Court File and Parties

COURT FILE NO.: CV-21-663995 MOTION HEARD: 20240613

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: GRANT A. HOOD HOLDINGS INC., GRANT ALEXANDER HOOD and THE GRANT HOOD FAMILY TRUST II, Plaintiffs

AND:

DAVID CIVIERO, GLEN HANSEN, JACAL HOLDINGS LTD., SHAWSCREEK CONSULTING LTD., FRANK DORACIN, FEHD HOLDINGS INC., DORACIN TERRA STRATEGIES LIMITED, HODERO HOLDINGS LTD., 8079 EIGHTH LINE HALTON HILLS INC., DG FARMS BURNHAMTHORPE INC., 823 TRAFALGAR DG FARMS INC., 270 SOUTHGATE DRIVE REAL ESTATE CORPORATION, DUNDAS DIAM INC., DG FOUR STACKS INC. and DG FARMS 10TH SIDE ROAD INC., CADE MANAGEMENT LTD., Defendants

RE: DAVID CIVIERO, and JACAL HOLDINGS LTD. and CADE MANAGEMENT LTD., Plaintiffs by counterclaim

AND:

GRANT A. HOOD HOLDINGS INC., GRANT ALEXANDER HOOD, THE GRANT HOOD FAMILY TRUST II, 2473003 ONTARIO INC., MICHAEL VERNOOY and MV2 CONSULTING INC., Defendants by counterclaim

BEFORE: Associate Justice Jolley

COUNSEL: David Sischy and Sophie Baker, counsel for the plaintiffs and defendants by counterclaim Shaun Laubman and Brendan Bohn, counsel for the defendants and plaintiffs by counterclaim

HEARD: 13 June 2024

Reasons for Decision

[1] The plaintiffs (hereinafter “Hood”) and defendants (hereinafter “Civiero”) each bring motions for orders compelling the other side to answer various questions refused on their examinations for discovery.

[2] Hood and Civiero had worked successfully as business partners for many years. Around 2016, they started to invest together in a number of joint venture real estate projects. The relationship turned acrimonious and then litigious in late 2020 or early 2021.

[3] Hood alleges, among other things, that Civiero has conducted the joint projects in a manner oppressive to the plaintiffs’ interests, misappropriated funds from Hodero Holdings, their jointly owned management company, and failed to distribute to Hood his share of the $20,000,000 in proceeds from the sale of one of the joint venture properties, (the “Thompson Road Property”).

A. Hood motion for answers to questions refused by Civiero and Glen Hansen (“Hansen”)

[4] Hood grouped Civiero’s and his co-defendant Glen Hansen’s refusals into four categories:

Civiero:

1. Documents relating to Civiero’s income;
2. Relevant documents;
3. Potential witness information;

Hansen:

4. Hansen’s exposure, credibility, liability and arrangements with Civiero in this litigation.

The category requesting clarification of Civiero’s knowledge/understanding of a unanimous shareholder agreement was not pursued on the motion.

Civiero refusals

Category 1 – Documents relating to Civiero’s income

[5] Civiero has claimed damages against Hood in the amount of $625,000 which he has characterized as profit, or damages for breach of contract and oppression for unpaid compensation or, for unjust enrichment (paragraph 146 of his counterclaim).

[6] He pleaded in paragraph 158 that it was understood that he would be primarily responsible for the day to day operations and oversight of the joint projects and, to that end, he worked with the defendant Frank Doracin and the defendant by counterclaim Michael Vernooy, both consultants to Hodero, to “create strategic development plans for the properties, initiating financing and hiring appropriate consultants and contractors”.

[7] At Question 212, Hood asked Civiero about the work he did on the joint projects for which he received a salary. He argues that Civiero has not provided any particulars about his services to justify the claim for compensation, other than to say that he “managed the corporations”. Nor has he provided details of the salary he purported to charge Hodero.

[8] Civiero provided his T4s for 2014-2020. Hood takes the position that the documents and limited answer are not responsive to the question for three reasons: (1) it does not provide information beyond 2020; (2) it does not indicate what the salary was for; and (3) it does not indicate what the salary arrangements were with Hodero.

[9] On the first issue, paragraph 206 of the counterclaim makes it clear that Civiero’s claim is for work from 2018 to 2020. On the second issue, Civiero has advised that he ran the day to day businesses for the various corporations, overseeing people and making decisions. Hood is free to argue at trial that Civiero has provided insufficient detail, when asked, to support a claim of this magnitude, but it is not clear what else Civiero could say. On the third issue, Civiero has advised that he paid Hodero out of his own pocket.

[10] Question 212 has been sufficiently answered.

[11] At Question 372, Hood seeks an accounting of the rent paid to Civiero or his company for the Thompson Road Property. Hood claims his share of the Thompson Road Property rental in paragraph 68 of the amended statement of claim. Civiero has produced an email from a company accountant that states: “Jacal [Civiero’s holding company] is receiving apprx 90K annually for net rent for Thompson Road”. Civiero objects to providing any further information on the basis that it would be disproportionate. There is no evidence to support that position. If Civiero’s accountant can provide the approximate total of the net rent, it seems logical that he has and can provide supporting documentation for the rent paid to him or his company.

[12] On the motion, Civiero argued that Hood has repudiated his ownership in the Thompson Road Property such that he is not entitled to the rental documents related to it. It is correct that Hood’s first position is that Civiero repudiated their 50/50 beneficial ownership of both the Thompson Road Property and 560 Main Street East, Milton (the “Main Street Property”) and that Hood is entitled to 100% of the Main Street Property as a result. However, Hood pleads in the alternative that he is entitled to 50% of the Thompson Road Property. Further, repudiation, even if true by either side, may not end entitlement to rent while the agreement was in effect.

[13] Question 372 is to be answered.

Category 2 – Relevant documents

[14] Hood requested that Civiero contact his service providers and ask them to produce from his blackberry or the other phone he used any text messages relevant to this litigation, from 2014 to date, subject to privilege (Question 334). At Question 341, Civiero was asked the same question but with respect to WhatsApp messages.

[15] Civiero has refused on the basis of relevance and proportionality. In answer to an undertaking, he has advised that he has no relevant WhatsApp messages (Q337) and has produced any relevant texts (Q333), (he had produced none).

[16] The objection based on relevance cannot stand, in my view, as Hood has asked only for relevant texts and WhatsApp messages.

[17] The question is also refused on the basis that Civiero has advised that he no longer has the messages and there is no evidence that the service provider can produce deleted text messages. The fact that Civiero no longer has the messages is the evidence that supports the request to ask the service provider if it maintains copies. While production may ultimately be disproportionate if the service provider responds and advises that it has ten years of hundreds of texts, making the request of the service provider to ask about production is not disproportionate.

[18] I accept that Civiero has made his own search of the texts and WhatsApp messages he did retain. Therefore, to ensure the request remains proportionate, he is to ask the service provider as a starting point whether it maintains deleted texts and deleted WhatsApp messages and for what period. If the service provider advises that it does retain documents, then the next step may be to determine the number of documents to assess the argument of proportionality.

[19] If the records exist and are of a manageable number, Civiero can consider producing them or Hood can consider a rule 30.10 motion against the non-party service provider.

[20] The question as to whether the documents exist should be asked of the service provider as a starting point.

Category 3 – Potential Witness Information

[21] Rule 31.06(2) of the Rules of Civil Procedure provides that a party is entitled to disclosure of the names and addresses of persons who might reasonably be expected to have knowledge of transactions or occurrences in issue in the action.

[22] Hood alleges that Civiero has misappropriated funds from Hodero by, among other things paying Civiero’s daughter, Alisa and his cleaning lady, Marisel Galang through Hodero (Questions 944 and 948) and he seeks their contact information as persons with relevant information.

[23] Civiero takes the position that neither person has relevant information and their contact information need not be produced as a result.

[24] The fact that both individuals received payments from Hodero does not alone make their evidence relevant, as it is not disputed that Civiero paid these personal expenses to Alisa and Marisel through Hodero and then repaid Hodero for those payments. Civiero has confirmed that neither Alisa nor Marisel provided services to Hodero and he is not seeking repayment from Hood or Hodero of any of the funds he paid to either woman. Further, these individuals are not likely to have any more information about the salary arrangements with Civiero, as it is conceded that they did personal work for him, he paid them through Hodero and reimbursed Hodero for a like amount. The fact that Civiero ran personal expenses through Hodero is not “in issue” in this action. Further, on an earlier motion before Associate Justice Abrams, Hood admitted that Civiero’s personal expenses and family expenses were put through Hodero with his knowledge and with no expectation that they would be shared with him, (Grant A. Hood Holdings v Jacal Holdings 2023 ONSC 4602 at paragraph 31). On these bases, find that neither Alisa nor Marisel are persons who might reasonably have information about the matters in issue.

[25] Questions 944 and 948 need not be answered.

Hansen refusal

[26] Hansen had a long standing consultant relationship with Hood and Civiero. He was hired in 2016 to assist them with the daily management activities of their jointly owned companies.

[27] Hansen refused to advise Hood who was paying his legal bills (Question 103). Hood argues that the question should be answered as the answer may go to Hansen’s credibility.

[28] The Ontario Court of Appeal in Kaiser (Re) 2012 ONCA 838 noted that “administrative information relating to the solicitor-client relationship – including the identity of the person paying the lawyer’s bills – is presumptively privileged.” As noted in Re Kaiser, supra at paragraph 38:

“disclosure of the source of [the lawyer’s] fees would reveal confidential communications between him and his client. The information is provided in the context of [the lawyer’s] need to know how his fees will be paid in order to decide whether to act. In the words of Supreme Court, it is therefore "information which a person must provide in order to obtain legal advice and which is given in confidence for that purpose", and accordingly "enjoys the privileges attached to confidentiality (Maranda v Richer, 2003 SCC 67 at para 22).”

[29] To rebut the presumption, Hood must show that there is no reasonable possibility that disclosure of the source of the payment of Hansen’s legal fees will lead directly or indirectly to the revelation of confidential solicitor-client communications or that the requested information is not linked to the merits of the case and that its disclosure would not prejudice Hansen.

[30] I find that Hood has not discharged the onus on him to displace the privilege that attaches to this information. The Supreme Court of Canada in Maranda, supra at paragraph 32 noted “the existence of the fact consisting of the bill of account and its payment arises out of the solicitor-client relationship and of what transpires within it. That fact is connected to that relationship, and must be regarded, as a general rule, as one of its elements.” Disclosure of how Hansen is paying his legal bills is privileged and I find that requiring disclosure of the payment particulars would require disclosure of an important element of his solicitor-client relationship with his counsel. I also find that the disclosure may prejudice Hansen, as Hood has argued that Hansen’s credibility will be affected if it is determined that Civiero is paying Hansen’s legal bills.

[31] Question 103 need not be answered.

B. Civiero motion for answers to questions refused by Hood and Vernooy

[32] Civiero has grouped Hood’s and his co-defendant by counterclaim Michael Vernooy’s refusals into seven categories, the following five of which were pursued on the motion:

1. Particulars of the allegations about the misappropriation of Hodero funds;
2. The Thompson/Main Agreement;
3. Hood and Vernooy’s communications about Glassman;
4. Vernooy’s management of the joint projects; and
5. Neatt’s involvement in the joint projects.

Two additional categories of refusal relating to Eighth Line allegations and damages from an FEHD loan agreement were not argued.

Category 1 – Particulars of the allegations about the misappropriation of Hodero funds

[33] Hood has pleaded that Civiero caused funds contributed by Hood to be misappropriated and used for other purposes (amended statement of claim, paragraph 25).

[34] Hood was asked at Question 1093 to review a short spreadsheet attached to an email from Civiero’s CFO to Hood’s CFO dated 29 July 2020 and advise whether he took issue with any of the payments listed.

[35] He refused to do so, arguing that the document was a “self-serving manufactured document”. He also advised that he would need the source documents to respond. Whether or not the document is “manufactured” or “self-serving”, it reflects Civiero’s position as to what happened to the funds deposited by Hood into Hodero. He is not being asked about the nature of the document but to comment on its contents. Hood’s position on whether the listed funds were in fact deposited and were spent in the manner set out in the spreadsheet is relevant.

[36] Putting his characterization of the spreadsheet aside, Hood’s position that he does not have adequate records to respond has already been adjudicated by the court on an earlier motion before Abrams, A.J. Having reviewed all the evidence before her, she held in August 2023 that “records as to the accounting and management services as relate to Hood-Civiero jointly-owned companies have been provided and will continue to be (and are to continue to be) provided; and Mr. Hood continues to have access to the books and records of the jointly-owned companies.” (supra, at paragraph 43).

[37] Question 1093 is to be answered.

[38] Hood was also asked at Question 1202 to particularize any amounts that he alleges Civiero had contributed to Hodero that had not been allocated to the joint real estate investment projects for which Hood is claiming damages.

[39] Hood refused the question on the basis that questions about Civiero’s contribution should not be answered separately from questions about Hood’s contribution. He also advised that he would provide his position on this question before trial after completing a forensic accounting (Question 1198). As found by Abrams, A.J., Hood has had access to all the financial records. A forensic accountant was retained at least by April 2022 and this question has still not been answered. When asked, Hood could not provide any timeline for the delivery of this forensic accounting report. In the circumstances, if the report is not delivered by 31 October 2024 with an answer to this question, Hood shall answer Question 1202 based on all the information available to him on that date, even if in the absence of forensic accounting report.

[40] Question 88 in this category was not pursued.

Category 2 – The Thompson/Main Agreement

[41] Hood alleges that there was a verbal agreement between him and Civiero that Civiero would hold 100% of the legal ownership in the Thompson Road Property and he would hold 100% of the legal ownership in the Main Street Property but each would retain a 50% beneficial ownership in each property. Hood alleges that Civiero breached this agreement.

[42] Hood seeks a declaration that Civiero has no beneficial interest in the Main Street Property. In the alternative, he seeks a payment of all amounts owing to him pursuant to his 50% beneficial interest I the Thompson Road Property. He has refused to answer whether it is his position that the original agreement he referenced is at an end (Questions 798 and 799). He has also refused to answer whether he agrees with the proposition that if he continues to have a 50% beneficial interest in the Thompson Road Property, Civiero would continue to have a 50% interest in the Main Street Property (Question 816). Hood takes the position that these are legal issues.

[43] I do not agree. While Hood accepts that he has to elect his position prior to trial, he objects to providing his position now. Nothing is to be gained by one party surprising the other with their position at or on the eve of trial. Civiero is entitled to know whether Hood will argue at trial that their agreement is at an end and that Hood now owns 100% of the Main Street Property and Civiero owns 100% of the Thompson Road Property. Hood is entitled to advance an alternative position in the event the court finds the agreement did not come to an end, but Civiero is entitled to know the case he has to meet. Civiero is also entitled to know what Hood says flows from any finding that the agreement was not breached and, in particular, whether Hood is of the view that he maintains a 50% beneficial interest in the Thompson Property but Civiero does not maintain a corollary 50% beneficial interest in the Main Street Property.

[44] Questions 798, 799 and 816 are to be answered.

[45] The next three questions in this category (Questions 614, 615 and 643) relate to Vernooy’s understanding of Civiero’s interest in the Main Street Property. Vernooy indicated that he was not directly involved in the management of either property and did not get into the structure of the arrangement, but it was his understanding that Hood and Civiero were going to share in the profits of the Thompson Road Property and the Main Street Property. He had no further information, to the extent it would have been relevant in any event.

[46] Questions 614, 615 and 643 have been answered.

[47] Hood has advanced a claim for rental income from the Thompson Property. He was asked when he first made a demand for rental income (Question 792). If there was a demand, he was asked for particulars (Question 795). He responded that he was unaware of the date, but it was at least by April 2017. His counsel then responded that the question presupposed that a demand was made. Civiero is entitled to know the case he has to meet, which includes whether Hood ever made a demand and, his best information, after reviewing his documents as to when the demand was made, to whom and in what circumstances.

[48] The questions are to be answered.

[49] The last series of questions on the Main Street Property relate to information on its development and sale, on the theory that this would permit Civiero to properly value his interest. At Question 808, Hood was asked to advise about any potential sale or discussions regarding the sale of the Main Street Property in the last two years. Vernooy was asked whether Neatt (his land development company with Hood) has any plans, proposals or contracts for building homes on the Main Street Property subsequent to June 2020, and whether pro formas or budgets had been prepared, financing obtained or zoning or planning applications filed for the Main Street Property (Questions 605, 655, 656, 657 and 660).

[50] Hood took the position that Civiero has disavowed his interest in the Main Street Property so was not entitled to advance a claim for documentation on the project. I disagree with that response. Civiero has specifically made an alternative claim for a 50% interest in the Main Street Property at paragraph 197 of his amended statement of defence and counterclaim, so I reject this rationale for not responding.

[51] However, I find the questions are not relevant, based on the pleading. In paragraph 144(j) of the counterclaim, Civiero seeks, in the alternative, a declaration that he is entitled to a 50% interest in the Main Street Property or 50% of any proceeds or profits from the property (paragraph 197). Civiero has sought a declaration that he has a 50% interest rather than damages equal to the value of his 50% interest. If he were to seek a valuation or damages, or has done so elsewhere in his pleading, that interest would likely be valued on the date of the award, not based on or with reference to some historic budget or proposal or whether there have been discussions about a sale.

[52] Questions 605, 655, 656, 657 and 660 need not be answered.

Category 3 - Hood and Vernooy’s communications about Glassman

[53] Civiero alleges that Hood and Vernooy worked together to advance the development of the Glassman project without Civiero’s approval as a director. He also alleges that Vernooy and Hood withheld important information about the project from him.

[54] Vernooy was asked whether he and Hood had discussed how much cash contribution to request from Civiero (Question 915), how much information to provide Civiero (Question 916) and whether Hood directed Vernooy to provide Civiero with certain information relating to the Glassman project (Question 919).

[55] Vernooy objects on the basis that the project is ongoing and information about it is privileged. The particulars for this claim of privilege were not provided, other than to say once lawyers were involved, all the information was privileged.

[56] In light of Civiero’s pleading that Hood and Vernooy have deliberately withheld information from him, Vernooy is to answer whether Hood has told him not to provide certain information to Civiero, as long as that withholding was not based on lawyers’ advice, which Civiero has specifically carved out in any event.

Category 4 – Vernooy’s management of the joint projects

[57] Civiero alleges that Vernooy was acting on the joint projects without informing Civiero or obtaining his approval as a director.

[58] At Question 126, Vernooy was asked to produce any documents about the termination of his prior employment with Mattamy Homes. The fact that Civiero pleads that “Vernooy had been terminated from his role at Mattamy in March 2019 and was subsequently available to provide consulting services to Civiero and Hood’s real estate ventures” does not make his termination file relevant. No basis of relevance has been established and Question 126 need not be answered.

[59] The other questions in this category were not pursued.

Category 5 – Neatt’s involvement in the joint projects

[60] Civiero alleges that Hood and Vernooy are favouring the interest of their homebuilding company, Neatt, over the interests of Civiero by trying to secure permit allocations to develop a jointly owned project in Oakville, known as Biggar, in a way that favours Neatt, at Civiero’s expense.

[61] Civiero seeks production at Question 595 of plans that allegedly favour the kind of building that Neatt is comfortable building over the kind of building that Civiero carries out. It is clear on the record that these proposed or discussed plans did not proceed and have not been worked on. I am not satisfied that the information sought is relevant. Question 595 need not be answered.

[62] Similarly, I find the request for Vernooy’s master spreadsheet for his time spent on all Neatt projects not relevant. The evidence is that the spreadsheet does not separate out Neatt projects. Further, it is no secret that Vernooy works on projects for Neatt. Question 484 need not be answered.

[63] Question 554 seeks information from Vernooy about Neatt’s development plans on any jointly owned properties. Civiero has not established the relevance of this information and the question need not be answered.

[64] Vernooy was asked at Question 587 about the implications of a plan of Neatt that did not come to pass, and might not even have existed, to build homes on some of the jointly owned properties. I am not satisfied discussions about plans that did not proceed are relevant. Question 587 need not be answered.

[65] The other questions in this category were not pursued.

C. Further discovery

[66] Each party has asked to continue his examination of the other.

[67] Hood examined Civiero for discovery for two days in July 2022. He argues that many important issues were not canvassed, and that he is entitled to seven hours discovery time for each of the six plaintiffs or defendants by counterclaim.

[68] The issue of discovery time was before Sanfilippo, J. when he made his consent timetable order on 16 December 2021 ordering that examinations for discovery of all parties were to be completed in one week and, at the time, ordered they be concluded by 30 July 2022, subject to any further order of the court.

[69] Civiero argues that he has adhered to the timetable and managed his time to ensure that he completed the major areas of discovery in the time allotted. Hood should not be given more time than he agreed to before Sanfilippo, J. simply because he did not manage his allotted time appropriately.

[70] Civiero advised that he was willing to attend for a further examination for discovery for a further day (up to seven hours) provided that it took place by video conference and provided that it only cover the two issues that Hood did not have an opportunity to ask questions about during Civiero's prior two days of examination for discovery: (a) questions arising from answers to undertakings given at Civiero's first two days of examinations for discovery; and (b) WS. Nicholls, a new issue first raised in the Hood recent pleading amendments.

[71] Hood advised that he might be prepared to limit his further discovery time to two days provided it was held in person, because the earlier examinations were conducted in person.

[72] Despite the clear message, which was apparently agreed to by all parties, Hood did not comply with the spirit, if not the letter, of Sanfilippo, J.’s timetable. While he may not have had the opportunity to ask all the questions he wanted, discovery can no longer be an unending process. Parties are expected to organize their time and prioritize the areas they wish to cover in the time allotted. While His Honour did not provide a breakdown of time, it was clear that all parties were to conclude their examination on an expedited basis and within five days. The parties are now three years beyond the deadline set by His Honour. Additionally, they have, by consent, altered that time allotment by agreeing to three days for Civiero to examine the plaintiffs and four days for the plaintiffs to examine all other parties.

[73] While I am reluctant to provide more time, I find it would be unhelpful for the parties, saying nothing of the trial judge, to proceed to trial without key issues having been examined.

[74] I order that Civiero attend for up to an additional seven hours by video conference. Hood may examine on topics he did not reach when he did examine Civiero and he may examine on topics first raised in the amended pleading or on answers to undertakings but, however he divides his time, it is not to exceed a further seven hours.

[75] Hood and Vernooy are also to re-attend to answer any questions arising from their answers to undertakings and the questions ordered answered. They may attend by video conference should they choose and each examination will be no more than three hours.

D. Costs

[76] The parties are to attempt to resolve the issue of costs. If they are unable to do so by August 9, they are to advise me and I will determine costs based on the costs outlines filed.

Associate Justice Jolley Date: 11 July 2024