Court File and Parties

COURT FILE NO.: FC-21-759 DATE: 2024-01-22 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Melissa Saunders, Applicant AND Anthony Mineault, Respondent

BEFORE: Justice Engelking

COUNSEL: Altynay Teshebaeva, for the Applicant Julius Dawn, for the Respondent

HEARD: October 24, 2023

Endorsement on Motion

[1] On April 20, 2023, the Applicant’s motion before me regarding disclosure was adjourned as follows:

1. The motion for the relief requested in Paragraph 1 of the Applicant’s Notice of Motion dated April 12, 2023 is adjourned on the following terms: a. Within 30 days of today, QTMG LLP shall provide to the Respondent disclosure of information/documentation identified by the Respondent’s expert as required to complete a valuation of the Respondent’s interest in the partnership/firm. b. Within 60 days of today, the Respondent shall provide to the Applicant a business valuation report regarding the date of separation value of his interest in the partnership/firm of QTMG LLP, and an income report.
2. If any further motion for disclosure is required, it may be scheduled before me by either party.

[2] The Applicant has now brought this motion seeking an order for disclosure, as well as for the Respondent to pay $2,830 for the production letter of the Applicant’s expert, Mr. Ranot, the full costs of a valuation report, and $6000 costs for the motion.

[3] The parties began cohabiting in the summer of 2010, married on July 7, 2012, and separated on September 15, 2020. There are only two issues in this case, those being the Applicant’s claims for equalization of the parties’ net family property and spousal support.

[4] The first requires, among other things, a valuation of the Respondent’s interest in the law firm in which he is a partner, Quinn Thiele Mineault Grodzki LLP, (hereinafter referred to “QTMG LLP”), and the second requires a valuation of his income for support purposes.

[5] The Applicant’s affidavit in support of this motion is sworn on October 13, 2023, however, it appears from some correspondence attached to her affidavit that the parties were aware of this October 24, 2023, motion date from at least June of 2023 (if not before).

[6] Despite the terms of my order dated April 20, 2023, neither a valuation of the Respondent’s interest in QTMG LLP, nor an income report had been provided to the Applicant at the time of the motion being heard.

[7] The Respondent starts his affidavit in response to the Applicant’s motion with: “I have done everything in my power and control to have my 25% partnership interest in QTMG LLP Valued, both as of the date of marriage and the date of separation.”

[8] The Respondent then sets out steps he took between April 1, 2022, and July 11, 2022, to retain Mr. David Clarke to conduct the valuation. At paragraph 7 of his affidavit, the Respondent states: “July 23, 2022 the law firm managing partner, Mr. Quinn, wrote to my solicitor that an issue had arisen in respect of the request for additional documents and that not all the partners would agree to the release of this information. Without this disclosure from QTMG LLP Mr. Clarke was unable to proceed with his valuation report.” The issue which had arisen was not identified in the Respondent’s affidavit.

[9] In paragraph 9 of his affidavit, the Respondent indicates that on November 10, 2022, the Applicant then sent a detailed list of financial information being sought from him, “over which I had no power or control.” The Applicant ultimately brought her motion which was first before Justice Pelletier on March 7, 2023. Justice Pelletier adjourned the motion to April 20, 2023, and required a) that the Applicant serve QTMG LLM with the motion materials and a copy of his order, b) that the Respondent disclose his efforts to obtain a business evaluation, and c) that the Respondent provide the Applicant with documentation supporting his values in Parts 4 to 6 of Financial Statement.

[10] The matter was then before me on April 20, 2023, after which a copy of my endorsement as set out above was provided to Mr. Clarke and he was “re-engaged” to proceed with the Business Valuation, notwithstanding that QTMG LLP, who is not a party to the proceeding, served a Notice of Appeal of my April 20, 2023, order on the Applicant and the Respondent. Mr. Clarke was authorized to deal directly with the partners of the law firm to obtain the disclosure he sought.

[11] At paragraph 15 of his affidavit, the Respondent indicates: “The partners of the Law Firm, without my involvement, then engaged in direct negotiations with Mr. Clarke in [an] attempt to resolve the scope of the disclosure to be provided to complete the Business Valuation reports.”

[12] At the time of this motion, it was the Respondent’s anticipation that a Mr. Clarke would complete a draft report prior to December 31, 2023. I have no knowledge as to whether that has transpired.

[13] At paragraph 17 of his affidavit, the Respondent, for the first time, provides the Applicant (and the court) with documentation attached as Exhibits “L” through “X” confirming the values contained in Parts 4 and 5 of his Financial Statement, but for proof of the value of his CRA tax arrears at the date of separation. The Respondent submits that he is unsure if CRA will produce a date of valuation amount. Of course, the obligation to prove the debt is the Respondent’s; any failure by him to do so will likely be reflected in the equalization calculation.

[14] According to the Ontario Business Registry, QTMG LLP, in which the Respondent is an equal partner, operates as a Limited Liability Partnership, without a partnership agreement. The Applicant submits that is it, therefore, governed by section 24 of Ontario’s Partnership Act, which provides:

24. The interests of partners in the partnership property and their rights and duties in relation to the partnership shall be determined, subject to any agreement express or implied between the partners by the following rules:

25. Every partner may take part in the management of the partnership business.

26. The partnership books are to be kept at the place of business of the partnership, or the principal place, if there is more than one, and every partner may, when he or she thinks fit, have access to and inspect and copy any of them.

[15] The Applicant’s position is that although Justice Pelletier required her to serve QTMG LLP, which she did, she is not seeking disclosure from a non-party, such that Rule 19(11) comes into play; she is seeking disclosure from the Respondent. Her further position is that, because of his partnership interest, pursuant to the Partnership Act the Respondent has full access to the documents being requested. She submits that the remaining partners at QTMG LLP are, in essence, unlawfully preventing the Respondent from exercising his rights, and he has provided no adequate explanation as to why he cannot obtain and disclose the requested information.

[16] The Respondent relies to a great extent on Himel v. Greenberg, 2010 ONSC 2325, which is a case about a corporation, GF7 Holdings Inc. (or Minto) and pertains to the Ontario Business Corporations Act (“OCBA”). At paragraph 16 of that decision, after setting out in paragraph 15 the documents to which Mr. Greenberg was entitled pursuant to ss. 140(1) and s. 154 of the OBCA, Justice Spies indicated:

[16] Mr. Greenberg is also a director of Minto, and as a director he has access to additional information, which would no doubt include the documents requested by Dr. Himel’s advisors. However, I accept the submission of Mr. Lowenstein that he is only entitled to these documents in his capacity as a director in the context of a bona fide exercise of his position as a director. Section 134(1) of the OBCA explicitly imposes duties upon directors to act honestly and in good faith with a view to the best interests of the corporation and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The Supreme Court of Canada has referred to these duties as a fiduciary duty or duty of loyalty and a duty of care. As a director, Mr. Greenberg must maintain the confidentiality of information he requires in his position as a directory.

[17] At paragraph 17, Justice Spies went on to set out a provision in GF7 Holdings Inc.’s Shareholders’ Agreement which provided for confidentiality, but for “information required to be disclosed by law”. (The emphasis is original).

[18] At paragraph 19, Justice Spies wrote:

[19] A distinction must be made with regard to the documents in Mr. Greenberg’s possession or control in his personal capacity as opposed to his capacity as a director of Minto. He is a party to this proceeding in his personal capacity. Minto is not a party to these proceedings. Mr. Greenberg is required to produce the documents that are in his personal possession and control. The documents he is entitled to as a shareholder have already been produced. The fact that Mr. Greenberg has access to documents in his capacity as a director of Minto does not permit him to obtain those for use in his personal capacity as a party to personal litigation. The information required of Mr. Greenberg is not required “by law” to be disclosed in this litigation as he has been sued in his personal capacity. Simply put, the phrase “by law” in the above provision merely begs the question that is the subject of Dr. Himel’s request. The “law” distinguishes between Mr. Greenberg’s personal capacity, and his capacity as a director of Minto. Accordingly, Mr. Greenberg is not required “by law” to disclose, in this personal litigation, confidential information acquired as a director. For these reasons I find that Mr. Greenberg does not have the legal authority to compel Minto to produce the requested documents to him so that he can disclose them to Dr. Himel. His only recourse would have been to bring the motion for third party production that has been brough by Dr. Himel.

[19] The Respondent submits that he is in the same position as Mr. Greenberg, and that Justice Spies’ logic is equally applicable to a partnership. He suggests that he is entitled to the partnership’s books only in his capacity as a partner, and not to disclose in personal litigation.

[20] The Applicant argues that Himel is distinguishable from this case on three grounds: first, and most obvious, the governing legislation in Himel is the Business Corporations Act; second, there was a Shareholders’ Agreement in place which governed the obligations and entitlements of the shareholders; and third, as a director of the corporation, Mr. Greenberg was entitled to more information than he was a shareholder.

[21] With the Applicant, I agree. No such latter distinction exists in the Partnerships Act. Indeed, in Himel, Justice Spies noted of Mr. Greenberg as set out above: “The documents he is entitled to as a shareholder have already been produced”. In other words, anything Mr. Greenberg was entitled to as a shareholder, he shared. Rather than support the Respondent’s contention that he is unable to share information/documentation to which he is entitled as a partner, this, in my view supports that unless some special provisions exist, either in an explicit or implied partnership agreement, or within the Partnerships Act itself, the Respondent can obtain and disclose any information to which he is entitled. I was directed to no such existent special provisions.

[22] Additionally, GF7 Holdings Inc. was a party to the motion in Himel precisely because of the documents to which Mr. Greenberg was not entitled as a shareholder, or conversely, only entitled to as a director and only to be used in his capacity as a director. With respect to the issue of whether QTMG LLP is a party to this motion, Justice Pelletier indicated in his March 7, 2023, endorsement:

The Court has chosen to address the issues raised as it appears that a third party (Respondent’s law firm) must become engaged in the process. Disclosure motion, with notice to the partnership, to be heard April 20, 2023 at 3pm (1 hour)

[23] Although Justice Pelletier noted that the law firm “must become engaged in the process”, and he required the Applicant to provide notice to the partnership of the return of the motion, which she did, this did not, in my view, render it a party to the motion pursuant to subrule 19(11) of the Family Law Rules. Presumably, Justice Pelletier indicated that it appeared the law firm would need to become engaged in the process based on what he was being told by the Respondent’s counsel, which one can infer was similar to what is deposed in the Respondent’s affidavit in support of this motion, that he had no control over the documents in question. However, as a partner and pursuant to ss. 24(9) of the Partnerships Act, he does have control over them, the same level of control as every other partner.

[24] On April 20, 2023, I reminded the Respondent of his obligation to prove the value of his interest in the partnership as of the dates of marriage and separation, as well as of his obligation to prove the value of his income for support purposes. I did not hear the disclosure motion but based on representations made by Mr. Quinn of QTMG LLP, I confirmed that the law firm would provide the necessary documentation required to the Respondent’s expert within 30 days, and I ordered the Respondent to provide a business valuation report to the Applicant within 60 days. In essence, given ss. 24(9) of the Partnerships Act, by requiring QTMG LLP to provide the documentation to Mr. Clarke, I was requiring the Respondent to do so.

[25] Based on the above, I do not consider QTMG LLP to be a party to this motion. Indeed, I have difficulty comprehending the Respondent’s arguments in the face of his obligations to disclose financial information. Engagement of both the Respondent’s expert, Mr. Clarke, and the Applicant’s expert, Mr. Ranot, would entail the signing of confidentiality agreements regarding the financial and/or client information relied upon. With respect to Mr. Clarke, this is confirmed in Mr. Dawn’s email to Mr. Quinn dated April 7, 2022, Mr. Dawn’s email to Mr. Clarke dated June 20, 2022, Mr. Clarke’s email to Mr. Dawn dated June 23, 2022, and Mr. Dawn and Mr. Clarke’s email exchange between June 28 and July 5, 2022, the latter of which includes a copy of the signed confidentiality agreement from Mr. Clarke on behalf of his firm, Baker Tilly Ottawa LLP. Mr. Dawn requested the confidentiality agreement of Mr. Clarke, and the same, could presumably be requested of Mr. Ranot on behalf of his firm, if necessary. Indeed, in his cover letter dated March 22, 2023, accompanying his production letter of the same date, Mr. Ranot stated:

We understand that Mr. Anthony Mineault (“Anthony”) has been reluctant to provide information regarding Quinn Thiele Mineault Grodzki LLp (“the partnership”) on the basis of confidentiality and privilege. We have valued hundreds of private businesses where one spouse had a partial interest, meaning arm’s length partners or co-shareholders. We do not recall any such case where we were not eventually permitted to review the necessary information and documentation required to determine the title spouse’s income and value of business interest.

[26] Mr. Ranot is clearly perplexed by the position taken by the Respondent and/or his law firm. I share that sentiment. The Applicant seeks an order for the Respondent to disclose to Mr. Ranot what he requires to conduct “the valuation of Anthony’s partnership interests at the two relevant dates and determining his income pursuant to the Federal Child Support Guidelines”, in other words, what is delineated in his production letter dated March 22, 2023. Given that the Respondent had not to the date of this motion provided valuations for either to the Applicant, I am prepared to make such an order.

[27] The Applicant also requests an order for the payment by the Respondent of the cost of Mr. Ranot’s production letter of $2,830. I am also prepared to make that order. The Applicant has been put to the expense of retaining Mr. Ranot because the Respondent has not fulfilled his obligations. She will be compensated for same.

[28] Although the Respondent indicated at the motion that he anticipated that Mr. Clarke’s valuation report(s) would be completed by the end of December 2023, thereby negating the need for the motion, I must state that the whole situation has been exacerbated by the complete lack of communication or professional courtesy by the Respondent’s counsel to the Applicant’s counsel. After the April 20, 2023, appearance, Ms. Teshebaeva wrote to Mr. Dawn to follow up on the whereabouts of the Respondent’s ordered valuation reports four times: twice on June 20, 2023, on July 11, 2023, and on October 12, 2023. At the time of the swearing of the Applicant’s affidavit on October 13, 2023, there had been no response to any of Ms. Teshebaeva’s four communications. Nevertheless, in response to this motion, the Respondent included copies of communications between his counsel and Mr. Clarke commencing on April 27, 2023, and continuing into May and June of 2023, as well as copies of communications between Mr. Clarke and the law firm commencing in June of 2023. One cannot help but think that one simple email or telephone call to advise Ms. Teshebaeva that Mr. Clarke was indeed engaged in conducting the required assessments would have been sufficient to negate the need for a motion. No such communication occurred.

[29] The Applicant has also requested an order for the Respondent to pay the “full cost of the valuation report” at paragraph 3 of the Notice of Motion. Because I do not know whether a report has been completed by Mr. Clarke, or, therefore, whether a report by Mr. Ranot is still required, I will reserve that request to the cause. However, I make the following disclosure order, in the event that the Applicant still requires Mr. Ranot to prepare his valuations.

Order

[30] Based on the above, there shall be an order as follows:

1. Within 30 days of this Order, the Respondent shall produce and provide to the Applicant disclosure as listed in Appendix A to the Applicant’s Notice of Motion dated October 13, 2023.
2. Within 10 days, the Respondent shall pay to the Applicant $2,830 to cover the cost of the Initial Production Letter of Mr. Ranot dated March 22, 2023.
3. The issue of the cost of the valuation report(s) is reserved in the cause.

Costs of the Motion

[31] The Applicant requests an order for costs for this motion of $6000. She is the successful party on the motion, and she is entitled to an order for costs. However, I have not heard from the Respondent in this regard. If the parties are not able to resolve the issue of costs for the motion by February 2, 2024, written submissions for same of no more than three, double-spaced pages, along with Bills of Costs and Offers to Settle, may be made to me at 10-day intervals from that date.

Engelking J. Date: January 22, 2024