COURT FILE NO.: CV-22-90550
DATE: 2022/12/20
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Margaret McMullen, Plaintiff
and
Dilawri Property Holdings Ltd., Defendants
BEFORE: Justice H.J. Williams
COUNSEL: Alyssa Tomkins and Jennifer Therrien, Counsel for the Applicant
Michael Beeson, Counsel for the Respondent
HEARD: December 16, 2022
AMENDED ENDORSEMENT
The release date of the original Endorsement dated December 20, 2022 was corrected on January 20, 2023 and the explanation of the correction is appended.
Overview
[1] The respondent has brought a motion for production of a document in the context of an urgent application.
[2] The application is for a declaration that a right of first refusal in favour of the respondent registered against property owed by the applicant is extinguished, and for an order removing the notice of ROFR from the property’s title.
[3] The applicant is up against a January 31, 2023 deadline to remove the notice.
[4] The application was to have been heard today.
Adjournment of the application hearing
[5] Half a day of court time was set aside for the hearing of the application. Time will be required for the argument on the motion. I am not available after 1 p.m. because of a 2 p.m. hearing of another matter. Regardless of the outcome of the motion, the hearing of the application will need to be adjourned.
[6] I have contacted the trial coordinators who have offered two return dates in January for the hearing of the application.
[7] Counsel shall take steps to reschedule the application hearing and shall advise trial coordination that I have commented that the judge assigned to hear the application will appreciate: (a) being informed at the time of the assignment of the requirement for a decision before January 31 2023; and (b) being given access to the application materials well in advance of the hearing date.
The document production issue
[8] The respondent seeks production of an agreement of purchase and sale. The APS is in respect of the property subject to the ROFR.
[9] The respondent relies on Rule 30.04(2) of the Rules of Civil Procedure, which says that a party may obtain inspection of any document in another party’s possession, control or power that is referred to in an originating process, pleadings or an affidavit served by the other party.
[10] The respondent maintains that the applicant referred to the APS in two affidavits.
[11] The respondent has not cross-examined the applicant on her affidavits. The respondent says it requested a copy of the APS before cross-examining. The respondent says that when the request was turned down, it scheduled its motion before cross-examining, to be efficient.
[12] The respondent says the circumstances surrounding its failed purchase of the property and the execution of the new APS are “very concerning.”
[13] In January 2022, the respondent had exercised its right under the ROFR to purchase the applicant’s property. The respondent’s deadline to waive conditions was May 16, 2022. The respondent was unable to complete its due diligence in time. The respondent asked the applicant for a 60-day extension. The applicant refused. On May 17, 2022, the applicant accepted a new offer to purchase the property. The respondent later learned that the new purchaser is the same company that had offered to purchase the property in the earlier APS that had triggered the respondent’s ROFR.
[14] In its factum, the respondent argued that the APS is relevant to the issues of the circumstances around the failed completion of its offer to purchase the property. In oral argument, the respondent’s counsel said that the respondent suspects that, in breach of a non-disclosure agreement, the applicant must have informed the purchaser under the May 2022 APS of the respondent’s May 16, 2022 deadline to waive conditions and its inability to do so. Otherwise, the respondent’s counsel says, the purchaser would not have known that the property was available for sale at the time it made its offer. The respondent says the applicant owed the respondent a duty of good faith in respect of the ROFR and that a breach of their NDA would amount to a breach of that duty of good faith.
[15] The applicant refuses to produce the APS. She considers it to be commercially sensitive. She also says an NDA prohibits her from disclosing it and she does not have the consent of the purchaser to disclose it. The applicant’s counsel concedes that although there is evidence that the purchaser has not consented to disclosure, there is no evidence that the purchaser was asked for its consent.
Analysis
[16] I am not satisfied that the APS sought by the respondent was “referred to” in the affidavits served by the applicant. A reference to a document is required by Rule 30.04(2) before an order for production for inspection will be made under Rule 30.04(5).
The November 10, 2022 affidavit
[17] In para. 21 of her affidavit of November 10, 2022, the applicant says that “[o]n May 16, 2022 another purchaser made an offer to purchase the property, which I accepted on May 17, 2022.” While it can be inferred that an APS was signed, the affidavit does not mention an APS and, as such, I do not consider the APS to be a document that has been incorporated by reference into the affidavit.
The November 29, 2022 affidavit
[18] The applicant specifically refers to the APS in her supplementary affidavit of November 29, 2022, however, she does so in response to a respondent’s affidavit to explain why she cannot produce the APS. In her November 29, 2022 affidavit, the applicant says she is unable to disclose the APS because there is an NDA and she does not have the consent of the purchaser to release it.
[19] It would be quite unfair, in my view, to conclude that a document should be produced under Rule 30.04(2) in circumstances where it was referred to in an affidavit, for the first time, for the purpose of explaining why it could not be produced.
Discretion not to produce: relevance; timeliness; prejudice
[20] If I am being too technical in my interpretation of Rule 30.04(2), I would nonetheless exercise my discretion not to order production of the APS.
[21] In Mask v. Silvercorp Metals Inc., 2014 ONSC 4161 at para. 21, Justice Belobaba observed that courts have exercised a broad discretion to limit the scope of a request to inspect based on relevance, proportionality, privilege, prejudice and timeliness. In Harris v. Bayerische Motoren Werke Aktiengesellschaft, 2019 ONSC 5958, at para. 44, Perrell J. made a similar observation when he said that courts may refuse to enforce a request to inspect on the basis of immateriality, irrelevance, prejudicial effect overcoming probative value, disproportionality, untimeliness (i.e. premature documentary discovery) and privilege.
Relevance
[22] I am not satisfied that the APS is relevant to the issues on the application. I agree with the applicant’s submission that if she had brought this application before she received a second offer to purchase the property, she would have made precisely the same arguments on the application.
[23] The respondent argues that the APS may show that the applicant breached an NDA and therefore also a duty of good faith she owed to the respondent. The respondent says that if the APS is not produced, the respondent will be limited to asking the application judge to make an inference about the applicant’s breach of the NDA.
[24] There are some frailties in the respondent’s arguments: (1) The respondent has not put the NDA in issue. The respondent did not mention the NDA in its responding affidavit on the application. There is nothing in the materials before me to suggest that the NDA has any bearing on the issue on the application, which is whether the ROFR has been extinguished, or to identify a remedy available to the respondent in the event of a breach of the NDA; (2) If the issue of the purported breach of the NDA were before the court, the respondent has not satisfied me that any portion of the APS, other than its date, would be relevant to the issue, and the date of the offer and its acceptance are already known; and (3) The respondent cannot legitimately argue that if the APS is not disclosed, the respondent would be limited to asking the court to draw an inference about the breach of the NDA, when the respondent has not, or perhaps not yet, cross-examined the applicant.
Prejudice
[25] I accept the applicant’s submission that the APS is a commercially sensitive document, and that production of the APS could be prejudicial to the applicant. At this time, it is not known whether the ROFR will be extinguished and, if it is, whether the sale under the May 2022 APS will close. The property could be on the market again in the future. I agree with the respondent that if the ROFR is not extinguished by the application judge, the applicant will be required to produce the APS to the respondent. That does not mean that she is required to produce it now.
[26] I place little weight on the NDA in the May 2022 APS. As I have already mentioned, the applicant does not want to produce the APS for her own reasons and although the applicant says she does not have the consent of the applicant to produce the APS, there is no evidence that the applicant asked for its consent.
Conclusion
[27] In conclusion, having considered the submissions of counsel and the materials before me, I am not satisfied that the APS is relevant to the issue on the application. The issue of whether the applicant breached her NDA with the respondent was not raised in the application materials and the effect of such a breach on the central issue of whether the ROFR is extinguished is not apparent. I also find that production of the APS could be prejudicial to the applicant.
[28] The applicant raised the timeliness of the respondent’s request for the APS but because of my conclusions about relevance and prejudice, I have not addressed the timeliness issue.
Disposition
[29] For these reasons, the respondent’s motion for production of the APS is dismissed.
Costs
[30] The costs of the motion are reserved to the judge who hears the application.
Justice H.J. Williams
Released: December 20, 2022
Re-released: January 20, 2023
APPENDIX
The Title of Proceedings previously stated:
COUNSEL: Alyssa Tompkins and Jennifer Therrien, Counsel for the Applicant
The Title of Proceedings now reads as follows:
COUNSEL: Alyssa Tomkins and Jennifer Therrien, Counsel for the Applicant
COURT FILE NO.: CV-22-90550
DATE: 2022/12/20
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Margaret McMullen
Applicant
and
Dilawri Property holdings Ltd.
Respondent
BEFORE: The Honourable Justice H.J. Williams
COUNSEL: Alyssa Tomkins and Jennifer Therrien, Counsel, for the Applicant
Michael Beeson, Counsel for the Respondent
HEARD: December 16, 2022
AMENDED ENDORSEMENT
Williams J.
Released: December 20, 2022
Re-Released: January 20, 2023