COURT FILE NO.: CV-21-668061
DATE: 2022 09 21
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: QIU XIE as the trustee of XIE 2018 FAMILY TRUST, YUN ZUO in her personal capacity and as the trustee of THE XUEZHANG FAMILY TRUST, JIAN MING XU and XING WAN, Plaintiffs
- and -
MARK GROSS, SHELDON GROSS, FAUSTO CARNICELLI, DENNIS DIVALENTINO, ALLEN GREENSPOON, GROSS PROPERTIES INC., GROSS CAPITAL INC., 800 PRINCESS STREET HOLDINGS LIMITED, PORTAGE ROAD HOLDINGS LIMITED, MORRISON STREET HOLDINGS LIMITED, 132 SECOND STREET HOLDINGS INC., 132 SECOND STREET PURCHASER LIMITED, 2478658 ONTARIO LTD., 2009 LONG LAKE HOLDINGS INC., GT SUDBURY HOLDING INC., 2771841 ONTARIO CORP., 2771840 ONTARIO LTD., 2771837 ONTARIO INC., 2771839 ONTARIO LIMITED, 65 LARCH HOLDINGS INC., 2753703 ONTARIO INC., 86 ANGELINE STREET HOLDINGS INC., 100 COLBORNE HOLDINGS INC., GT ORILLIA HOLDING INC., 249 ONTARIO STREET HOLDINGS INC., SOUTHMOUNT HEALTHCARE CENTRE INC., 240 OLD PENETANGUISH HOLDINGS INC., GT PORT HOPE HOLDING INC., VICTORIA AVENUE LP and VICTORIA AVENUE NORTH HOLDINGS INC., Defendants
BEFORE: Associate Justice Todd Robinson
COUNSEL: M. Armstrong and P. Waldmann, counsel for the plaintiff
J. Figliomeni and A. Kwok, counsel for the defendants, 2753703 Ontario Inc., 2771837 Ontario Inc., 2771839 Ontario Limited, 2771840 Ontario Ltd. and 2771841 Ontario Corp.
D. Marr, counsel for the defendant, Fausto Carnicelli
J. Wadden, counsel for the defendant, Mark Gross
HEARD: September 9 and 12, 2022 (by videoconference)
REASONS FOR DECISION (Refusals and Re-Attendance at Examinations)
[1] This action arises from a dispute over whether the plaintiffs have any beneficial ownership in five properties currently owned by the defendants, 2753703 Ontario Inc., 2771837 Ontario Inc., 2771839 Ontario Limited, 2771840 Ontario Ltd. and 2771841 Ontario Corp. (together, the “Purchaser Corporations”). In the action, the plaintiffs assert that they invested funds with Gross Capital Inc. and Gross Properties Inc. through Mark Gross and Sheldon Gross. The plaintiffs collectively assert a co-tenancy agreement with respect to the properties and loans made to Gross Capital Inc. and Gross Properties Inc. for which a security interest in the five properties is said to have been granted.
[2] The Purchaser Corporations purchased the five properties in the period of June to September 2020 from other corporate co-defendants, which are related entities to Gross Capital Inc. and Gross Properties Inc. The bona fides of those transactions are directly at issue in this proceedings. At the time of the purchase transactions, the principals and shareholders of the Purchaser Corporations appear to have been Stephen Foxall, Fausto Carnicelli, Allen Greenspoon, and Dennis DiValentino.
[3] After commencing this action, the plaintiffs move ex parte and obtained certificates of pending litigation (CPLs) against the subject premises. The Purchaser Corporations now have a pending motion to discharge those CPLs, in support of which they have tendered an affidavit of Stephen Foxall.
[4] The plaintiffs cross-examined Stephen Foxall on his affidavit and further conducted examinations of both Fausto Carnicelli and Allen Greenspoon under rule 39.03 of the Rules of Civil Procedure, RRO 1990, Reg 27 (the “Rules”). The defendant, Mark Gross, did not agree to produce himself for examination under rule 39.03.
[5] On this motion, the plaintiffs seek production of various documents, answers to refused questions, and further examinations of each of Stephen Foxall, Fausto Carnicelli and Allen Greenspoon to answer the refused questions and to be examined on the requested documents. The plaintiffs also moved to compel the examination of Mark Gross under rule 39.03. That relief was ultimately settled between the plaintiffs and Mark Gross by an agreement for Mr. Gross to produce himself for examination on September 20, 2022. That portion of the motion was accordingly not argued before me. I assume the examination has proceeded in accordance with the consent resolution of those parties.
[6] Having considered the arguments on the remaining production requests, refusals by Stephen Foxall, Fausto Carnicelli, and Allen Greenspoon, and whether they should be compelled to re-attend for further examination, I am ordering some further production and written answers to some of the refused questions, but am otherwise dismissing the plaintiffs’ motion.
Analysis
Issue 1: Should documents requested in the notices of examination be produced?
[7] The plaintiffs complain that none of Stephen Foxall, Fausto Carnicelli, and Allen Greenspoon brought to their examination appointments the documents they were directed to bring in their notices of examinations. I do not fault them for not having done so. The list of documents is quite long and starts with a series of documents to which the plaintiffs would only reasonably be entitled in a judgment debtor examination, such as listings of all real property in which they personally had any interest, beneficial or otherwise, and the values, as well as personal investments, other assets, and debts. Relevance of other requested documents to the pending CPL discharge motion was also unclear, such as current assets and liabilities of the corporate defendants.
[8] Prior to the motion hearing, the Purchaser Corporations voluntarily produced many of the requested documents, albeit in the morning before the hearing commenced on September 9, 2022. That production was made without prejudice to the Purchaser Corporations’ position that they were irrelevant to the pending motion. After receiving that production, the plaintiffs opted not to make submissions on relevance of the produced documents and withdrew their production request from Fausto Carnicelli and Allen Greenspoon, including documents relating to their assets and liabilities.
[9] Only two items of document production are still sought from Stephen Foxall, namely the following:
(a) item no. 6 in the notice of examination, namely a list of any transfers of any shares in any of the corporate defendants in which Mr. Foxall is an officer, director, financial controller or shareholder or which are in his possession or control; and
(b) item no. 10 in the notice of examination, namely copies of all correspondence and due diligence provided in respect of any purchases or sale of the five properties, which occurred while Mr. Foxall was a director, officer, financial controller or shareholder of the transferor or transferee.
[10] Both categories are argued by the plaintiffs to be central documents on the pending motion that will speak to what the Purchaser Corporations knew when purchasing the properties and what, if any, relationship they have with Gross Capital Inc., Gross Properties Inc., and their principals. The Purchaser Corporations argue that the requests are overbroad.
[11] Although not specifically cited by the parties, the documents that a person being examined may be required to produce for inspection at an examination is governed by rule 34.10 of the Rules. Subrule 34.10(2)(b) requires a person being examined to produce for inspection non-privileged documents within the person’s possession, control, or power that the notice of examination requires that person to produce. That is qualified in subrule 34.10(3), which essentially provides that, unless the court orders otherwise, the notice of examination may only require the person being examined to produce relevant documents.
[12] In addition, subrule 34.10(4) provides that if a person admits on examination to having possession or control of or power over a relevant document that is not privileged, then the document must be produced for inspection either at the examination or within two days thereafter.
[13] With respect to share transfers, the plaintiffs argue that the produced shareholder ledgers are not current based on evidence from the examinations supporting that there have been share transfers. For example, Fausto Carnicelli confirmed during his examination that he sold his shares in two of the Purchaser Corporations. Stephen Foxall also confirmed that there had been changes in the shareholding of the Purchaser Corporations since they were incorporated, and that he had the share purchase agreements. The plaintiffs argue that, given their position that the purchase transactions were not bona fides, which is squarely in issue on the pending CPL discharge motion, identification of who was and is in control of the Purchaser Corporations is relevant.
[14] In Mr. Foxall’s affidavit sworn in support of the CPL discharge motion, his unequivocal evidence is that the Purchaser Corporations were not affiliated with any of the sellers of the five properties, Gross Properties Inc., Gross Capital Inc., Mark Gross, or Sheldon Gross. Nevertheless, Fausto Carnicelli confirmed during his rule 39.03 examination that he likely remains an officer director in one of the other corporate defendants that was controlled by Gross Capital Inc. and still has shareholdings in others. That fact does not mean that Mr. Foxall’s statement is incorrect or inaccurate, but in my view it supports relevance of the identity of shareholders in the Purchaser Corporations to the pending motion.
[15] Mr. Foxall admitted during his cross-examination that he has in his possession, control, or power the share purchase agreements for share transfers in the Purchaser Corporations from the time of incorporation to date. Those documents are captured by the production request made in the notice of examination. Since, in my view, the shareholdings of the Purchaser Corporations are relevant, those documents ought to have been produced for inspection pursuant to subrule 34.10(2)(b) and also pursuant to subrule 34.10(4). Mr. Foxall shall accordingly produce them.
[16] With respect to the request for all correspondence and due diligence provided for the transactions, I do not disagree that some due diligence documentation may well be relevant on the pending motion. However, during cross-examination, Mr. Foxall confirmed that there are “hundreds of emails and documents”, including “three years’ worth of emails that have absolutely nothing to do with [the] plaintiffs.” There is nothing before me supporting that his characterization is incorrect or that I should not believe it.
[17] Given the apparent volume of emails and documents captured by item no. 10, I am not satisfied that “all” correspondence and due diligence is relevant on the pending motion. I am thereby not prepared to find that Mr. Foxall failed to comply with his obligations under subrule 34.10 by not producing all correspondence and due diligence for inspection at or following his cross-examination.
[18] The same production request was made during cross-examination and refused. The plaintiffs have moved on that refusal. I will thereby address whether production is properly ordered with Mr. Foxall’s refusals below.
Issue 2: Should Stephen Foxall be ordered to answer refused questions?
[19] The plaintiffs seek an order compelling Stephen Foxall to answer various refused questions and re-attend for the purpose of answering those questions and being examined on the documents produced by the Purchaser Corporations.
a. Scope of proper cross-examination
[20] The scope of proper cross-examination on a pending motion is discussed in the oft-cited decision of Ontario v. Rothmans Inc., 2011 ONSC 2504 at para. 143. Principles applicable to cross-examination, which I have considered in my disposition of this motion, include the following:
(a) the scope of a cross-examination of a deponent for a motion is narrower than an examination for discovery;
(b) a cross-examination is not a substitute for examinations for discovery or for the production of documents available under the Rules;
(c) the examining party may not ask questions on issues that go beyond the scope of the cross-examination for the motion;
(d) questions must be relevant to (i) the issues on the particular motion; (ii) matters raised in the affidavit by the deponent, even if those issues are irrelevant to the motion; or (iii) the credibility and reliability of the deponent’s evidence;
(e) the proper scope of cross-examination of a deponent will vary depending upon the nature of the motion;
(f) a question asked on a cross-examination for an application or motion must be a fair question; and
(g) a deponent for a motion may be asked relevant questions that involve an undertaking to obtain information, and the court will compel the question to be answered if the information is readily available or is not unduly onerous to obtain.
b. Question 99 – Correspondence and due diligence
[21] As discussed above, the plaintiffs requested in their notice of examination that Stephen Foxall produce for inspection “all” correspondence and due diligence for the purchase of the five properties. The Purchaser Corporations submit that the request is overbroad and irrelevant. The plaintiffs disagree. They submit that the production request is not an overbroad fishing expedition, but is rather directly germane to the issue of whether the Purchaser Corporations had notice of the plaintiffs’ interest in the properties.
[22] The evidence from Mr. Foxall and the specific production request made by plaintiffs’ counsel are important. After hearing Mr. Foxall’s evidence on the volume of emails and documents, which he evidently felt had nothing to do with the plaintiffs, examining counsel reiterated the request made in the notice of examination for “all correspondence and due diligence provided with respect to any of the purchases of the subject properties”. The Purchaser Corporations’ counsel initially provided a clear refusal of the production request as irrelevant. When challenged, he invited plaintiffs’ counsel to explain how the request was relevant to the pending CPL discharge motion. Plaintiffs’ counsel declined to do so, instead essentially insisting on a “yes” or “no” answer to production. The request was taken under advisement.
[23] Plaintiffs’ counsel subsequently asked about what due diligence was obtained. In response, Mr. Foxall answered, “Rent rolls, building condition reports, maybe an old appraisal, real estate related documents, lease information from the tenants, environmental information.” Plaintiffs’ counsel then reiterated the request for production of all due diligence and disclosure received from the sellers of the properties.
[24] I have been directed to nothing else in the transcript dealing with further questions on the due diligence. For example, plaintiffs’ counsel did not ask what, if any, information about the plaintiffs was included in the materials provided nor did he ask specific questions about whether the due diligence included review or production of tenancy and loan arrangements, particularly involving the plaintiffs.
[25] On a refusals motion, the court must assess whether the question asked should be answered. In my view, it is not for the court to rephrase questions and order answers to different questions that could have been, but were not, asked. Examining counsel frames the questions. When a question is refused or taken under advisement and a clear position on relevance has been given, examining counsel has the option to rephrase or narrow the question. Often a valid objection to an overbroad question is less tenable when a more focused, narrower question is subsequently asked.
[26] In my view, the production request as asked is overbroad. Based on Mr. Foxall’s evidence on what due diligence documents were provided, the production request includes irrelevant content. For example, I fail to see how rent rolls, building condition reports, appraisals, and environmental information has any bearing on the pending motion. Mr. Foxall’s undisputed evidence is that all correspondence and due diligence comprises hundreds of emails and documents.
[27] Subrule 1.04(1.1) provides that orders and directions should be proportionate to the importance and complexity of the issues and to the amount involved in the proceeding. Had the plaintiffs sought a narrower scope of production, or asked questions to establish relevance of a portion of the overall correspondence and due diligence, I may have been more inclined to grant some relief. However, as framed, the production is overbroad, largely irrelevant, and disproportionate to the issues on the pending motion. I do not agree that a production order is warranted.
[28] My decision does not preclude the plaintiffs from raising non-disclosure of due diligence as a factor on the pending motion in dealing with whether there are triable issues around the bona fides of the transaction. Nevertheless, it is neither necessary nor proportionate to order voluminous production of what appears to be largely irrelevant documents in advance of the pending motion simply because there could possibly be something relevant within the requested production.
c. Question 89 – Lawyers’ files
[29] I have already held that the share purchase agreements should be produced. In light of that order, I fail to see the relevance of the lawyers’ files. I agree with the Purchaser Corporations that the request for production of the lawyers’ files pertaining to share purchases is overbroad for the pending motion. It also raises issues of privilege. This question need not be answered.
d. Questions 142 & 292 – Correspondence with lender’s counsel and brokerage
[30] I am not convinced by the plaintiffs’ arguments that all correspondence with counsel for American General Life Insurance Company (a lender with security against most of the properties at the time of purchase) or with Cushman & Wakefield (the real estate brokerage advising on the transactions and providing property appraisals) is relevant or probative to the pending motion. In my view, the requested scope of production casts an overbroad net. The questions may be relevant in discoveries, but the scope of a proper cross-examination is narrower than an examination for discovery and cross-examination is not properly used as a substitute for it. These questions need not be answered.
e. Question 312 – List of changes to shareholders, officers and directors
[31] My prior order overlaps with part of this refused question. I have already decided relevance of the shareholders in Purchaser Corporations to the pending motion. In my view, the request for a list of all changes to officers and directors is similarly relevant. Given Stephen Foxall’s evidence that the Purchaser Corporations have no affiliation to the co-defendant corporations, Mark Gross, or Sheldon Gross, control of the Purchase Corporations is relevant to the bona fides of the transactions. This question shall be answered.
f. Questions 106-107 & 110 – Communications about evidence with Fausto Carnicelli, Allen Greenspoon, and Dennis Di Valentino
[32] I do not agree with the plaintiffs that these questions genuinely go to the credibility of Stephen Foxall or his evidence. I am also not convinced by the plaintiffs’ arguments that whether Mr. Foxall discussed his evidence with the other directors, officers, or shareholders has any relevance or bearing to the pending motion.
[33] With respect to the plaintiffs argument that Mr. Foxall has given evidence on behalf of other shareholders, which they are entitled to test, in my view, such evidence either complies with subrules 4.06(2) and 39.01(4) of the Rules or it does not. Argument about the weight to be given to Mr. Foxall’s evidence dealing with matters beyond his personal knowledge may be made at the pending motion. These questions need not be answered.
Issue 3: Should Fausto Carnicelli be ordered to answer refused questions?
[34] The plaintiffs seek an order compelling Fausto Carnicelli to answer four refused questions and re-attend for the purpose of answering those questions and answering further questions on the documents produced by the Purchaser Corporations.
a. Scope of proper rule 39.03 examination
[35] Generally, the scope of a witness’ examination under rule 39.03 is limited to information that is within their personal knowledge. Witnesses examined under rule 39.03 are not required to take steps to inform themselves of matters beyond their personal knowledge or make inquiries of others, and they are not obliged to give undertakings: Magnotta Winery Corporation v. Ontario (The Alcohol and Gaming Commission), 2020 ONSC 561 at paras. 52 and 57; Arnold v. Arnold, 2021 ONSC 7983 at para. 6.
[36] The plaintiffs argue that, even though Mr. Carnicelli is not a moving party in the pending motion and has provided no affidavit in support of it, he remains a party to this proceeding. They submit that, as a party, the scope of proper examination under rule 39.03 is broader than it would be for a non-party.
[37] Mr. Carnicelli disagrees. He submits that, although he is a defendant in the action, I should take into account that there are no allegations of fraud against him personally in this action, that he is not a moving party on the pending motion, that he was not and is not an owner of any of the properties in his personal capacity, that his evidence confirms he has no current role in the Purchaser Corporations, and that he is not seeking any relief on the pending motion. Mr. Carnicelli submits that the refused questions go beyond the scope of proper rule 39.03 examination.
[38] In support of their position on a broader scope of examination, the plaintiffs point to Arnold v. Arnold, supra, in which my colleague, Kaufman A.J., distinguished the scope of proper examination under rule 39.03 for party and non-party witnesses. He held, at para. 8, that where a party to the proceeding is being examined under rule 39.03, the scope of that examination should be the same as if that party was cross-examined on an affidavit. He reasoned that, although non-parties “should not be unduly inconvenienced with intrusive, onerous and time-consuming disclosure requirements”, parties “cannot shield relevant information from the Court and from other parties by choosing not to swear an affidavit in the proceeding.”
[39] Arnold turned on its facts. The party examined under rule 39.03 was the co-applicant, who had not sworn an affidavit in support of the application. That context is significant. Unlike this case, the co-applicant was not subject to documentary and oral discovery, which are procedures only available in actions. I am not convinced that Kaufman A.J. intended his comments to apply to all cases, including those in which parties are subject to documentary and oral discovery.
[40] Nevertheless, I agree that where a party is examined under rule 39.03 examination on a pending motion in an action, questions and production requests should be assessed in a different light than when a non-party is being examined. That is particularly true where, as here, the motion is prior to documentary and oral discoveries.
b. Questions 62 & 66-67 – Share transfer documents
[41] Fausto Carnicelli was asked to produce documents evidencing his transfer of shares in the Purchaser Corporations owning two of the properties in Niagara Falls. He was further asked to identify to whom he transferred his shares in the Purchaser Corporation owning the property in Kingston and why he relinquished those shares. All of these were refused as irrelevant to the pending motion.
[42] For reasons already discussed, I am satisfied that the identify of the Purchaser Corporations’ shareholders are relevant to the pending motion. The substance of questions 62 and 66 are accordingly relevant. However, Mr. Carnicelli was not asked if the share transfer documents requested in question 62 remain within his possession, control, or power.
[43] Mr. Carnicelli argued that privacy concerns are raised by compelling identification of non-party shareholders in the Purchaser Corporations. No case law was submitted supporting that I should refuse to compel an answer to a relevant question based solely on general privacy concerns. I am not convinced that identifying the names of current shareholders (who are potentially relevant witnesses in this action) is problematic. I am also not convinced that producing relevant documents is trumped by vague privacy concerns. In my view, since Mr. Carnicelli is a party, production of relevant documents falls within documentary discovery, which is subject to the deemed undertaking rule.
[44] I am ordering that Mr. Carnicelli provide answers to both questions 62 and 66. However, he need only produce the documents requested in question 62 to the extent they are in his possession, control, or power.
[45] With respect to question 67, the plaintiffs have not satisfied me that Mr. Carnicelli’s reasons for relinquishing his shares has any relevance or bearing on the pending motion. That question need not be answered.
c. Question 80 – Role in corporations
[46] Fausto Carnicelli was asked how he obtained the role that he described himself as having in the Purchaser Corporations. That question was challenged by Mr. Carnicelli’s counsel and, after an exchange between counsel, was refused. Mr. Carnicelli submits that the question asked was unclear, but is also irrelevant.
[47] The plaintiffs argue that Mr. Carnicelli confirmed that he was (and believes he remains) a registered officer and director of the vendor corporation for the property in Lindsay. Mr. Carnicelli acknowledged he had a specific role in the Purchaser Corporations, namely handling the day-to-day property management, leasing and accounting of the properties. The plaintiffs submit that it is thereby relevant how Mr. Carnicelli came to have the role that he described.
[48] I am not convinced that the inquiry, as asked, is relevant to the pending CPL discharge motion. I was directed to nothing in Mr. Carnicelli’s examination or the record before me supporting that his role in the Purchaser Corporations was in any way connected to his position as an officer and director in one of the co-defendant vendor corporations. No such questions appear to have been asked during his examination. In my view, the plaintiffs have not made a cogent or convincing argument for how Mr. Carnicelli’s role in the Purchaser Corporations has any bearing on issues before me in the pending motion. The question may ultimately be relevant on discovery, but it need not be answered in the context of the pending motion.
Issue 4: Is any relief against Allen Greenspoon appropriate?
[49] Allen Greenspoon was short-served with the materials for this motion by regular mail. Because of the Labour Day holiday, he was not even deemed served until after the first day of the hearing. Neither personal service nor alternative to personal service was attempted. Relief against Dr. Greenspoon accordingly has the added layer of validity of service.
a. Should service on Allen Greenspoon be validated?
[50] The plaintiffs requested an order validating service of the motion record through the Purchaser Corporations. That request was made on the basis that Dr. Greenspoon’s notice of examination was purportedly sent only by email to the Purchaser Corporations’ counsel and Dr. Greenspoon appeared for his examination. The plaintiffs submit that it is an appropriate inference to draw that the Purchaser Corporations’ counsel and Dr. Greenspoon are in contact.
[51] There is some evidence that Allen Greenspoon is the sole remaining shareholder of certain of the Purchaser Corporations. However, the Purchaser Corporations’ lawyers do not represent Dr. Greenspoon and there is no evidence before me that they have had any actual communications with him about this motion.
[52] Validation of service under rule 16.08 of the Rules requires that I be satisfied that the plaintiff’s motion materials either did come to the attention of Dr. Greenspoon or were served in a manner that would have come to his attention except for his own attempts to evade service. There is no evidence that Dr. Greenspoon was evading service and nothing before me supports that Dr. Greenspoon had any actual notice of this motion prior to the hearing. I am not prepared to validate service and, accordingly, am not prepared to grant any relief against Dr. Greenspoon,
b. Had proper service been effected, should Allen Greenspoon be ordered to answer his refused question?
[53] For completeness, though, I would not have ordered an answer to the sole question refused by Dr. Greenspoon pursued by the plaintiffs on this motion.
[54] The plaintiffs argue that, at question 235, they asked Dr. Greenspoon to confirm the names of the individuals involved in setting up the Purchaser Corporations. However, the specific question asked was to advise whoever else was involved in “setting up this investment” once Dr. Greenspoon had checked his records. I do not agree with the plaintiffs that “this investment” clearly refers to or was understood to mean setting up the Purchaser Corporations.
[55] The relevant portion of the examination was as follows (emphasis added):
- Q. Let me ask you a question sort of an aside to this, Doctor Greenspoon. In terms of this lawsuit, in which you're a defendant and these five corporations in which you have some kind of investment that you don't recall -- first of all, do you have any documents which would set out what your investment is?
A. I'm sure there are documents. I don't have them in my possession nor am I aware of them, but I'm sure there are documents that outline my position.
- Q. So you don't have these documents that outline your investor position in your possession, power or control. Correct?
A. I don't have them in my possession. I don't know where they are.
- Q. Would they be in the possession of Fausto Carnicelli?
A. It's possible. I don't know for sure. I don't know where the documents are.
- Q. And was Mr. Fausto Carnicelli, I mean you knew that he had previously been acting on behalf of Gross Capital Inc. in purchasing a building from you. Right?
A. Yes
- Q. So would it be fair to say that in setting up this investment you, Dr. Valentino, whoever else, I would ask you to advise me whoever else is when you check your records. Is that all right?
MR. FIGLIOMENI: No.
MR. WALDMANN: What's the reason?
MR. FIGLIOMENI: Irrelevant to the issues in the pending motion.
[56] In my view, the line of inquiry was evidently about Dr. Greenspoon’s investment and investor position in the Purchaser Corporations. The only investment being discussed was that of Dr. Greenspoon and the records that Dr. Greenspoon mentioned were documents outlining his own position. In context, those were reasonably the records to which examining counsel was referring when asking for Dr. Greenspoon to provide an answer after he had “check[ed] his records”.
[57] Examining counsel may well have intended to ask about setting up the Purchaser Corporations, but that is not what was actually asked. I see no relevance to the pending motion of the question as asked. I accordingly would not have ordered that it be answered.
Issue 5: Should re-attendance for further examination be ordered?
[58] I need not address the arguments that the consent time limit on examinations has been exceeded. Given the limited extent of production ordered and the nature of the answers to be provided, in my view, further examination in advance of the pending motion is not warranted. A short deadline for the ordered production and answers is sufficient and will permit the pending motion to proceed as scheduled.
[59] The plaintiffs also seek further examination on the documents produced by the Purchaser Corporations, which they argue ought to have been produced in advance of the examinations. I give no effect to that submission.
[60] With respect to Fausto Carnicelli and Allen Greenspoon, I have been directed to no evidence that either of them had or could have produced the documents prior to being examined. The plaintiffs made a decision to proceed with those examinations without the documents and must live with that decision. In my view, it would be unfair to Mr. Carnicelli and Dr. Greenspoon to permit the plaintiffs to split their examination when neither of them has been demonstrated to have obstructed a proper examination.
[61] With respect to Stephen Foxall, I have made no finding on whether the produced documents are relevant on the pending motion. In producing the documents, the Purchaser Corporations did not concede relevance. The letter providing answers to matters under advisement and producing documents expressly states, “Please note that the answers are provided without prejudice to our position that the questions are irrelevant to the issues on the pending motion in respect of which Mr. Foxall was cross-examined.”
[62] The plaintiffs have advanced no argument for why these documents are relevant on the pending motion. Absent a concession to relevance or being convinced that they are, in fact, relevant, I am not prepared to compel the further expense of a potentially unnecessary and irrelevant cross-examination. The plaintiffs now have the documents, despite the Purchaser Corporations’ objection to their relevance. The plaintiffs may make use of those documents on the pending motion as they see fit.
Costs
[63] The plaintiffs seek their costs of this motion in the amount of $19,000 on a partial indemnity basis, with $9,500 payable by the Purchaser Corporations and $9,500 payable by Fausto Carnicelli and Allen Greenspoon. The Purchaser Corporations submit that costs of the motion should be in the cause of the pending CPL discharge motion. Mr. Carnicelli seeks his own partial indemnity costs of the motion in the amount of $1,500, although no costs outline has been submitted.
[64] The plaintiffs have been unsuccessful against Dr. Greenspoon, so there is no basis for a costs award against him. The plaintiffs have had only limited success with respect to relief sought against Mr. Carnicelli. In my view, given the divided success, there should be no order as to costs as between them.
[65] I agree with the Purchaser Corporations that the costs claim advanced by the plaintiffs on this motion is disproportionate to the materials filed and includes costs that are properly viewed as costs of the pending motion, rather than costs of this motion. There has been divided success between the plaintiffs and the Purchaser Corporations. In all the circumstances, I agree that costs as between the plaintiffs and the Purchaser Corporations should be in the cause of the pending CPL discharge motion.
Disposition
[66] I accordingly order as follows:
(a) Stephen Foxall shall, by September 23, 2022, produce copies of all share purchase agreements for share transfers in the Purchaser Corporations from the date of incorporation to date.
(b) Stephen Foxall shall provide a written answer to question 312 from his cross-examination by September 23, 2022.
(c) Fausto Carnicelli shall provide written answers to questions 62 and 66 from his examination by September 23. 2022. The answer to question 62 shall be to the extent that the requested documents remain within his possession, control, or power.
(d) Any production of documents in accordance with subparagraphs (a)-(c) above shall constitute part of the documentary discovery in this action, such that the deemed undertaking in rule 30.1 of the Rules applies.
(e) The plaintiffs’ motion is otherwise dismissed.
(f) There shall be no costs of this motion as between the plaintiffs and Fausto Carnicelli and Allen Greenspoon.
(g) Cost of this motion as between the plaintiffs and the Purchaser Corporations shall be in the cause of the pending motion to discharge the plaintiffs’ CPLs.
(h) This order is effective without further formality.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: September 21, 2022