lawyers, at least early on in the file.

[74] In the circumstances, I order Erez to pay Greenspan’s costs of this motion in the amount of $10,000.00 plus disbursements of $320.00.

[75] These amounts are payable within 30 days of the date of this endorsement.

W.D. Black J.

Date: June 17, 2022