COURT FILE NO.: CV-19-00614180-00CL
DATE: 20240821
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
BETWEEN:
CV-19-00614180-00CL
SELENA STRONACH
Plaintiff
– and –
BELINDA STRONACH, NICOLE WALKER, FRANK WALKER, ESTATE OF ELFRIEDE STRONACH, deceased, by its trustees Frank Stronach and Christopher MacLeod, and ALON OSSIP, in their capacities as Trustees of the Andrew Stronach 445 Family Trust; BELINDA STRONACH, ESTATE OF ELFRIEDE STRONACH, deceased, by its trustees Frank Stronach and Christopher MacLeod, and ALON OSSIP, in their capacities as Trustees of the 445327 Trust; BELINDA STRONACH, FRANK WALKER, ELFRIEDE STRONACH and NICOLE WALKER, in their capacities as Trustees of the Strosel 2011 Trust; BELINDA STRONACH, FRANK WALKER, ESTATE OF ELFRIEDE STRONACH, deceased, by its trustees Frank Stronach and Christopher MacLeod, and NICOLE WALKER, in their capacities as Trustees of the Stroand 2011 Trust; BELINDA STRONACH in her capacity as Trustee of the BSFIN Investment Trust; 2305218 ONTARIO INC. in its capacity as Trustee for the Woodington Trust; BELINDA STRONACH and ESTATE OF ELFRIEDE STRONACH, deceased, by its trustees Frank Stronach and Christopher MacLeod in her their capacities y as Trustees of the Adena North Trust; FRANK WALKER, ESTATE OF ELFRIEDE STRONACH, deceased, by its trustees Frank Stronach and Christopher MacLeod, and NICOLE WALKER, in their capacities y as Trustees for the Andrew Stronach Family Trust; BELINDA STRONACH, ESTATE OF ELFRIEDE STRONACH, deceased, by its trustees Frank Stronach and Christopher MacLeod, FRANK WALKER and NICOLE WALKER, in their capacities as Trustees for the Andrew Stronach 2011 Trust; BELINDA STRONACH, NICOLE WALKER and FRANK WALKER, in their capacities as Trustees of the ST Trust; BELINDA STRONACH, ESTATE OF ELFRIEDE STRONACH, deceased, by its trustees Frank Stronach and Christopher MacLeod, FRANK WALKER and NICOLE WALKER, in their personal capacities
Defendants
Mathew Gottlieb, Shaun Laubman and Melanie Zetusian, for the Plaintiff
Michael Barrack, Iris Fischer, Liam Kelley and Sam Cotton, for the Defendant Belinda Stronach
Alan Mark, for the Defendants Nicole Walker and Frank Walker
Linda Plumpton, Gillian Dingle and Alexandra Shelley, for the Defendant Stronach Consulting Corp.
Mark Gelowitz, Craig Lockwood, Ankita Gupta and Simon Cameron, for the Defendant Alon Ossip
Nina Bombier, for the Estate of Elfriede Stronach
HEARD: August 8, 2024
OSBORNE J.
REASONS FOR DECISION
[1] Regrettably, members of the Stronach family have been in litigation before this Court for almost six years.
[2] Initially, Frank Stronach and his wife Elfriede Stronach sued several members of their family who are substantially the same group as the Defendants in this action. Some months later, Frank’s son, Andrew Stronach, and Andrew’s daughter, Selena Stronach (Frank and Elfriede Stronach’s granddaughter) commenced their own respective proceedings (of which this action is one) against largely the same group of Defendants. The Plaintiff, Selena Stronach, commenced this action only a few months after she turned 18, while she was still attending school.
[3] Elfriede Stronach died while the actions brought by Selena Stronach and Andrew Stronach have been pending. Her estate continues as a Defendant in the action brought by Selena Stronach.
[4] Given the commonality of surname, I will refer to the Stronach parties by their first names.
Background and Context for these Motions
[5] The actions brought by Selena and Andrew are almost identical (though not exactly) in that the named Defendants and the allegations made in each are almost the same. Largely for those reasons, the two actions have proceeded together. They have been case managed together, and numerous motions have been brought by Andrew and Selena together or in alignment with one another, and the positions taken by them have been unified and consistent, at least until now.
[6] Frank Stronach started and grew several business ventures, resulting in enormous wealth. That wealth was shared among members of the Stronach family through various corporations and trusts. As pleaded by Selena, Frank made his family members, including her, beneficiaries of certain trusts that he established in order to distribute his wealth to them.[^1]
[7] Frank’s daughter and Selena’s aunt, Belinda Stronach, has become more involved in the management of The Stronach Group (“TSG”) since approximately 2013. Belinda is the president and CEO of Stronach Consulting Corp. and TSG. She is also a trustee of most of the family trusts, as are Belinda’s children, Frank and Nicole Walker. Selena has named all of them as Defendants in this action.
[8] The Defendants other than members of the Stronach family include Alon Ossip (“Ossip”), who is the former CEO of Stronach Consulting Corp. and who remains a trustee of several of the family trusts.
[9] Selena claims that when her grandfather Frank stepped back from the family business in 2013 to run for political office in Austria, Belinda collaborated with Ossip to assert greater control over TSG and the trusts. Selena alleges that Belinda, Ossip, Frank and Nicole have breached their fiduciary obligations to her by managing and distributing assets without consideration for her beneficial interests in the trusts.
[10] Selena further alleges that Belinda has implemented policies that restrict the financial support that she and Andrew receive as punishment for commencing litigation against her. She alleges that Belinda has done this under the guise of responding to a liquidity crisis at the company. For all of these reasons, Selena pleads that she “seeks the Court’s intervention to ensure that her interests are protected and that a full and proper accounting of the affairs of the trusts and their underlying assets is provided.”[^2]
[11] The action is well advanced. Approximately six years after it was commenced, productions have long since been exchanged, examinations for discovery have been conducted, expert reports have been exchanged and the action is set to proceed to trial scheduled to commence in approximately three weeks. At a case conference before the Commercial List Team Lead earlier this spring, that trial was scheduled to begin on September 9, 2024, and continue for seven weeks. All parties confirmed they were prepared to proceed.
[12] Then, in June 2024, Frank Stronach was charged with a number of sexual offences. There was (and remains) intense media coverage of the charges.
[13] By Notice of Motion dated July 5, 2024, Selena then brought a motion in this action for an order requiring the Defendants Belinda and Ossip to produce all documents by August 23, 2024, and then be examined for discovery within 10 days thereafter, on all issues related to:
a. their knowledge of allegations of sexual assault and sexual misconduct against Frank Stronach;
b. human resources complaints and any internal investigations within TSG regarding sexual misconduct allegations made against Frank Stronach; and/or
c. any settlements entered into by any entity within TSG, or using funds belonging to or sourced from TSG, with any complaints regarding allegations of sexual assault and sexual misconduct against Frank Stronach.
[14] The Defendants against whom the relief is sought, Belinda and Ossip, indicated their intent to oppose the motion. So too did Nicole and Frank on the basis that, while no production or discovery relief was sought as against them, the effect of the motion for production and further discovery against Belinda and Ossip would have the inevitable effect of delaying the imminent trial (which has already been repeatedly scheduled and adjourned a number of times). The Estate of Elfriede Stronach took no position on the motion but expressed a strong desire that the trial proceed and the issues in this action be determined as quickly as possible.
[15] Among the defences raised by Belinda and Ossip was the argument that the allegations of sexual misconduct against Frank Stronach were not relevant to the issues as framed by the pleadings in this action. They further argued that there was no evidence of either of them having any knowledge of such allegations. Nor was there any evidence of Belinda or Ossip orchestrating any settlement agreements by TSG or any entity within that group, or any evidence of such agreements having been made at all.
[16] Selena maintains that her current pleadings include sufficient material facts to justify the further production and examination for discovery relief sought.
[17] However, two weeks after the production and discovery motion, Selena brought a second motion (by Notice of Motion dated July 19, 2024) for leave to amend the Statement of Claim to add new allegations of improper payments and settlements to claimants involving allegations of sexual misconduct against Frank Stronach.
[18] The parties have opposite views of the effect of this second motion to amend the pleadings. Selena maintains her position that the production and discovery motion should succeed based on the pleadings without any amendment. However, given the position advanced by the Defendants, she brought the second motion to amend her pleading to address any doubt that the requested productions and discovery were relevant based on the allegations in the (proposed amended) claim.
[19] The Defendants, on the other hand, submit that the amendment motion is completely inconsistent with the production and discovery motion. They argue that it demonstrates the validity of the very argument they make to the effect that the claim as currently pleaded does not provide a basis for the requested production and discovery.
[20] For the reasons that follow, both motions are dismissed.
[21] I will address the motion for further production and examinations for discovery first, since it was brought first, and also because Selena maintains her position that it ought to succeed whether or not the pleadings amendment motion succeeds.
[22] I will then address the motion to amend the pleading.
Motion for Further Production and Examinations for Discovery
[23] This motion raises two issues as submitted by Selena: first, whether (and when) Belinda and Ossip should be required to provide further and better affidavits of documents; and second, whether those Defendants should be required to attend for further examinations for discovery on the new allegations.
[24] Selena submits that Belinda and Ossip should be ordered to provide all relevant documents by August 23, with examinations to be held within 10 days thereafter. In the alternative, Selena submits that these Defendants should be ordered to attend examinations for discovery regarding the existence of the requested documents forthwith, and then required to produce all relevant documents identified at their examinations.
The Test
[25] The law is clear with respect to the obligations of parties for production and discovery.
[26] Rule 30.02 provides that every document relevant to any matter in issue in an action shall be disclosed, whether or not privilege is claimed in respect of the document.
[27] The scope of relevance in a civil action is determined by reference to the pleadings: Ontario v. Rothmans Inc., 2011 ONSC 2504 (“Rothmans”) at para. 129. In Rothmans, Perell, J. set out the principles that emerge from the case law as follows:
[129] The case law has developed the following principles about the scope of the questioning on an examination for discovery:
• The scope of the discovery is defined by the pleadings; discovery questions must be relevant to the issues as defined by the pleadings: Playfair v. Cormack (1913), 1913 CanLII 599 (ON SC), 4 O.W.N. 817 (H.C.J.).
• The examining party may not go beyond the pleadings in an effort to find a claim or defence that has not been pleaded. Overbroad or speculative discovery is known colloquially as a “fishing expedition” and it is not permitted. See Cominco Ltd. v. Westinghouse Can. Ltd. (1979), 1979 CanLII 489 (BC CA), 11 B.C.L.R. 142 (C.A.); Allarco Broadcasting Ltd. v. Duke (1981), 1981 CanLII 723 (BC SC), 26 C.P.C. 13 (B.C.S.C.).
• Under the former case law, where the rules provided for questions “relating to any matter in issue,” the scope of discovery was defined with wide latitude and a question would be proper if there is a semblance of relevancy: Kay v. Posluns (1989), 1989 CanLII 4297 (ON SC), 71 O.R. (2d) 238 (H.C.J.); Air Canada v. McConnell Douglas Corp. (1995), 1995 CanLII 7147 (ON SC), 22 O.R. (3d) 140 (Master), aff’d (1995), 1995 CanLII 7189 (ON SC), 23 O.R. (3d) 156 (Gen. Div.). The recently amended rule changes “relating to any matter in issue” to “relevant to any matter in issue,” which suggests a modest narrowing of the scope of examinations for discovery.
• The extent of discovery is not unlimited, and in controlling its process and to avoid discovery from being oppressive and uncontrollable, the court may keep discovery within reasonable and efficient bounds: Graydon v. Graydon (1921), 1921 CanLII 444 (ON SC), 67 D.L.R. 116 (Ont. S.C.) at pp. 118 and 119 per Justice Middleton (“Discovery is intended to be an engine to be prudently used for the extraction of truth, but it must not be made an instrument of torture …”); Kay v. Posluns (1989), 1989 CanLII 4297 (ON SC), 71 O.R. (2d) 238 (H.C.J.) at p. 246; Ontario (Attorney General) v. Ballard Estate (1995), 1995 CanLII 3509 (ON CA), 26 O.R. (3d) 39 (C.A.) at p. 48 (“The discovery process must also be kept within reasonable bounds.”); 671122 Ontario Ltd. v. Canadian Tire Corp., [1996] O.J. No. 2539 (Gen. Div.) at paras. 8-9; Caputo v. Imperial Tobacco Ltd., [2003] O.J. No. 2269 (S.C.J.). The court has the power to restrict an examination for discovery that is onerous or abusive: Andersen v. St. Jude Medical Inc., [2007] O.J. No. 5383 (Master).
• The witness on an examination for discovery may be questioned for hearsay evidence because an examination for discovery requires the witness to give not only his or her knowledge but his or her information and belief about the matters in issue: Van Horn v. Verrall (1911), 3 O.W.N. 439 (H.C.J.); Rubinoff v. Newton, 1966 CanLII 198 (ON SC), [1967] 1 O.R. 402 (H.C.J.); Kay v. Posluns (1989), 1989 CanLII 4297 (ON SC), 71 O.R. (2d) 238 (H.C.J.).
• The witness on an examination for discovery may be questioned about the party’s position on questions of law: Six Nations of the Grand River Indian Band v. Canada (Attorney General) (2000), 2000 CanLII 26988 (ON SCDC), 48 O.R. (3d) 377 (S.C.J.).
[28] Rule 30.06 provides that where the court is satisfied by any evidence that a relevant document may have been omitted from a party’s affidavit of documents or that a claim of privilege may have been improperly made, the court may (among other things) order the disclosure of the document and inspect the documents for the purposes of determining its relevance or the validity of a claim of privilege.
[29] In determining that a document may have been omitted and should be ordered to be produced under Rule 30.06, the following factors apply:
a. there must be evidence that specific documents exist that have not been produced;
b. the documents must meet the test of relevance; and
c. the documents must satisfy the proportionality requirements of Rule 29.2.03.
See Gamble v. Black & McDonald Limited, 2020 ONSC 811, at paras. 3-4, quoting with approval Bow Helicopters v. Textron Canada Ltd., [1981] O.J. No. 2265 (“Bow Helicopters”), at paras. 5-9.
[30] As acknowledged by Selena, the decision in Bow Helicopters (on which all parties rely for this motion) was decided under the former Rules of Civil Procedure. The potential abuse it describes was remedied by the current Rule 30.06, which gives the Court the power to grant appropriate relief where necessary.
[31] Rules 29.2.03(1) and (2) provide that, in making a determination as to whether a party must produce a document, the court shall consider whether:
a. the time required for the party to produce the document would be unreasonable;
b. the expense associated with producing the document would be unjustified;
c. requiring the party to produce the document would cause him or her undue prejudice;
d. requiring the party to produce the document would unduly interfere with the orderly progress of the action;
e. the information or the document is readily available to the party requesting it from another source; and
f. such an order would result in an excessive volume of documents required to be produced by the party.
[32] Rule 30.07 provides for the ongoing obligation of relevant production. It mandates that if a party, after serving an affidavit of documents, comes into possession of a document that relates to a matter in issue in the action and that is not privileged, they shall forthwith serve a supplementary affidavit disclosing any additional documents. The same obligation applies where a party discovers that their initial affidavit is inaccurate or incomplete.
[33] Rule 31.03 provides that a party may examine for discovery any other party adverse in interest, once, and requires leave of the court to examine that party more than once (subject to certain exceptions).
Application of the Test to this Action
[34] I accept the submission made by Selena that Rule 30.06 contemplates a relatively low threshold: “the court may be satisfied by any evidence that the requested documents exist” [emphasis added]. I also accept her submission that the level of proof required on a motion under Rule 30.06 should take into account the fact that one party has access to the document and the other does not: Elmaati v. Canada (Attorney General), 2013 ONSC 3176 at para. 59).
[35] However, while the threshold may be low, it requires some basis in the record or in a reasonable inference drawn therefrom.
[36] In my view, Selena cannot meet the applicable test in these particular circumstances.
Requirement 1: There must be evidence that specific documents exist that have not been produced.
[37] There is simply no evidence in the record that the requested documents exist.
[38] The position of the moving party here is, at its best, speculation. Selena relies upon two categories of documents:
a. The charges brought against Frank Stronach and the Information’s sworn to support those charges, and
b. Various articles in the media. One such article was an opinion piece published in The Globe and Mail on June 25, 2024 which was written by a woman (who identified herself by name), and which described various incidents said to have occurred in 1986. Another such article was published in the Toronto Star on July 8, 2024, describing various allegations made by an unnamed woman as told to a reporter.
[39] Selena submits that neither she nor Andrew were aware of any of the allegations until after they were reported in the press in June 2024.
[40] The criminal charges and the underlying allegations are described in detail in the Informations sworn in support of those charges.
[41] The allegations are extremely serious and will be determined in the context of the pending criminal proceedings.
[42] The challenge for Selena on this motion in this action, however, is that there is no evidence that the documents she seeks production of actually exist.
[43] Selena submits on this motion that “the requested information and documents are entirely within the possession, control or power of the Defendants.”[^3] However, she has provided no evidence to support that position, and relies entirely on the criminal charges and the media coverage.
[44] In particular, there is no evidence that any documents exist relating to the Defendants Belinda and Ossip’s alleged knowledge of the allegations underlying the criminal charges. Nor is there any evidence in the record that TGS or any corporate entity within TGS entered into any settlement agreements, let alone any evidence that such agreements, if they exist, were entered into at the direction of or with the knowledge of either Belinda or Ossip.
[45] Selena does not contend that any documents in the record (of which there are hundreds of thousands) support the submission that further relevant documents exist. Whether or not such documents do in fact exist, it would be inappropriate to make a production order here based on “evidence that amounts to intuition, speculation and guesswork” which courts have found to be insufficient: Maalouf v. Bayer Inc., 2023 ONSC 4875 (“Maalouf”) at para. 17.
[46] I agree with the approach of the court in Maalouf that when missing documents are alleged, the moving party must prove that the documents exist on a balance of probabilities before an order is made that they be disclosed in a further and better affidavit of documents. While the level of proof required must take into account that one party has access to the documents and the moving party does not, there must be evidence that specific documents exist that have not been produced: Maalouf at para. 17.
[47] A motion for a supplementary affidavit of documents and further production “cannot be a licence to conduct a classic “fishing expedition” in the hopes of attempting to identify any additional information to prove the moving party’s allegations”: Mattson et al v. Tom Quiggan et al, 2017 ONSC 984 at para. 29.
[48] That alone is fatal to the motion.
[49] Selena submits that even if there is no evidence that such documents exist, I ought to draw an inference that such documents exist. Her argument is that if such allegations were made against Frank Stronach, and if TSG entered into a settlement agreement or agreements with claimants to resolve claims arising out of those allegations, it is unlikely to the point of being inconceivable that Belinda and Ossip would not have knowledge of them. I accept the submission of the Responding Parties that this amounts to conjecture without a factual basis in the record as described in Maalouf (at para. 17) and Mattson (at para. 28) and is not sufficient to order further production pursuant to Rule 30.06.
[50] Finally on this issue, I decline to draw the inference that the requested documents exist based on the fact that the defendants Belinda and Ossip have not filed affidavits denying the existence of such documents. I accept their submission that to draw such an inference would amount to shifting the burden of proof on to the responding parties.
Requirement 2: The documents must meet the test of relevance.
[51] Even if I concluded that there was evidence that the requested documents exist, I am not persuaded that they are relevant to the action as determined by reference to the Claim.
[52] I described at the outset of these Reasons the nature of the allegations as pleaded, and the “gist” of Selena’s claim which is now approximately six years old. I do so now with more particularity to frame the analysis of relevance. Selena brought and has been prosecuting this action to succeed in her claim that various members of her family, including Belinda and Belinda's children Frank and Nicole, her grandmother Elfriede (now represented by her Estate), and Ossip all failed in their fiduciary duties to her as the beneficiary of various trusts set up to distribute the family’s wealth.
[53] In particular, Selena alleges that various expenses, such as campaign expenses related to her grandfather Frank Stronach’s run for public office in Austria, ought not to have been paid or contributed to by TSG, with the ultimate result that the value of the trusts or some of them to which she is a beneficiary was depleted.
[54] The Claim is clear in the allegations pled. It includes, broadly, five main heads of allegations said to constitute the general mismanagement of TSG by the Defendants:
a. A reorganization of certain trusts in 2013;
b. The establishment of certain trusts in 2004, 2010, 2011, 2013 and 2015;
c. Changes to the proposed distributions from various trusts made in 2018, with effect in 2019;
d. An agreement made in May 2020 between Belinda and Frank Stronach to settle the litigation commenced by Frank and Elfriede against Belinda and her children in exchange for transferring assets from the trusts to Frank; and
e. A subsequent allocation of the value of one of the trusts (defined in the Claim as the 445 Trust), in which Selena has a beneficial interest on a 2/3 – 1/3 basis that favoured Belinda and her children and prejudiced Selena.
[55] Andrew makes largely the same allegations in his action which, as noted above, has been case managed with this action and is scheduled to be tried together with this action.
[56] In my view, the productions sought on this motion are not relevant to the allegations of breach of fiduciary duty and oppression under the Ontario Business Corporations Act advanced by Selena.
[57] It strains even a low threshold for the determination of relevance to conclude based on a plain language reading of the Claim that it includes any allegations about alleged sexual misconduct by Frank Stronach or an intentional and calculated cover-up of such allegations, and any related settlements by Belinda and Ossip. period of time between That is simply not what this action is about, even on a generous reading of the pleading.
[58] I recognize that there are references in the Claim to alleged general mismanagement of TSG, and similar general allegations of breach of fiduciary duty by trustees of the various trusts. However, in my view, and given the nature of the Claim and the particular allegations pled, these general allegations are not sufficient so as to include production of the documents now sought, which would by any measure dramatically broaden the scope of the issues being litigated within this Claim.
[59] I am reinforced in this conclusion by the time periods relevant to the allegations in the existing Claim on the one hand, and the time periods relevant to the allegations of misconduct by Frank Stronach on the other hand.
[60] The misconduct by Frank Stronach is based on allegations of events said to have taken place in 1977 to 1978, 1980, 1983, 1986, 1988, 1990, 1999, 2001 to 2002, 2023 and 2024. There are no allegations of misconduct against him based on events said to have occurred after 2002 until 2023.
[61] In contrast, the misconduct alleged against the Defendants in this action, and in particular, Belinda and Ossip, is based on allegations of events as described above, at paragraph 54 said to have taken place from 2013 effectively through 2020.
[62] The date range of the alleged misconduct by Frank Stronach is therefore either: a) well before the time. At issue in this action, including before even the settlement of any of the trusts at issue, and before either of Belinda or Ossip held a leadership role at TSG; or alternatively, b) at a time following the settlement of the lawsuit by Frank Stronach against the individual Defendants when he was no longer associated with TSG.
[63] It follows that all of the public information to date (which is the material on which Selena relies in support of this motion), suggests that the alleged misconduct of Frank Stronach occurred during periods of time not at issue in this litigation. As submitted by Ossip, the misconduct allegations against Frank Stronach relating to the earlier period of time (prior to 2003) allegedly occurred before Ossip had even met Frank Stronach, and the latter allegations (2023 – 2024) relate to conduct that allegedly occurred well after Ossip ceased to be the CEO of TSG. His involvement was only in the period 2006 to 2017.
[64] Selena, the Moving Party here, is now 23 years of age and was not even born when the majority of the alleged acts of misconduct by Frank Stronach are alleged to have occurred. Belinda, one of the responding Defendants, was born in 1966 and accordingly was still a child of 11 or 12 years of age when the first of the events of misconduct by her father are alleged to have occurred.
[65] In short, the chronology of the events at issue in this action is materially different than the chronology of the allegations of misconduct against Frank Stronach. The proposed new allegations are not relevant to the issues in the action now set for imminent trial.
Requirement 3: The documents must satisfy the proportionality requirements of Rule 29.2.03.
[66] Even if I were persuaded that the above two factors were met, in my view Selena cannot satisfy the proportionality requirements of Rule 29.2.03.
[67] As I have noted, the action is (literally) on the eve of trial, for which all parties have prepared for months, and indeed years.
[68] The relief now sought will in my view, have a significantly disruptive effect on the action and on all Defendants (including, to be clear, those Defendants such as the Estate of Elfriede, and Frank and Nicole Walker against whom no relief is sought on this motion). It will also have a disruptive effect on the parties to Andrew’s action (such as Stronach Consulting Corp.) with which this action has proceeded and with which it will be tried.
[69] In addition, I am not persuaded that the Defendants Belinda and Ossip could reasonably be expected to produce the documents requested in the very short period of time suggested by the Moving Party, even if such were ordered. Selena submits that the task ought not to be onerous because hopefully there are not a large number of relevant documents suggesting a large number of complainants who have advanced allegations of misconduct against Frank Stronach. If there are a large number of documents, Selena submits that that is all the more reason that the alleged conduct of the Defendants is improper and the documents should be produced.
[70] The scope of production requested is set out above at paragraph 13. It is very broad. It goes well beyond documents and events within the current knowledge of Belinda or Ossip and includes, for example, all human resources complaints, internal investigations and any settlements made by TSG.
[71] Compliance with an order directing that production is not at all limited to what Belinda and Ossip recall today. It requires a conscientious and reasonable search of the records (in this case, corporate records of a number of entities comprising TSG) to see if such relevant documents exist. If they do, compliance with the order further requires them to determine whether any claim of privilege applies, prepare a supplementary affidavit of documents, and then produce (electronically in this case) copies of the documents listed in Schedule “A” to the supplementary affidavit of documents. That would be a significant task.
[72] Accordingly, the practical effect of ordering the relief requested by Selena on this motion would be the inevitable adjournment of the trial scheduled to commence in a few weeks.
[73] This is all the more inevitable, in my view, when one considers that the requested relief contemplates a further examination for discovery of both Belinda and Ossip following production. Even if those further examinations are targeted and “surgical” and limited to the new issues, they require preparation on both sides. There is the very real possibility if not probability of undertakings given and refusals maintained, all of which would have to be sorted out before a trial based on a full evidentiary record could proceed. That is simply not going to occur in a few weeks.
[74] While a trial can obviously be adjourned and rescheduled to a later date, I observe that this trial has already been rescheduled more than once and was fixed to proceed by the Commercial List Team Lead months ago, on the consent of all parties.
[75] It would be unfair to the parties, and particularly to Defendants like the Estate of Elfriede Stronach and Frank and Nicole Walker, to adjourn the trial at this stage. The action is already approximately six years old. The parties deserve and are entitled to a disposition of those allegations on the merits without further delay.
[76] Finally, I observe that the relief on this motion is requested by Selena, but not by Andrew in his companion action, which will be tried together with Selena’s action and has proceeded more or less in complete alignment with Selena’s action. Selena relies on an affidavit from Andrew on her motion. However, whether or not the fact that the relief is sought in one action but not the other represents tactical manoeuvring on the part of the plaintiffs in both actions as alleged by the Responding Parties or not, is an issue I do not need to make, and do not make, any determination on this motion.[^4]
[77] The objective fact is that, in addition to the above factors, there would be a lack of alignment in the scope of issues in one action, but not the other. Where the cases have proceeded together in near complete lockstep, that factor further militates to minimize further complicating issues on the eve of trial that will have the inevitable effect of lengthening the proceeding for all parties in both actions.
[78] For all of these reasons, the factors set out in Rule 29.2.03 militate in favour of the motion being dismissed.
Alternative Relief Requested: Production Following Further Examinations
[79] For completeness, I also reject the proposed alternative relief of ordering further examinations for discovery now of Belinda and Ossip, and deferring the matter of further production to be determined once those further examinations have been completed.
[80] As the case law described above makes clear, the test for relevance is essentially the same when considering further production and when considering further examinations for discovery. The test for further discovery is not made out here for the reasons set out above.
[81] Moreover, an endorsement of an approach which contemplates examining the Defendants Belinda and Ossip about the issues in respect of which there is no evidence in the record at present, would in my view amount to endorsing a “fishing expedition” that has been consistently described in the case law as inappropriate. There is no basis to grant leave for a further examination for discovery pursuant to Rule 31.03.
[82] For all of these reasons, the motion for further production and examinations for discovery is dismissed.
Motion to Amend Selena’s Claim
[83] The chronology of the two motions before the Court is described above. The motion for further production and discovery was brought first. When the Defendants refused to produce the requested documents or agree to further examinations for discovery, partially based on relevance, Selena moved to amend the Claim in the form of the proposed Further Amended Fresh as Amended Statement of Claim (the “Proposed Claim”).
[84] Certain amendments are not opposed and are not the subject of this motion. The paragraphs of the Proposed Claim opposed are: 111, 128.1 – 128.6, and 139(g). Those include the new allegations specifically related to the alleged sexual misconduct on the part of Frank Stronach, and allegations against Belinda, Ossip, and the Estate of Elfriede that they settled, concealed, and/or covered up claims and allegations of misconduct against Frank Stronach.
[85] The amendments are opposed by the Defendants Belinda, Ossip, and Frank and Nicole Walker. The Estate of Elfriede, as with the motion for further production and discovery, takes no position on the proposed amendments but understandably desires that the trial of this action proceed as soon as possible.
The Test
[86] Selena moves to amend pursuant to Rule 26.01. That Rule is clear that on a motion at any stage of an action, the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
[87] In 1588444 Ontario Ltd. v. State Farm Fire and Casualty Company, 2017 ONCA 42 (“1588444 Ontario”) at para. 25, the Court of Appeal for Ontario summarized the general principles as follows:
[25] The law regarding leave to amend motions is well developed and the general principles may be summarized as follows:
The rule requires the court to grant leave to amend unless the responding party would suffer non-compensable prejudice; the amended pleadings are scandalous, frivolous, vexatious or an abuse of the court's process; or the pleading discloses no reasonable cause of action: Iroquois Falls Power Corp. v. Jacob Canada Inc., [2009] O.J. No. 2642, 2009 ONCA 517, 75 C.C.L.I. (4th) 1, at paras. 15-16, leave to appeal to S.C.C. refused [2009] S.C.C.A. No. 367, 2010 CarswellOnt 425; and Andersen Consulting Ltd. v. Canada (Attorney General), 2001 CanLII 8587 (ON CA), [2001] O.J. No. 3576, 150 O.A.C. 177 (C.A.), at para. 37. [page 688]
The amendment may be permitted at any stage of the action: Whiten v. Pilot Insurance Co., (1996), 1996 CanLII 8109 (ON SC), 27 O.R. (3d) 479, [1996] O.J. No. 227 (Gen. Div.), var’d (1999), 1999 CanLII 3051 (ON CA), 42 O.R. (3d) 641, [1999] O.J. No. 237 (C.A.), rev’d [2002] 1 S.C.R. 595, [2002] S.C.J. No. 19, 2002 SCC 18.
There must be a causal connection between the non-compensable prejudice and the amendment. In other words, the prejudice must flow from the amendments and not from some other source: Iroquois, at paras. 20-21; and Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 2001 CanLII 8620 (ON CA), 56 O.R. (3d) 768, [2001] O.J. No. 4567 (C.A.), at para. 65.
The non-compensable prejudice may be actual prejudice, i.e., evidence that the responding party has lost an opportunity in the litigation that cannot be compensated as a consequence of the amendment. Where such prejudice is alleged, specific details must be provided: King's Gate Developments Inc. v. Drake (1994), 1994 CanLII 416 (ON CA), 17 O.R. (3d) 841, [1994] O.J. No. 633 (C.A.), at paras. 5-7; and Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1995), 1995 CanLII 7105 (ON SC), 25 O.R. (3d) 106, [1995] O.J. No. 2220 (Gen. Div.), at para. 9.
Non-compensable prejudice does not include prejudice resulting from the potential success of the plea or the fact that the amended plea may increase the length or complexity of the trial: Hanlan v. Sernesky, 1996 CanLII 1762 (ON CA), [1996] O.J. No. 4049, 95 O.A.C. 297 (C.A.), at para. 2; and Andersen Consulting, at paras. 36-37.
At some point, the delay in seeking an amendment will be so lengthy, and the justification so inadequate, that prejudice to the responding party will be presumed: Family Delicatessen Ltd. v. London (City), [2006] O.J. No. 669, 2006 CanLII 5135 (C.A.), at para. 6.
The onus to prove actual prejudice lies with the responding party: Haikola v. Arasenau (1996), 1996 CanLII 36 (ON CA), 27 O.R. (3d) 576, [1996] O.J. No. 231 (C.A.), at paras. 3-4; and Plante v. Industrial Alliance Life Insurance Co. (2003), 2003 CanLII 64295 (ON SC), 66 O.R. (3d) 74, [2003] O.J. No. 3034 (Master), at para. 21.
The onus to rebut presumed prejudice lies with the moving party: Family Delicatessen, at para. 6.
[88] The Court of Appeal for Ontario has also been clear that Rule 26.01 does not mandate that amendments must be allowed in all circumstances. There is no absolute right to amend pleadings, and the residual discretion contemplated directly in the language of Rule 26.01 can be exercised if the responding party would suffer non-compensable prejudice, or if the amendments are untenable: Avedian v. Enbridge Gas Distribution Inc., 2023 ONCA 289 (“Avedian”) at para. 6 (where the Court of Appeal quoted with approval from 1588444 Ontario at para. 25); Marks v. Ottawa (City), 2011 ONCA 248 (“Marks”) at para. 19.
[89] An amendment is untenable if it is not prima facie meritorious, or if it is not sufficiently particularized: Marks, at para. 19.
[90] The law is clear that pleadings must contain sufficient particulars.
[91] Moreover, the requirement is increased where the proposed amendments include allegations of intentional and serious conduct. Rule 25.06(8) provides that “[w]here fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.”
[92] The case law is clear that Rule 25.06(8) requires pleadings to set out precisely what each allegation of such wrongful act is, and “the when, what, by whom and to whom of the relevant circumstances”: 1876871 Ontario Inc. v. Nova Era Bakery & Pastry IV Ltd., 2018 ONSC 3724 at para. 26. See also Balanyk v. University of Toronto, [1999] O.J. No. 2162 (Ont. S.C.J.), 1999 CanLII 14918 at para. 28.
Application of the Test to this Case
[93] In my view, and applying the above principles, the motion cannot succeed since the proposed amendments are scandalous, frivolous, vexatious or an abuse of the court's process. In addition, the proposed pleading discloses no reasonable cause of action. I exercise my residual discretion to decline to grant leave to amend the Claim at this stage.
[94] In my view, the same observations made by the Court of Appeal in Avedian at paragraph 7 with respect to that case are applicable here. The Court of Appeal stated:
We agree with the motion judge’s finding of presumed prejudice. Given that these amendments were sought for a case that was previously listed for trial and was to be again listed for trial with an expedited date. The addition of these new claims could change the nature of the evidence to be called, and would, almost certainly, require amendments to, or new, expert reports on damages. Those realities would cause further delay in a case that is already over a decade old.
[95] That is exactly the case here, largely for the reasons described above: the action is approximately six years old, documentary production has long since been completed, examinations for discovery have been completed, expert accounting reports have been exchanged, and this action is scheduled for a seven week trial on the Commercial List commencing on September 9, 2024 (i.e., in three weeks).
[96] Documentary production consists of hundreds of thousands of documents. The parties in both actions agreed on a joint Discovery Plan in 2019, pursuant to which voluminous production was made. Examinations for discovery were completed in 2021. Beyond that, the parties have served all expert reports including an initial expert report relied upon by the Plaintiffs from Kroll Consulting Canada Co. dated June 13, 2022, and a reply report from the same expert, responding to the report filed by the Defendants.
[97] In my view, this is exactly the scenario contemplated by the Court of Appeal in Avedian described above. Moreover, in that case, the Court of Appeal commented on the skepticism of the motion judge about the legal basis for the claims to be advanced. The Court of Appeal was clear that neither the motion judge nor the Court of Appeal itself was making any determination as to whether or not those claims could succeed (para. 9). Similarly, I make no determination here on whether the Proposed Claim can succeed.
[98] The Court of Appeal did observe, however, that that result “does not change the fact that the questionable foundation for the claims was a proper matter for the motion judge to consider in terms of deciding whether the circumstances of the case as a whole justified allowing the amendments to be made”: Avedian at para. 9.
[99] Here, the fact that the amendment motion was brought subsequent to the further production and discovery motion is not itself fatal. Nor is the fact that the Moving Party still maintains that the Claim without the proposed amendments is sufficient to justify the production and discovery motion. That is a fact which, as noted above, the responding Defendants rely on for the submission that the two motions are inconsistent. They submit that the fact that the Moving Party brought the amendment motion is tantamount to an admission that the production and further discovery motion cannot succeed since the requested productions and discovery are not relevant to the Claim as pleaded.
[100] However, and while not determinative, these facts are relevant to the analysis described by the Court of Appeal. In my view the circumstances of this case as a whole do not justify allowing the amendments to be made three weeks before trial, all in the context of this immensely complex action, the scope and context of which (as noted above in the discussion regarding the production and discovery motion) will be inescapably yet significantly altered and expanded if the amendments are permitted.
[101] Selena submits that the plaintiff is not required to plead evidence, and that for the purposes of assessing whether a pleading discloses a reasonable cause of action, the pleading is taken to be true. I accept that submission.
[102] I also accept the submission that, as observed by the Divisional Court, the purpose of Rule 25.06(8) is to ensure that bald allegations of this nature (i.e., where malice or intent is alleged) should not be permitted. Further, I accept that the rule was never meant to stand in the place of discovery, but only to ensure that a defendant knows the case to meet such that “full particulars” means sufficient material facts to permit a defendant to respond in a meaningful way at the pleading stage: Resolute Forest Products, Inc. et al v. 2471256 Canada Inc., 2014 ONSC 3996 (Div. Ct.) at para. 14(2).
[103] I do not accept the submission, however, that the objection by the Defendants that the proposed amendments lack sufficient particulars here amounts to a demand for specific evidence. Selena submits in her factum that the proposed amendments do not allege a new cause of action, but simply particularize existing ones in that the cover-up and settlement sexual misconduct claims against Frank Stronach are part and parcel of the general alleged misuse of corporate and trust assets to Selena’s detriment.
[104] For the reasons set out above (and particularly at paragraphs 52 – 65), I do not accept this argument. Selena’s action is a claim she advances as a beneficiary (indeed, a discretionary beneficiary) of various family trusts. Allegations of serious misconduct by her grandfather, many of which are alleged to have occurred before she was born let alone named as a beneficiary, are not relevant to that claim.
[105] The Proposed Claim does not contain sufficient particulars of the contested allegations sought to be added now. In my view, this flows from the fact that there is no evidence in the record for the factual basis underlying the allegations. Second, the higher particularization required by Rule 25.06(8) (or any particularization) is absent here.
[106] The allegations made in the criminal proceedings against Frank Stronach are extremely serious. However, the allegations made against the Defendants here, particularly against Belinda and Ossip, are also serious: they are alleged to have intentionally facilitated and then covered up sexual misconduct by Frank Stronach, in part by causing the TSG entities to enter into settlement agreements for the purpose, as alleged in the Proposed Claim, of “concealing the allegations against Frank from public view.”[^5]
[107] Such allegations include malice and intent as contemplated in Rule 25.06(8). Yet the “when, what, by whom and to whom of the relevant circumstances” as contemplated by the case law referred to above is missing.
[108] Firestone, J. (now R.S.J.) of this Court put it correctly, in my view, in Robson v. Law Society of Upper Canada, 2016 ONSC 5579 at paras. 65–67 where he distinguished Khan v. Lee, 2014 ONCA 889 relied upon by the Moving Party here:
[65] I would further adopt the language of the Conway panel, at para. 39, as it applies to the torts based on malice, bad faith, and dishonesty: “[s]ince bad faith or dishonesty is an essential ingredient of the tort of misfeasance in public office, rule 25.06(8) requires that full particulars be pleaded: Gratton-Masuy, at para. 88-89.”
[66] I make this point, and adopt this language, because counsel for the plaintiff seemed to suggest, in argument, that he was not in a position to offer particulars in his pleadings relating to the two torts of malicious prosecution and misfeasance in (abuse of) public office.
[67] With respect, that is not tenable or realistic position to take in a pleadings motion of this kind. It is important to be clear that the factual matrix underlying this case is not at all analogous to Khan (Litigation Guardian of) v. Lee, 2014 ONCA 889, 123 O.R. (3d) 709, a medical malpractice case where no allegations of bad faith or malice were made, where the court concluded that the plaintiff was not in a position to offer detailed particulars in its pleading. Regarding the present causes of action grounded in alleged malice and bad faith conduct, particulars of the specific acts complained of, i.e., “who did what and when,” must be pled. Anything less is a bald allegation which will be found to be “frivolous and vexatious.” As the Court states, in part, in Salehi v. Association of Professional Engineers of Ontario, 2016 ONCA 438, 2016 CarswellOnt 8611, at para. 9: “The party claiming bad faith must provide specific allegations of it.”
[109] The same analysis applies to the intentional misconduct alleged here. There are no particulars in the proposed amendments setting out who (among the Defendants, and in particular as between Belinda and Ossip) was aware, what the allegations of which they are alleged to have been aware were, and what acts they or either of them committed in furtherance of a scheme to conceal such allegations.
[110] The pleading is that they “facilitated, ignored, and/or sought to suppress information” regarding the alleged misconduct of Frank Stronach.[^6] Yet there are no particulars pleaded with respect to the dates, names, amounts of any settlement(s) related to the alleged misconduct of Frank Stronach or the settlement(s) of any claims with respect to that conduct authorized by Belinda or Ossip.
[111] In her factum filed on this motion, Selena submits that she has agreed to provide the facts and evidence she intends to rely on in support of these amendments at trial within seven days of leave being granted.[^7] Yet when asked in argument what it is that she agreed to provide, counsel was unable to direct the Court to anything beyond the materials in the public record (i.e., the criminal charges and the reports in the media). I acknowledge the candour of counsel for Selena to the effect that they had no further materials. This further demonstrates, however, the fact that the Moving Party has no further particulars of the proposed allegations.
[112] The present case is more analogous to Cadieux v. Cadieux, 2016 ONSC 4446 at para. 31, where the Court was determining whether amendments should be allowed in litigation that had been ongoing for over four years and held that there was “far less justification for the use of the boilerplate pleading at this stage in the litigation. To the contrary, the party should be seeking to narrow the issues and move the action towards resolution or trial.”
[113] As Master MacLeod (now R.S.J.) observed in that case, there had been production, discovery and adequate time to fully investigate all the circumstances. The same is applicable to the present case for the reasons noted above about the voluminous production, examinations for discovery and exchange of expert reports.
[114] I would also observe that Andrew (who, again, made the initial request for production and discovery (through counsel), and swore an affidavit in support of this motion by Selena, but did not bring a companion motion in his action), acknowledged in his affidavit sworn in support of this motion that he has been aware of an allegation of sexual harassment against Frank Stronach for many years.[^8] An allegation was also publicly disclosed in the media[^9] long before this action was commenced, yet no allegations relating to that or any other allegations of sexual misconduct by Frank Stronach were pleaded or pursued by either Selena or Andrew and their respective actions until now.[^10]
[115] Moreover, the Discovery Plan negotiated among the parties to all three actions jointly (the litigation commenced by Frank Stronach, this action commenced by Selena and the companion action commenced by Andrew) included, among other things, the requirement for the production of “records related to the use of TSG assets for the benefit of Frank, among others.” As the responding Defendants submit, the Kroll Reply Report relied upon by Selena was served over a month after the arrest of Frank Stronach.
[116] In addition, the argument that Rule 25.06(1) requires pleadings to contain material facts but not evidence does not relieve a party of the obligation to plead particulars, at least in the context of the proposed new allegations and in the further context of this particular case.
[117] Moreover, as the Court of Appeal has observed, “A scandalous pleading includes those parts of a pleading that are irrelevant, argumentative, or inserted for colour, and unfounded and inflammatory attacks on the integrity of a party”: Abbasbayli v. Fiera Foods Company, 2021 ONCA 95 at paras. 48-49.
[118] In my view, the proposed amendments are not relevant to the causes of action already pleaded and are intended to add a colour and complexion to this action in the nature of that described in Abbasbayli. They represent an effort to delay the trial again, and as such should not be permitted at this stage. The responding Defendants submit that the proposed allegations are extremely embarrassing to them, and as such are an abuse of process in the particular circumstances of this case. The Moving Party responds that the allegations are embarrassing only if they are true. In my view, allegations such as those proposed to be made here need not ultimately be proven to be true in order to be embarrassing or constitute an abuse of process. Clearly, the fact of allegations such as are now proposed here can themselves be embarrassing.
[119] In my view, the proposed amendments change entirely the scope of the action and will bring about, inevitably and as described above, further pre-trial steps with consequent delay.
[120] A six year old action about alleged improper corporate spending and mismanagement of family trusts would become, three weeks before trial, an action with considerable emphasis and focus on allegations of sexual misconduct by the founder of the family empire and corresponding allegations of a cover-up by Belinda and Ossip acting together with Frank’s wife and Selena’s grandmother, Elfriede.
[121] The proposed amendments would amount to a fundamental change to the complexion and scope of the action (yet, as described above, not the companion action with which this action is being tried together) and in my view such amendments are not appropriate at this stage.
[122] For all of these reasons, leave to amend the Claim with respect to the disputed amendments is denied.
Result and Disposition
[123] For all of the above reasons, both motions are dismissed.
[124] The parties are strongly encouraged to agree on costs. If they cannot do so, the responding Defendants, who are presumptively entitled to their costs of these motions, may file submissions in writing not to exceed two pages in length, together with their bills of costs, within 10 days, and the Moving Party may file submissions in writing not to exceed two pages in length within seven days thereafter. All materials to be filed through the Commercial List office.
[125] Order to go in accordance with these reasons.
Osborne J.
Date: August 21, 2024
[^1]: Amended Fresh as Amended Statement of Claim dated June 7, 2022 (the “Claim”), para. 4. [^2]: Claim, para. 19. [^3]: Notice of motion dated July 5, 2024, para. (u). [^4]: I do observe, however, that the initial request to the Defendants for additional production was made by Andrew’s counsel on behalf of both him and Selena, and the request and supporting aide memoire filed with the Commercial List for an urgent case conference to schedule this motion was filed on behalf of both of them. [^5]: Para. 128.3 of the Proposed Claim. [^6]: Proposed Claim, Para. 128.2. [^7]: Moving Party’s Factum, Para. 16. [^8]: Affidavit of Andrew Stronach sworn July 7, 2024, para. 4. [^9]: Including the Globe & Mail. [^10]: I also observe that the allegation of which Andrew admits he was aware relates to the settlement of a civil sexual harassment claim entered into between Frank Stronach and MEC Holdings, Inc. which is a non-party to this action and a corporate entity of which neither Belinda or Ossip was ever an officer or director.