Estate of Kenneth Ryan Hill (Re), 2023 ONSC 7161
SUPERIOR COURT OF JUSTICE – ONTARIO
ESTATES’ LIST
IN THE MATTER OF THE ESTATE OF KENNETH RYAN HILL
RE: Rayna Rachalle Bayliss, Emery John Bayliss, by his Litigation Guardian Rayna Rachalle Bayliss, Alisha Sherine Milhim and Gabryella Milhim-Hill by her Litigation Guardian Alisha Sherine Milhim, Applicants
AND:
Ryan Edward Dalton Burnham in his capacity as Estate Trustee for the Estate of Kenneth Ryan Hill, Respondent
BEFORE: C. Gilmore J.
COUNSEL: Alexander Turner and Katie Morris, Counsel for the Applicants Rayna Bayliss and Alisha Milhim
Arieh Bloom and Jessica Karjanmaa, Counsel for Brittany Beaver and Brody Hill Beaver
Justin Nasseri and Gordon Vance, Counsel for Catherine Anne Haggett, Jordan Austin Hill, Jasmine Alura Hill by their Litigation Guardian Catherine Anne Haggett
Iris Fischer, Leah Kelley and Brittiny Rabinovich, Counsel for Grand River Enterprises Six Nations Ltd.
Patrick Cotter, Counsel for Bryan Porter and Peter Franklin James Hill in their capacities as Estate Trustees During Litigation for the Estate of Kenneth Ryan Hill
George Pappas, Counsel for Katherine Andersen and Jacob Matthew Andersen
Zara Wong, Counsel for Maegan Martin
Susan Sack, Counsel for John Hammond
Rory McGovern, Counsel for Jerry Montour
Kelly Charlebois, Counsel for the Respondent Ryan Edward Dalton Burnham
HEARD: November 23, 2023
ENDORSEMENT on motions
INTRODUCTION
1There are two motions before the Court:
a. Motion # 1: the Production Motion brought by Maegan Martin, Rayna Rachalle Bayliss, Emery John Bayliss by his litigation guardian Rayna Rachalle Bayliss, Alisha Sherine Milhim, Gabryella Milhim-Hill by her litigation guardian Alisha Sherine Milhim, Brittany Beaver, Brody Hill Beaver by his litigation guardian Brittany Beaver, Catherine Haggett, and Jasmine Alura Hill and Jordan Austin Hill by their litigation guardian Catherine Haggett (the “Motion #1 Moving Parties”); and
b. Motion #2: the Motion for Leave to Examine brought by Rayna Bayliss, Alisha Sherine Milhim, Brittany Beaver, Catherine Haggett and Meagan Martin (the “Motion #2 Moving Parties”).
2In Motion #1, the Moving Parties seek production of documents and records from Grand River Six Nations Ltd. (“GRE”) to permit them to understand the value of the estate of the deceased Kenneth Ryan Hill (“Kenny”) who died, unmarried, on January 18, 2021.
3Kenny’s purported last will dated September 10, 2020 is subject to a will challenge which will be heard at a five-day trial scheduled for September 16-20, 2024 (“the Will Challenge”). The moving parties in the Will Challenge are Kenny’s children, other than his adult sons: the respondent Ryan Burnham (“Ryan”) and Joshua Hill (“Joshua”). There are also dependent support claims by his six minor children, their five mothers, and a former spouse.
4To date, GRE has refused to produce the requested documents. Kenny owned 12.5 percent of the shares in GRE. As GRE is one of the largest exporters of tobacco products in Canada, Kenny’s shares are worth a significant amount of money. GRE resists the production request on the grounds that some of the requested documents have already been produced and others do not exist. With respect to the requested financial statements and any other documents which may be required by a valuator on behalf of the Moving Parties, GRE’s position has always been that, among other reasons, production of those statements would be detrimental and prejudicial to GRE’s commercial and competitive interests and therefore cannot be disclosed publicly.
5With respect to Motion #2, the Moving Parties request an order to examine for discovery the Non-Parties John Hammond (“Mr. Hammond”) and Jerry Montour (“Mr. Montour”) (together the “Non-Parties”) as well as an order that Mr. Montour and Mr. Hammond produce any documents in their possession or control that relate to the Will Challenge.
6Mr. Montour, Mr. Hammond and Ryan resist the motion. Mr. Hammond resists the motion on the grounds that the Moving Parties have failed to meet the test for leave to examine Non-Parties and that the sworn evidence previously provided by Mr. Hammond discloses all of the information he has with respect to the will of the late Kenny Hill. Mr. Montour and Mr. Burnham filed material which contains similar arguments to those of Mr. Hammond.
7For the reasons set out below, I find that the Moving Parties have met the required threshold under rule 30.01 and that the productions sought in their notice of motion shall be provided within 30 days. Further directions are provided below with respect to ensuring a degree of confidentiality pending trial given GRE’s concern about privacy and harm.
8Further, for the reasons set out below, leave to examine the Non-Parties is granted with certain conditions.
BACKGOUND FACTS
9Kenny is survived by nine children. His adult children include Ryan, Joshua, Maegan Martin (“Maegan) and Jacob Matthew Anderson (“Jacob”). Jacob was a minor on the date of death. Jacob’s mother, Katherine Anderson, is his litigation guardian.
10Kenny’s minor children are Jordan Austin Hill (“Jordan”), Jasmine Alura Hill (“Jasmine”), Gabryella Milhim-Hill (“Gabryella”), Emery John Bayliss (“Emery”) and Brody Beaver-Hill (“Brody”) (together “the children”).
11There are six outstanding claims against the Estate which include dependants’ support for the children and a former spouse, the Will Challenge and damages and constructive trust claims.
12All the minor children are currently receiving interim support from the Estate as well as other expenses, including but not limited to private school tuition, uniforms, and extra-curricular activities.
13Kenny was a member of the Six Nations of the Grand River community. He was a successful businessman who co-founded GRE, a privately-held company that manufactures and exports cigarettes. Kenny also owned other businesses that operated in the U.S. and the Bahamas.
14Bryan Porter (“Bryan”) and Peter Hill (“Peter”) are the co-Estate Trustees During Litigation (the “ETDLs”) of the Estate. Bryan served as the Chief Financial Officer for GRE for eight years. In 2019, he became the Shakohen: te’s of GRE, which is a role akin to a Chief Executive Officer. Bryan continues in that role.
15After Kenny died, a one-page will dated September 10, 2020 was discovered naming Ryan as the estate trustee. As mentioned above, the children, other than Ryan and Joshua, have challenged the Will. In the Will Challenge, the Moving Parties challenge the Will based on a lack of due execution, a lack of knowledge and approval of the contents of the Will by Kenny, and suspicious circumstances. They challenge whether the Will makes testamentary sense given Kenny’s vast wealth and holdings.
16The Will Challenge trial will be heard in September 2024. A copy of the contents of the Will is set out below:
LAST WILL
I Kenneth Ryan Hill, of the Six Nations of the Grand River Reserve in Ohsweken, Ontario, Canada, make this final Will. I have no other Wills.
I want my son Ryan Edward Dalton Burnham to be the Executor of my estate after I die.
I give the following money to my children listed below:
Jordan Austin Hill - $ 5 million
Jasmine Alura - $ 5 million
Gabriella Milhim-Hill - $5 million
Emery Bayliss - $5 million
Brody Hill - Beaver - $3 million
Jacob Matthew Andersen - $5 million
If I do not have enough money to make these payments, then my Executor should sell some of my property to make the payments.
I give all my shares in Grand River Enterprises Six Nations Ltd to my son Ryan Edward Dalton Burnham. But I want Ryan to give 50% of the money that comes from those shares to my son Joshua Hill or hold that money for Joshua as Ryan thinks is needed.
I give all the rest of my property and land to my son Ryan Edward Dalton Burnham. But I want Ryan to give 50% of the money that comes from the use or sale of that property and land to my son Joshua Hill or hold that money for Joshua as Ryan thinks is needed.
Date: September 10, 2020 “KENNETH RYAN HILL”
17Kenny was one of the eight initial stakeholders in GRE but has always been a minority, non-controlling shareholder holding 12.5 percent of GRE’s common shares. Kenny was never an officer or a director of GRE. GRE is not a party to the Will Challenge or any of the estate litigation related to Kenny’s estate.
18GRE was founded in 1983 with a mission to become a self-sustaining business in an Indigenous community. It is owned and operated entirely by Indigenous people on Indigenous land. GRE employs over 500 people, most of whom live in the Six Nations community.
19GRE is unique among Canadian Indigenous tobacco producers in that it complies fully with federal and provincial laws and regulations and pays all required excise taxes and duties. Before GRE could obtain a Canadian licence to operate and sell tobacco, GRE was required to incorporate under the Canada Business Corporations Act, R.S.C. 1985, c. C-44 and did so in 1996. Despite being a federally incorporated company, GRE operates using traditional Haudenosaunee governance principles. This means that many business matters are not reduced to writing, without formalized meetings or minutes. Decisions are reached based on informal discussions and gatherings.
20As GRE is an entirely Indigenous-owned company operating on Indigenous land, it does not pay corporate dividends to its shareholders, as such dividends would be subject to corporate taxes. Rather, dividends are paid to shareholders by way of a profit distribution which is taxable in the hands of the corporation. Therefore, GRE does not retain profit but puts its revenue back into the business and pays its shareholders by way of personal income which is not subject to taxation in accordance with the Indian Act R.S.C. 1985, c. I-5. GRE shares cannot be held by anyone who is not a Status Indian.
21GRE’s shareholders are members of the same small community and have known one another for many years. GRE’s shareholders have an understanding that its shares cannot be sold on the open market. GRE’s Articles provide that its shares cannot be transferred without the approval of the majority of the directors or shareholders.
22GRE operates within a highly competitive business environment, competing with over 50 privately-held Indigenous-owned tobacco companies which are not licensed or registered with authorities. Its competitors do not pay excise taxes or duties, nor are they bound by Health Canada regulations. This has led to GRE losing some market share to cheaper sovereign brands.
23Some members of the Six Nations community are unhappy with GRE’s position on regulatory compliance and are vehemently opposed to it paying any taxes to the Canadian government.
24On November 8, 2023, the ETDL provided a report prepared by PricewaterhouseCoopers LLP (“PwC”) dated November 3, 2023 which purported to value Kenny’s 12.5 percent interest in GRE (“the November valuation report”). As that report was not intended to be an expert report, its release is restricted to counsel and the Court only pursuant to my endorsement dated November 6, 2023. It has not been publicly released due to PwC’s insistence that a release be signed by all parties. The Moving Parties refused to sign any release. In any event, the Moving Parties submit that the PwC report does not assist them and does not provide the information they are seeking in the within motion.
25Annual payments are made to GRE shareholders. Payments owing to the Estate from GRE would be $2M in each of 2017, 2018 and 2019, $4M in 2020, $7M in 2021 and an estimated $6M in 2022. The payment for 2023 has not yet been determined. No payments from GRE to the Estate or to Kenny have been made since 2018. Payments have not been made to Kenny’s Estate by GRE due to concerns about irreversible tax implications if the payment is made to an off-reserve bank account or to someone other than a status Indian with tax-exempt status.
26In my February 9, 2023 endorsement, I requested that GRE’s counsel be put on notice that its financial statements should be produced for the purpose of assessing the dependants’ support claims within 30 days. On August 3, 2023, counsel for GRE advised that GRE would not produce its financial statements as they do not provide such financial access to shareholders with respect to its operations. GRE’s counsel advised that it was not given notice of the February 9, 2023 case conference and could therefore not respond to requests for information.
27GRE further relied on an endorsement from Justice Cavanagh (“the Cavanagh Endorsement) dated November 26, 2019 in relation to an Application made by GRE under s. 157(3) of the CBCA. In that Endorsement, Justice Cavanagh held that the production of financial statements in the family law proceeding involving Kenny and Brittany Beaver (“Brittany”) would not be permitted given the concerns regarding the effect of disclosing private financial information to the public and GRE’s competitors. The CBCA Application was brought without notice to Brittany although there is evidence that Brittany was aware of the Application. It should be noted that the Cavanagh Endorsement does not preclude a non-party in the family law proceeding from seeking production of records from GRE.
28Given my February 2023 endorsement, the Cavanagh Endorsement, the Moving Parties’ position that the November valuation report was insufficient for their needs, and the position of GRE on disclosure, the within production motion was scheduled and brought forward.
MOTION #1 – THE PRODUCTION MOTION
29This is a rule 30.10 motion for production. The Moving Parties claim that GRE has made conscientious efforts to block their efforts to obtain relevant and necessary financial information for both the Will Challenge and the support claims.
30The status of the requested financial disclosure is as follows. The Moving Parties have received the articles, by-laws and shareholder’s list for GRE as well as a list of payments due or owing to the Deceased or the Estate between 2018 to date. The outstanding productions sought by the Moving Parties include financial statements for the fiscal years 2021, 2022 and 2023, quarterly financial statements until trial or resolution of this matter, and any other documents required by the Moving Parties’ valuator(s), acting reasonably, in order to prepare a valuation of Kenny’s interest in GRE.
31In addition to productions from GRE, the Moving Parties seek the following productions from the ETDL:
(a) An order that the ETDL produce all records, communications and documents between them and Grand River Enterprises Six Nations Ltd. ("GRE") which affect the Deceased's interest in GRE; and
(b) An order that the ETDL account, with vouchers, for all payments paid, due, or owing from GRE to the Deceased or to the Estate from 2018 to present, including, without limitation, salary, dividends, or any redemption of the Deceased's shares in GRE.
32As for the accounting sought from the ETDL, the ETDL responds that all information in that regard has been given and that no distribution has been received to date and that all T4 slips issued to the Deceased since 2017 have already been provided. The ETDL did not make submissions on the motion.
33With respect to the disclosure sought from GRE, the President of GRE, Steve Williams, has filed an affidavit sworn October 27, 2023. In that affidavit, Mr. Williams deposes that disclosure of GRE’s financial information would be detrimental and prejudicial to GRE and has never been publicly disclosed, except to shareholders at Annual General Meetings. Even then, copies are not provided.
34Mr. Williams deposed that if GRE’s financial statements became publicly available:
- GRE's competitors would be able to assess GRE's third-party business relationships, calculate GRE's market share and profit margins on its various tobacco products, as well as gain insight into GRE's business volume and its product costs. They could use this information to place GRE in a disadvantageous position by developing competitive strategies directed at disrupting business relationships and reducing GRE's market share, both domestically and internationally, to their own benefit. The detriment would be particularly grave because most of GRE's competitors. (i.e., the local non-licensed sovereign manufacturers) do not make similar disclosure and their financial statements are not available publicly.
35In his affidavit, Mr. Williams disclosed that two former shareholders of GRE, namely Sidney (“Sidney”) and Jeffrey (“Jeffrey”) Burnham had previously had their shares purchased for $5M and $7M respectively.
36As a result of investigations carried out by the Moving Parties, it was discovered that GRE commenced litigation against Sidney (“the Sidney Proceeding”) nearly 20 years ago and that by way of counterclaim in the Sidney Proceeding, Sidney sought an independent valuation of his shares and damages for oppression. In that proceeding, the Court held that Sidney’s attempts to obtain financial disclosure were ignored by GRE and that the conduct of GRE was oppressive.
37In the course of that litigation, GRE was ordered to produce all financial records for GRE for the relevant period and certain employees, including Mr. Williams, were ordered to be examined for discovery. GRE sought a stay of the requirement to provide financial disclosure, which was denied by the court on the grounds that the harm to GRE had not been adequately delineated.
38Mr. Williams filed three affidavits in the Sidney Proceeding. However, during his cross-examination in relation to this motion, Mr. Williams did not recall swearing those affidavits or the decision of the Court in the Sidney Proceeding. Further, the affidavit of GRE’s accountant at that time, Mr. John Duncan, stated that all of the financial statements of GRE were provided to Sidney.
39In his cross-examination in relation to this motion, Mr. Williams deposed that he would not permit the Litigation Guardians’ valuator(s) to come to GRE’s office to inspect GRE’s financial statements, despite having done so in the Sidney Proceeding.
40Seven years after the Sidney Proceeding was settled, GRE brought a motion seeking a sealing order over the court file because media was accessing the file and reporting on it. GRE’s controller at the time, Mr. Don Richards, swore an affidavit in support of the motion setting out that a “substantial amount of financial and business information” had been disclosed in the course of the Sidney Proceeding and that without a sealing order, GRE could not effectively ensure confidentiality of its financial information. The sealing order was denied.
41There was no reference to the Sidney Proceeding in the CBCA Application before Justice Cavanagh. GRE maintained its position that no shareholder had been examined or taken copies of GRE’s financial information.
42GRE views the Sidney Proceeding as irrelevant to this motion as it involved shareholders who were not parties to the litigation, different legal tests and a different context.
ANALYSIS
43Rule 30.10 governs the production of documents from non-parties. A court may order production of a document in the possession or control of a third party, that is not privileged, where the Court is satisfied that:
(a) the document is relevant to a material issue in the action; and
(b) it would be unfair to require the moving party to proceed to trial without having discovery of the document.
44As the original application in this matter has now been converted to a trial, the Court has jurisdiction to order the productions either pursuant to rule 30.10 or rule 75.06, which permits the Court to order production from third parties in contentious estate proceedings.
45The Moving Parties require the Rule 30.10 disclosure for three main reasons: (1) Kenny’s GRE assets are the Estate’s largest asset; (2) the Moving Parties need to understand the value of the Estate’s shares in GRE to properly ground their dependency claims; and (3) the complexity of Kenny’s assets and their value goes to whether Kenny had the requisite knowledge and approval of the contents of his Will in the Will Challenge case.
46The factors to be considered by a motion judge on a rule 30.10 motion are set out in Ontario (Attorney General) v. Ballard Estate (1995), 1995 3509 (ON CA), 26 O.R. (3d) 39 (C.A.), at para. 15 as follows:
the importance of the documents in the litigation;
whether production at the discovery stage of the process as opposed to production at trial is necessary to avoid unfairness to the appellant;
whether the discovery of the defendants with respect to the issues to which the documents are relevant is adequate and if not, whether responsibility for that inadequacy rests with the defendants;
the position of the Non-Parties with respect to production;
the availability of the documents or their informational equivalent from some other source which is accessible to the moving parties;
the relationship of the Non-Parties from whom production is sought, to the litigation and the parties to the litigation. Non- parties who have an interest in the subject matter of the litigation and whose interests are allied with the party opposing production should be more susceptible to a production order than a true "stranger" to the litigation.
47These considerations were also adverted to in Tetefsky v. General Motors Corp., 2010 ONSC 1675, at para. 42. In that case, a third party in a class action refused to provide proprietary information to Plaintiffs. A rule 30.10 motion was brought, as the Plaintiffs’ position was that they needed the information for certification of their class action.
48At paragraph 44 of that decision, Justice Perell described rule 30.10 relief as “extraordinary and intrusive on the rights of a non-party”. Justice Perell held that the Plaintiffs had to establish necessity, which they had not done. The motion was refused. I note that in the analysis of the refusal, Justice Perell mentions the low evidentiary standard on a motion for certification and that the Plaintiffs were not required to prove the merits of their case at the certification stage.
49Justice Perell agreed that, as per Morse Shoe (Canada) Ltd. v. Zellers Inc. (1997), 1997 1573 (ON CA), 100 O.A.C. 116, at para. 19, rule 30.10 relief “should not be granted as a matter of course and should only be made in exceptional circumstances.”
50As for possible production under rule 75.06 (third party production in the context of a contested Estate Application), Justice Kimmel in Taylor v. Reid, 2022 ONSC 671 held that reliance on rules 74 and 75 is not a circumvention of rule 30.10. Justice Kimmel found in that case that it could have exercised its jurisdiction under rr. 74 and 75 but that it was not necessary because rule 30.10 applied.
Is the Disclosure Relevant?
51The relevance test is elevated when documents are in the hands of a third party. The information sought must be logically probative of a material issue in the action: see Walker v. Doxtator et al., 2018 ONSC 2112, at para. 12.
52It is important to note that Kenny’s Estate owns significant assets including real estate, boats, vehicles and bank accounts. Those assets (without consideration of the GRE shares) are worth approximately $56.3M. GRE submits there are many other valuable assets which can satisfy the claims of the Moving Parties.
53The Moving Parties submit that the Estate’s holdings in GRE far exceed the other Estate assets in terms of value. GRE denies this is the case. This conundrum cannot of course be resolved without knowing the value of the GRE shares. That is not to say that the value of the income of the shareholdings is important, however, it is this court’s view that any informed decision about how to resolve this case must have both sets of information.
54The Moving Parties submit that the GRE disclosure is required and relevant for the following reasons:
a. The disclosure will provide an understanding of the complexity of Kenny’s assets. This relates to whether Kenny had knowledge and approval of the Will contents and whether the Will makes sense. Both are key issues in the Will Challenge. The simplicity of the Will itself is apposite to the complexity of Kenny’s assets.
b. The disclosure is relevant to the dependants’ support claim including the ongoing determination of interim support.
c. The disclosure is relevant to the issue of the ETDL’s management of this matter, including communications between the ETDL and GRE, and the pending removal and passing of accounts of the ETDL.
d. The disclosure is relevant to the Moving Parties’ ability to advise the litigation guardians and provide evidence to the Court with respect to the reasonableness of any settlement involving the minor children and will ensure meaningful participation in an upcoming mediation.
55GRE submits that the valuation of Kenny’s GRE shares is not relevant to any material issue. The disclosure will not influence the court with respect to any finding in relation to the Will Challenge. The Will Challenge attacks the Will as not being Kenny’s true Will because it is suspicious, confusing and the circumstances of how it came into being are unknown. The disclosure sought will make no difference to proving these allegations.
56Further, the argument with respect to the interim support claims is a red herring because the support claims do not form part of the Will Challenge. Similarly, the ETDL’s management of the GRE shares also does not form part of the Will Challenge and should not be a consideration on this motion.
57The Moving Parties contend that this Will Challenge involves suspicious circumstances. As per Scott v. Cousins (2001), O.T.C. 9 (S.C.J.), suspicious circumstances include whether or not the Will makes testamentary sense. The Moving Parties point out several aspects of the Will that do not make sense.
58For example, why do each of the minor children receive a $5M bequest but Brody receives only $3M? Why is Kenny’s adult daughter Maegan Martin left out altogether? How can Kenny’s shares in GRE be transferred to Ryan when GRE insists they are inalienable? As Mr. Williams has deposed that he will not provide information as to who GRE’s shareholders are, how could Kenny know whether a majority of those shareholders would agree to transfer the shares to Ryan and to share the income of Ryan’s shares with Joshua? There are also other suspicious circumstances including the signature on the Will and the fact that it was not witnessed as well as its provenance.
59Given the above, the issue of whether Kenny’s Will makes testamentary sense remains an outstanding and important triable issue in this litigation. I therefore disagree with GRE that the value of the GRE shares is not relevant to an issue in this proceeding. On the contrary, I find that the value and alleged inalienability of the GRE shares is at the very heart of the Will Challenge.
60GRE submits that the Moving Parties actually have more information than Kenny regarding the value of his shares because they have the PwC report.
61The PwC report has become a contentious point on this motion. GRE submits that the report may be relied upon because PwC used an accepted income valuation method to value the income stream from the shares. Since the shareholders only receive “income” and not dividends in relation to their shares for tax purposes, and the shares cannot be sold on the open market, the Moving Parties (assuming they are successful in their Will Challenge) would receive a portion of that income stream as well. There is no reason not to rely on this report for settlement purposes. The share valuation envisaged by the Moving Parties is pointless since the shares are inalienable.
62The Moving Parties do not agree. Their position is that the PwC report is of no value because it clearly states that PwC was not given financial statements and had limited financial information available to it. They relied on the Williams affidavit (which would not have been available but for this motion) and other “limited” information. The Moving Parties view the report as virtually useless in terms of the Will Challenge, mediation and the obligations of the litigation guardians and the Court with respect to any settlement.
63I accept that this is a somewhat unique situation, given the underlying restrictions on share transfers and the rather unorthodox manner in which the corporation is run. I also accept that the test for relevance is “elevated” beyond the scope of normal discovery when the documents are in the hands of a third party.
64However, the Estate is a shareholder just as Sidney Burnham was. The request for disclosure in this case is just one step removed from that in the Burnham litigation because the shareholder is now deceased.
65I accept that the disclosure is relevant for all of the reasons raised by the Moving Parties. While interim support may not be the subject of this motion, it would be inefficient in relation to court resources and for case management reasons to have this motion brought again in the context of the dependants’ relief application. The same applies to the ETDL considerations.
66The GRE shares are an asset of the Estate and must be valued like any other asset. I disagree with GRE that the request for disclosure by the Moving Parties is “unbounded.” On the contrary, I find that it does not stray from what one might expect to see in any estates case where documents related to the deceased’s interests in certain assets are in the hands of third parties. If the procedure for obtaining that disclosure must be fashioned to protect business and privacy interests, that can be addressed with a properly drafted order.
67As for the PwC report, it is largely based on information from Mr. Williams’ affidavit with minimal analysis and importantly without any financial statements. Specifically, the report sets out the following under the heading of “Scope Limitation”:
You have advised us that GRE has not agreed to disclose any of its financial information and it is therefore unavailable for the purpose of our analysis.
As a result, our assessment of value heavily relies on our analysis of the reported annual distributions paid or payable to Mr. Hill or the Estate due to his beneficial ownership of the GRE shares.
68The report values the Fair Market Value of Kenny’s shares with a gap of over $41M between the low and high range. This gap on its face is problematic. Further, why should the Moving Parties be forced to accept this as the only valuation of the Estate’s interest in the GRE, given the clear limitations of its scope?
69It is this court’s view that the PwC report is not the answer to the disclosure problem, it is actually the question. The Moving Parties are simply being asked to accept the valuation without any real opportunity to test the conclusions therein. That is simply insufficient given the issues at stake in this litigation.
70GRE also complains that providing the requested disclosure would result in a “clear and present danger to the personal safety of GRE’s stakeholders.” Again, this seems overstated given that the Estate is a stakeholder. It would clearly not be in the Estate’s interest to use any financial information obtained from GRE in any way that would harm GRE’s business interests given their claims in relation to the Will Challenge and the dependants’ support claims.
71I find that there can be no doubt that the GRE disclosure is relevant to the matters in issue including the dependants’ support claims, the Will Challenge and the passing of accounts by the ETDL. These outstanding matters cannot be decided in a vacuum. An understanding of the value of Kenny’s shares in GRE is essential for the Moving Parties.
Issue #2 – Is the Requested GRE Disclosure Fair and Necessary?
A. Is There Another Way to Obtain the Disclosure?
72According to the Williams affidavit, it is clear that GRE has no intention of releasing financial statements to the Moving Parties or the ETDL. GRE suggests that the disclosure requested by the Moving Parties is “unbounded” in part because the PwC report contains the information that the Moving Parties need for both mediation and a determination of the value of their claim to satisfy the litigation guardians and the Court that any settlement is in the best interest of the minor children.
73GRE submits that the value of shares is a moving target. If the Moving Parties insist on pegging the value of the shares at a certain amount, that could be detrimental to them in the event that the share price increases. As such, agreeing to receive a percentage value of the assets and the income from GRE would give them a better outcome. Counsel for GRE submits that Ms. Martin agreed with this proposition in her examination.
74GRE further submits that there is no reason not to rely on the PwC valuation. Interestingly, in this case, Bryan is both the CEO of GRE and an ETDL. This could explain why it took the ETDL two years to take the position that they were not able to produce the requested disclosure, however I make no specific finding in that regard. What is clear is that Mr. Williams’ evidence is that although Bryan has access to GRE’s financial information, he has been precluded from releasing it to the Moving Parties.
75Further, it cannot go without comment that in this Application and in the CBCA Application before Justice Cavanagh, GRE took the position that it had never provided shareholders with financial statements as that would be detrimental to GRE’s business. In fact, GRE provided financial statements and more in the Sidney Proceeding. The Court in that case heard similar arguments to those raised in this motion but ordered the disclosure to be made and subsequently refused a request for a sealing order. Justice Harris found GRE’s conduct in the Sidney Proceeding to be oppressive. I do not see that GRE is conducting itself much differently on this motion. As such, and adverting to the Tetefsky factors, I find that:
a. The issue of the value of Kenny’s interest in GRE is important in this litigation. I have already found that it is an essential part of the Will Challenge.
b. Production at this stage rather than at trial is required. Production at trial would inevitably lead to an adjournment to permit the Moving Parties’ accountants or experts to review and analyze the information.
c. Examination of a representative of GRE, rather than production, is of no assistance here. Mr. Williams has categorically stated he will not provide the disclosure, nor will he authorize Bryan to produce it.
d. There is no other source from which the disclosure can be obtained.
e. While GRE is a non-party, it is not without connection to this litigation. Kenny, although a minority shareholder, was described by Mr. Williams as being the “face” of GRE. The shareholders of GRE are long-time friends and live in the same community. They are unlike the usual resisting third party, which is often a bank or some other commercial institution which had no personal contact with the Deceased.
f. Mr. Williams and GRE have made their position on the disclosure quite clear otherwise this lengthy and expensive motion would not have been necessary. GRE took the same position in the Sidney litigation. While I agree that it was litigation related to a different remedy with different tests, the fact remains that the disclosure was resisted until a court order was made. Further, the same position was taken on the CBCA Application. I do not view that finding by Justice Cavanagh to preclude the Court from ordering the disclosure on this motion given his carefully carved out exceptions to Non-Parties to that Application.
76This case involves a number of minor children who are represented by their mothers as litigation guardians. In the event the matter is settled, the Moving Parties must be able to assess all relevant material to ensure the settlement is fair. Further, the court must approve the settlement. In doing so, the Court must also have access to all relevant information to ensure that the settlement is in the children’s best interests as per rule 7.08 and that the minor children are protected from any mistakes made by the litigation guardians.
77In Wu, Re (2006), 2006 16344 (ON CA), 268 D.L.R. (4th) 670, at para. 10, the Court reviewed the Court’s parens patriae jurisdiction with respect to approval of such settlements to ensure that parties under a disability (such as minors) do not enter into settlements which would compromise their legal rights or that such rights would not be “surrendered without proper compensation.”
78As mentioned above, if the within motion is denied on the grounds that the information is not relevant to the Will Challenge, the motion will simply reappear as a production motion in the context of the support claims. That is neither realistic nor reasonable given the current strained court resources.
The Estate’s Rights as a Shareholder
79Under s. 157(2) of the CBCA, a shareholder and their personal representatives are entitled to examine and take copies of financial statements.
80This right is to be broadly interpreted as per Power Corporation du Canada v. Mouvement d’éducation et de défense des actionnaires, 2009 QCCA 1627. The Plaintiff in that case appealed from a judgment of the Superior Court of Quebec which found that pursuant to s. 157(2) of the CBCA it was required to keep a copy of all financial statements for its subsidiaries at its head office and allow shareholders access to them. In dismissing the appeal, the Court of Appeal held that disclosure of financial statements applied to subsidiaries and to sub-subsidiaries to permit “curious or sophisticated shareholders free access to financial information…that the corporation is obliged to place before them every year”: at para. 57.
81I interpret the Power Corporation case to mean that shareholder’s rights to financial information must be construed broadly, even where such information is tangentially related to the main corporation (such as sub-subsidiaries in Power Corporation).
82In summary, I find that the Moving Parties have met the burden of demonstrating that the requested disclosure is both relevant to a material issue in this litigation and that it would be unfair to require the Moving Parties to proceed to trial or mediation without the disclosure. As for GRE’s concerns about privacy, an order can be fashioned such that the information can be kept confidential until after the trial. At that point, GRE may seek a sealing order if so advised.
MOTION #2 – LEAVE TO EXAMINE MR. HAMMOND AND MR. MONTOUR
Background to the Motion
83Mr. Hammond and Mr. Montour are Non-Parties to this litigation (together “the Non-Parties”). They are the only individuals known to have any direct information about Kenny’s Will. Both have sworn affidavits in this proceeding.
84A summary of the information in the Non-Parties’ affidavits is of assistance in understanding the background to this motion.
85Mr. Montour deposed that:
a. He was a close friend and business partner of Kenny but was unaware that Kenny had made a Will.
b. Mr. Hammond reached out to him after Kenny died and told him that Kenny had told him that he had transferred his business interests to Ryan and that he had a Will.
c. This contact reminded him that in January 2021, Kenny had given him an envelope which he requested be delivered to his lawyer (Mr. Hammond) if something happened to him. He located the envelope in February 2021. It was unsealed. Mr. Montour opened it and saw the title “Will” at the top. He did not read it but arranged to have it delivered to Mr. Hammond.
86Mr. Hammond deposed that:
a. As Kenny’s lawyer, he had raised the issue of estate planning with him in October 2020, but Kenny told him it was all taken care of. Kenny made it clear he did not wish to discuss the matter further.
b. Mr. Hammond received the envelope from Mr. Montour on February 10, 2021, reviewed its contents and sent a scanned copy to Ryan’s lawyers who were Norton Rose Fullbright Canada LLP at the time.
The Positions of the Parties
A. The Moving Parties.
87The Moving Parties submit that they have met the test for leave to examine Mr. Montour and Mr. Hammond for the following reasons:
a. There is an expectation that any party or non-party who swears an affidavit may be cross examined upon it.
b. There are gaps in their affidavit evidence which need to be explored.
c. The third-party examinations will not delay the trial which is more than ten months away.
d. The proposed examinations will not cause any additional expense as the Court may impose time limits or any other parameters on the examinations to ensure they are conducted in an efficient and timely manner.
e. The Will itself is the central dispute in an Estate’s case worth hundreds of millions of dollars. The Will appeared out of nowhere and without context. The Moving Parties should be entitled to fully explore its production.
f. There are questions raised by the evidence given by the third parties, including Kenny’s reference that arrangements for his Estate planning “had been taken care of”, whether others were present when the envelope was discovered, and what the circumstances were of the delivery and discovery of the envelope in which the Will was placed.
g. If the Non-Parties are not examined prior to trial and their evidence at trial raises new issues, the trial could be delayed or adjourned which would be prejudicial to the Moving Parties.
h. The Moving Parties could have served a notice of examination prior to the matter being converted to a trial but wished to avoid any allegation of “gamesmanship.”
i. Mr. Burnham is clear that he has no evidence to give concerning the Will. There is no one other than Mr. Hammond and Mr. Montour who have relevant information. Unlike other cases, it is not possible to ask the parties as they cannot assist.
j. Mr. Alex Turner, counsel for Rayna Bayliss and Alisha Milham since April 2021, has deposed that he is not aware of anyone other than Mr. Montour and Mr. Hammond who have information about the Will. He further deposed that it would be unfair for the Moving Parties to wait until trial to test the contents of the non-parties’ affidavits given the mediation which will take place in 2024. As well, the Non-Parties’ affidavits were commissioned by Ryan’s counsel who had an opportunity to explore their evidence. The same opportunity should be afforded to the Moving Parties.
k. There is some evidence that Mr. Montour and Mr. Hammond have attempted to avoid the court process as follows:
i. The Moving Parties sought Mr. Montour’s contact information so they could put him on notice of their intention to bring the within motion. As Ryan had tendered Mr. Montour’s affidavit, Ryan’s counsel was contacted for this information, but she did not have the contact information.
ii. There were difficulties serving Mr. Hammond and Mr. Montour or receiving responses from them once served. This is set out in my endorsement dated November 6, 2023. I noted that counsel had made significant efforts to bring the motion material to the attention of Messrs. Hammond and Montour but without success until just before that date. Orders were required to validate service.
iii. In August 2023, counsel for Ms. Beaver wrote to Mr. Hammond at his law office address giving notice of the motion date and proposing a timetable for the exchange of materials. A similar letter was sent to Mr. Montour. Despite several follow ups, there was no response. Counsel was retained by Mr. Hammond shortly before the November 6, 2023 appearance. Counsel for Mr. Montour was confirmed only a few days prior to the argument of this motion.
88In summary, the Moving Parties argue that the Non-Parties actions in attempting to avoid service of the motion, late retention of counsel and their lack of communication is a form of constructive refusal to cooperate.
89Refusing to allow leave to examine at this stage will leave the Moving Parties (and particularly the litigation guardians) in a difficult position at mediation as they will not have all the evidence they need to make an informed decision regarding a settlement that is in the best interests of the minor children.
90Finally, unfairness and prejudice would result if leave was not granted and the cross-examination of the non-parties at trial revealed key evidence about which the Moving Parties were not previously aware.
B. The Position of the Non-Parties and Ryan Burnham
91The Non-Parties and Mr. Burnham are adamantly opposed to any order for leave to examine.
92The grounds for their resistance to the relief sought may be summarized as follows:
a. The Moving Parties have failed to establish any form of refusal or constructive refusal. On the contrary, Mr. Montour and Mr. Hammond have cooperated in proceeding by providing affidavits which fully outline the extent of their knowledge in relation to the Will.
b. Merely sending a letter and asking for cooperation without receiving a response in the time frame requested does not amount to any form of constructive refusal. In any event, Mr. Bloom’s letter of August 23, 2023 is not in evidence on this motion, only in the Production Motion.
c. The within motion is purely tactical and there is no unfairness to the Moving Parties which would justify a departure from the general rule.
d. The cases provided by the Moving Parties are not on point and are wholly different on their facts.
e. The Moving Parties advance a theory that there were various people involved in the preparation of an allegedly fraudulent Will. The Moving Parties are attempting to bolster this theory by seeking to examine the Non-Parties. Their theory is merely speculation.
f. Ryan Burnham has not been examined yet. There is no reason not to explore his knowledge accompanied by a reasonable request for undertakings to request information from Mr. Hammond and Mr. Montour if he does not have the information himself.
g. There is no evidence that Mr. Hammond did not cooperate. He is a lawyer and was easily located if court documents needed to be served on him. The motion record was not actually served on his counsel until after she was retained. In any event, Mr. Hammond was Kenny’s lawyer. Questions about his files in relation to Kenny are likely protected by solicitor-client privilege which will simply result in another motion before this court if those documents are requested.
h. There have never been any specific questions or requests for documents related to the Will preparation directed at Mr. Montour or Mr. Hammond.
i. Mr. Montour has no additional evidence to give about the creation of the Will or anything other than his evidence that Kenny gave him an envelope which he in turn gave to Mr. Hammond after Kenny’s death.
The Test for Leave to Examine
93The test for leave to examine is set out in rule 31.10 as follows:
(2) An order under subrule (1) shall not be made unless the court is satisfied that,
(a) the moving party has been unable to obtain the information from other persons whom the moving party is entitled to examine for discovery, or from the person the party seeks to examine;
(b) it would be unfair to require the moving party to proceed to trial without having the opportunity of examining the person; and
(c) the examination will not,
(i) unduly delay the commencement of the trial of the action,
(ii) entail unreasonable expense for other parties, or
(iii) result in unfairness to the person the moving party seeks to examine. R.R.O. 1990, Reg. 194, r. 31.10 (2).
94Leave to examine under rule 31.10 is not granted routinely as the information sought to be examined upon can usually be obtained through a party or by examination of the non-party at trial. However, the application of the rule cannot be too rigid and should be applied where there is a constructive refusal, an obstacle to obtaining the information, or where preventing such an examination would cause inefficiency.
95In Kissoon v. Aviva Insurance Company of Canada, 2018 ONSC 2167, De Sa J. dealt with a rule 31.10 motion. In that case, all the Plaintiffs were involved in the same motor vehicle accident. They elected to each commence a separation action, although represented by the same counsel. The actions were ordered to be tried together. The issue for the motion was whether the Respondent Aviva should be permitted to examine the Plaintiff as a non-party in relation to the conduct of the other occupants of the vehicle.
96While the facts of that case are not aligned with the case at bar, the case is cited for its recitation of the principles of discovery including an emphasis on a party being entitled to know the case against it, decreasing expense and delay and avoiding discovery at trial in the case of Non-Parties: at para. 18.
97In Lana International Ltd. v. Menasco Aerospace Ltd. (2000), 2000 30137 (ON SCDC), 195 D.L.R. (4th) 497 (Ont. S.C. Div. Ct.), a motion for leave to examine Non-Parties for discovery was brought before Master MacLeod. The Non-Parties were former employees of the defendant company. The Non-Parties resisted the motion on the grounds that they had already been extensively interviewed concerning the issues that led to their dismissal.
98The Court found that the employees had information relevant to a material issue in the action and that they were unwilling to speak further with either the plaintiffs or the defendants. Further, based on some correspondence, there was hostility by one of the Non-Parties towards the defendants.
99The Court adverted in paragraph 15 that the “usual” situation is one in which the person being discovered is still under the control of a party. In the Menasco case, the former employees were no longer under the control of either party. The Court permitted the examinations of the Non-Parties but on terms.
100The Non-Parties rely on Famous Players Development Corp. v. Central Capital Corp (1991), 1991 7202 (ON SC), 6 O.R. (3d) 765 (S.C.) for the proposition that there must be actual or constructive refusal to obtain the information sought before the Moving Parties can meet the onus under rule 31.10(2)(a).
101I find that the Famous Players decision is not on all fours with this case because there was no sworn affidavit submitted by the former Vice-President of Central Capital Corporation. Rather, she assisted in answering undertakings given by the defendants and there was no indication that she would not have assisted with follow up questions to the answers to undertakings. As there was no actual or constructive refusal to cooperate, the Court declined to give leave to examine.
102I agree with the Moving Parties on this motion. Mr. Montour and Mr. Hammond are not under the control of Ryan Burnham or any other party in this litigation. While in the end they retained counsel and filed material, the fact that a case conference was required to validate service on them demonstrates some resistance to cooperation.
103Mr. Montour and Mr. Hammond appear to be under the impression that simply providing their affidavits absolves them from further involvement until trial. In my view, that is not accurate.
104It is my view that Mr. Hammond and Mr. Montour are not really Non-Parties in the true sense. They are affiants who have consented to filing affidavits in this proceeding. As such, they are taken outside the parameters of cases such as Famous Players. While I find there was some initial resistance on their part, I do not agree with the counsel for the Non-Parties and Ryan that I must find any actual or constructive refusal on the part of the Non-Parties in these factual circumstances in order to grant the relief sought.
105Finally, the examinations can be fashioned with parameters similar to those set out in Menasco to ensure fairness and reasonableness with respect to the time and expense of the Non-Parties.
106Given all of the above, I find that the test for leave to examine in rule 31.10 has been met and the examinations will take place subject to the terms set out below.
ORDERS
107The relief sought in the Moving Parties’ Production Motion is granted.
108Leave to examine Mr. Montour and Mr. Hammond is granted on the following terms:
a. The examinations shall take place within 60 days, at a time and place agreeable to the parties and to the persons being examined.
b. The date for the examinations shall be set within two weeks of the date of these reasons.
c. Examination of either non-party shall not exceed 2.5 hours.
d. The examinations will be oral. The Moving Parties will designate one counsel to ask questions. Counsel for any other party may attend but may not ask questions. Mr. Hammond and Mr. Montour are entitled to have their counsel present at the examination.
e. The Moving Parties will pay the cost of the examinations and the cost of the transcripts from the examination. The transcripts of those examinations may not be used for any purpose other than this litigation without leave of the Court.
f. The cost of the examinations (other than the transcripts) shall be dealt with by the Trial Judge.
109A case conference is to be convened before me in January 2024 to discuss costs of both motions, the form of orders (if they cannot be agreed upon), any offers to settle served in relation to the motions, a mechanism for keeping the disclosure confidential until mediation has taken place, and access to records by the valuator.
C. Gilmore, J.
Date: December 21, 2023