Court File and Parties

Court File No.: CV-20-00644516-0000 Date: 2024-03-07 Superior Court of Justice - Ontario

Re: Triple-K Consult Ltd., Plaintiff (Respondent) And: Bombardier Inc., Defendant (Appellant)

Before: L. Brownstone J.

Counsel: Rob Stellick, for the Respondent Jeremy Devereux and Erika Woolgar, for the Appellant

Heard: March 4, 2024

Endorsement

[1] The defendant Bombardier Inc. appeals from the March 1, 2023 decision of Associate Justice Jolley. That decision dismissed most of Bombardier’s request for an order requiring the plaintiff Triple-K Consult Ltd. to deliver a further and better affidavit of documents. Associate Justice Jolley ordered the production of a portion of one of eight categories of documents Bombardier requested and dismissed its request for production of the other seven categories.

[2] The background to the litigation is as follows.

[3] On February 11, 2015, Triple-K and Bombardier entered into a sales representative agreement, which was renewed and amended several times, under which Triple-K was appointed as Bombardier’s sales representative in certain African countries in respect of certain aircraft models. Triple-K was to be paid commissions upon the occurrence of certain events.

[4] The agreement allowed Bombardier to audit Triple-K’s records of “work performed, and services provided under or related to this Agreement”.

[5] Triple-K claims that Bombardier owes it unpaid commissions under the agreement regarding Bombardier’s sale of two CS300 aircraft to the United Republic of Tanzania. Bombardier delivered the aircraft in December 2018 or January 2019 and started an audit of Triple-K’s activities under the agreement shortly thereafter. Triple-K claims Bombardier has been wrongfully using its audit powers to withhold commission payments that are due and owing. It argues that it has complied with the audit request, which was initially framed as being related to the Tanzania Government Flight Agency and the Tanzanian transactions (including two completed transactions for which Bombardier had paid Triple-K its commissions). It objected to what it considers to be an expanded audit.

[6] Bombardier claims the audit process is a necessary pre-requisite to rendering any payment that may be owing to Triple-K, such that conditions to payment have not been met. As Triple-K has not complied with the audit process, it is not entitled to payment. It argues that Triple-K has commenced this litigation to avoid the audit.

[7] Associate Justice Jolley summarized the audit requests and responses as follows:

Under the auspices of the audit, the defendant sent the plaintiff its audit request in July 2019 and the plaintiff produced those documents in October. In November 2019, the plaintiff provided limited financial documents and delivered further information in March 2020 in response to the defendant's request of December 2019. The plaintiff made its last attempt to satisfy the audit request by sending further information in June 2020.

[8] Associate Justice Jolley found that Bombardier’s requests for a further and better affidavit of documents from Triple-K was a request for documents related to the audit. However, she found that the crux of Bombardier’s defence is that Triple-K did not co-operate with its audit, entitling Bombardier to withhold commission payments under the terms of the contract. She therefore distinguished between documents related to the audit, and documents related to the litigation.

[9] In reaching her conclusions, Associate Justice Jolley stated:

[11] Relevance is governed by the pleadings. In its defence, Bombardier pleads that the plaintiff has not complied with the audit which is a necessary precondition to payment. It is the failure to comply with the audit request that is the crux of the defence. Yet, the import of this motion would be to have the plaintiff comply with the audit rather than support the defence that it has not complied.

[13] While I am of the view, as a result, that the plaintiff has not met the test under rule 30.06, I will comment on the specific documentary requests.

[10] The Associate Justice then reviewed the eight categories of documents requested by Bombardier.

[11] Bombardier argues in general that Associate Justice Jolley erred in her relevance determination. Specifically, Bombardier argues that the Associate Justice did not clearly reach a decision on relevance of some of the documents, but incorrectly deferred that issue until after examinations; that she was incorrect in the determinations of relevance that she did make; that she based her conclusion that some documents did not exist on submissions and not evidence; and that she failed to take into account Bombardier’s obligation to put its best foot forward on Triple-K’s intended motion for summary judgment.

[12] In respect of relevance, the parties agree that the standard of review is correctness. In this regard, Bombardier argues that the documents requested are relevant to the question of audit compliance. Second, it argues that its defence is broader than simply compliance with the audit. It points to paragraph 58 of its 63-paragraph defence which pleads: “It is a condition precedent to any obligation on the part of Bombardier to make payment to Triple-K under the Agreement that Triple-K fully comply with the Agreement, including but not limited to , the Audit Provision.” (emphasis added). It also points to its references to specific paragraphs of the agreement in its pleadings in support of its assertion that the documents it requests are relevant to the broader issue of compliance with the agreement as a whole as a condition precedent to payment. It argues that its right to the documents is contractual, separate and apart from any audit power in the contract.

[13] I agree with Associate Justice Jolley that the crux of Bombardier’s defence as pleaded relates to Triple-K’s alleged non-compliance with the audit. The addition of the words “but not limited to” does not render documents related to all possible, but otherwise unspecified, theories of the case relevant. The requests must be assessed on the basis of the defence as pleaded.

[14] With this in mind, I turn to a review the requested categories of documents.

Requested Categories of Documents

1) Constating documents

[15] The Associate Justice did not order production of “up to date constating documents for (i) Triple-K Consult Ltd., (ii) its registered agent, Intercontinental Trust (Seychelles) Limited, and (iii) its sole shareholder and director, ITSL Nominees Limited, including documents pertaining to corporate structure, shareholders and beneficial ownership (if different than shareholders).” She noted that the plaintiff may have put its ownership structure in issue given the fact that in its claim it refers to Triple-K’s CEO, Dr. Kariuki, being its ultimate beneficiary, but that the defendant concedes that issue in its defence. The plaintiff will be required to answer questions concerning representations in the agreement as they relate to the plaintiff and its CEO. She held that the defendant will be at liberty to ask about the structure of the plaintiff’s ultimate ownership on discovery and lay groundwork for further productions.

[16] In reading the decision of the Associate Justice as a whole, I find that, like in the other categories in respect of which Bombardier states she erred by deferring production, Associate Justice Jolley determined that Bombardier had not met its onus of demonstrating that the documents were relevant at this stage. However, she was not foreclosing the possibility that it might establish this moving forward.

[17] I agree with Associate Justice Jolley that Bombardier has not demonstrated that up-to-date constating documents to the breadth requested are relevant at this stage. I agree with her that it is possible that Bombardier will establish relevance of some constating documents through examinations, but based on the single reference in the claim, with which Bombardier has agreed, that foundation does not currently exist.

2) Certified bank statements from 2015 to present

[18] Associate Justice Jolley found that production of the documents requested would in essence ground a wholesale audit of Triple-K’s business. Again, she held that the defendant may ask about the issues of expenditures related and the documents that have been provided (copies of bank accounts in uncertified form, a list of expenditures incurred related to the sale of Bombardier aircrafts and their correspondent supporting documentation) after which the parties may agree on a narrower scope of further production, or the defendant can renew its request after a better foundation is laid.

[19] Again, I agree with the Associate Justice that Bombardier has not established relevance of the requested documents beyond those already provided. There is no suggestion that the bank statements are not authentic or that certified copies are required. Associate Justice Jolley did not foreclose the possibility that this could become relevant, or that a narrower scope of the requested documents could become relevant, but found they currently are not. The Associate Justice was alive to the issue of separating what might be relevant to the audit from what is relevant to the litigation as framed by the parties. I agree with her assessment that Bombardier has not met its burden of showing the category 2 documents are relevant to the litigation as framed at this time.

3) Detailed general ledger from 2015 to present

[20] The Associate Justice found that there are no further general ledger productions to be had. She stated “The plaintiff indicated in its factum and on the motion that it does not have a formal general ledger and has produced the excel spreadsheet that it does have. The defendant may elicit information about what financial documents the plaintiff does have during discovery including what it did with the funds it received. At present, based on the plaintiff's representations, there are no further general ledger productions to be had.”

[21] Bombardier states this was an error of law insofar as it was based on representations of counsel and contradicted by the evidence in para. 47 of the affidavit of Dr. Kariuki sworn May 27, 2021. That paragraph appeared to voice an objection to producing the general ledger on the basis of relevance, not on the basis that it did not exist.

[22] Triple-K points to its May 30, 2020 response to Bombardier queries, which indicate a detailed ledger was provided as part of the management accounts previously delivered. This presumably implies there is nothing further to be provided. Given that response, I find there was some evidence on which the Associate Justice reached her conclusion. This is not a question of law as there was not a complete absence of evidence.

[23] Insofar as it is a question of fact, it is reviewable on a deferential standard: MDM Plastics Limited, 2013 ONSC 710 at paras. 15-16; appeal dismissed (2015), O.R. (3d) 420, 2015 ONCA 28. Given the evidence in the record is ambiguous and could support the Associate Justice’s finding, I am unable to conclude that the Associate Justice made a palpable and overriding error in not ordering production of this category of documents at this stage.

4) Triple-K’s sales efforts for each prospective Bombardier client and territory

[24] Associate Justice Jolley held that the plaintiff has advised that it has produced all documents it has, and while the defendant believes there must be more, this is an area better pursued on discovery or cross-examination. Bombardier states that this places too high a bar on it, as it cannot prove, and need not provide compelling evidence, that documents exist when it is not the holder of the documents: RCP Inc. v. Wilding, (2002) 115 A.C.W.S. (3d) 33. Bombardier notes that Triple-K did not produce an affidavit swearing that such documents do not exist. Triple-K argues that Bombardier’s request is based on mere speculation, and that its affidavit of documents should suffice in this regard: Glover v. IBM Canada Ltd., 2020 ONSC 554, 314 A.C.W.S. (3d) 712 at para. 5.

[25] Again, I do not view the Associate Justice’s decision as deferring a decision on relevance or as placing the bar too high on Bombardier. Rather, she found that on the record before her there was no reason to believe that relevant documents had not been produced. If other information were to come to light on discovery or cross-examination, that conclusion might change.

[26] I agree with Associate Justice Jolley’s assessment, which is consistent with Gamble v. Black & McDonald Limited, 2020 ONSC 811 at para. 10.

5) Documents pertaining to transactions from July 2014 to December 2017 for which the plaintiff's lawyers, Robson Harris & Co. Advocates received fees

[27] Associate Justice Jolley noted that the defendant “intends to question the fees the plaintiff paid to its lawyers, as, in its view, they appear disproportionate to the plaintiff's commercial activity during that time.” She considered that it would be almost impossible to fulfill the request without breaching solicitor-client privilege. She concluded that Bombardier could ask Triple-K to expand on the explanation it has provided, and that “[i]f it can establish relevance, it can ask Dr. Kariuki about any purchases he made through the law firm without the need to obtain documents from or related to the plaintiff's lawyers.”

[28] While the plaintiff states that they did not wish to obtain any privileged documents, I agree with Associate Justice Jolley’s conclusion that such a request would be difficult to fulfill without breaching that privilege. Again, the Associate Justice left the door open so that if Bombardier can establish relevance, it can ask questions about purchases made through the law firm without needing to obtain documents from or related to their lawyers. Again, this is not a deferred decision on relevance. It provides the plaintiff with an avenue to seek these documents without interfering with solicitor-client privilege, if it can lay a foundation for relevance, which it has not yet done.

[29] Associate Justice Jolley was correct in her assessment of current relevance.

6) Documents concerning services rendered to the plaintiff by a consultant, Lewis Nathan Advocates ("LNA") or Lewis Mosho

7) Documents concerning payments made by the plaintiff to LNA or Lewis Mosho

[30] Triple-K has already produced a consultancy agreement and invoices establishing that some payments have been made to the consultants. Bombardier states these payments are concerning given that subcontractors are prohibited by the agreement. It argues that more documents must exist about these services and payments. Associate Justice Jolley again left the door open for the plaintiff to renew its requests for further documents if it establishes that additional relevant documents exist.

[31] As with category 4, Bombardier states that this places too high a bar on it, as it cannot prove that documents exist when it is not the holder of the documents. It notes that Triple-K did not produce an affidavit swearing that such documents do not exist. Triple-K argues that Bombardier’s position is based on mere suspicion, and that its affidavit of documents should suffice in this regard.

[32] I agree with Associate Justice Jolley that the current record does not indicate that the plaintiff has been uncooperative. The plaintiff has responded to a number of Bombardier requests for documents in the audit process and has produced its affidavit of documents. The plaintiff has produced documents indicating it had a consultancy agreement related to Bombardier and its work on aviation business opportunities in Zambia. Invoices supporting the payments are produced. The plaintiff may ask questions about these documents and if it establishes a basis beyond its speculation that there must be further documents, it can renew its request for further productions.

8) Documents to support the payment of $75,000 to the plaintiff's principal, Dr. Kariuki

[33] Associate Justice Jolley ordered the plaintiff to produce supporting documentation for $35,000 of the $75,000 Dr. Kariuki says he spent on business expenses. The remainder was said to be an advance on future expenses; only $35,000 has actually been spent. The Associate Justice again indicated this could be probed on discovery. If it can be established that more funds have been spent, supporting invoices can be sought.

[34] Associate Justice Jolley stated:

[24] This decision does not preclude the defendant examining the plaintiff about these issues in order to establish a basis for their production beyond "speculation, intuition or guesswork" (Glover v. IBM Canada Ltd. 2020 ONSC 554).

[35] I agree with the Associate Justice in this regard.

[36] Bombardier further argued that Associate Justice Jolley erred in her conclusion that any failure of Triple-K to produce documents would work to Triple-K’s, not Bombardier’s, detriment. It argued that Associate Justice Jolley failed to consider Bombardier’s obligation to put its best foot forward on summary judgment. Since she will not be the judge deciding the summary judgment motion, she cannot make such a pronouncement.

[37] This misses the context of the Associate Justice’s statement. Triple-K claims funds are due and owing to it; Bombardier claims they are not, because Triple-K did not provide documents it was required to produce. It is the record of what Triple-K produced, and whether its productions complied with the audit requirements, that is in question. Triple-K has to assert it met its obligations based on what it produced in the audit process. Bombardier has to claim Triple-K did not meet its obligations based on those same productions. In that regard, if Triple-K’s productions are lacking, it is to the detriment of Triple-K, not Bombardier.

[38] Finally, Bombardier argues that the decision of the Associate Justice runs afoul of rule 1.04 in that it does not ensure production is done in the most efficient way – it will lead to rounds of production and examinations and possibly motions. Triple-K notes that if Bombardier had not appealed the Associate Justice’s order, examinations would have occurred by now and the parties would be much further along. It also argues that the Associate Justice’s decision on the most efficient way of moving forward should be granted deference.

[39] In this case, I find that proceeding in the manner put forth by Associate Justice Jolley, which is consistent with Gamble, is appropriate and efficient. I do not find that the goals of efficiency would be served by Triple-K searching for the categories of documents requested, given the findings above about their existence and their relevance.

[40] The motion is therefore dismissed.

[41] The parties provided bills of costs that were not drastically different from one another. In light of the parties’ submissions on costs, the bills of costs provided, and the factors that are to govern the exercise of my discretion in fixing costs, including the results achieved and the complexity of the matter, I find that the amount of $13,162.50 claimed by Triple-K is fair and reasonable. Bombardier shall pay Triple-K that all-inclusive amount on a partial indemnity basis within 30 days.

L. Brownstone J. Date: March 7, 2024