Court File and Parties

COURT FILE NO.: 14-62684 DATE: 2024/08/30 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Ottawa Credit Exchange Limited, Plaintiff AND David Wu and Opus Fitness Investment Inc., Defendants

BEFORE: Justice R. Ryan Bell

COUNSEL: Anthony J. Imbesi, for the Plaintiff Jason M. Squire, for the Defendants

HEARD: August 8, 2024

Endorsement

Overview

[1] In this commercial dispute involving the management buyout and reorganization of The Athletic Club (which later became Movati Athletic (Group) Inc.), Ottawa Credit Exchange Limited (“OCEL”) moves for the production of four categories of documents and records:

(i) emails sent and received by David Wu, personally or on behalf of Opus Fitness Investment Inc., using the email address “caymus1968@gmail.com”;

(ii) Blackberry Messenger (BBM) chats and/or messages involving Mr. Wu, personally or on behalf of Opus, relevant to the matters in issue;

(iii) emails between Mr. Wu, personally or on behalf of Opus and lawyers at Blake, Cassels & Graydon LLP; and

(iv) the forensic copy of the data preserved from the smartphones and computers used by the defendants made by Careworx in or around June 2017.

[2] Mr. Wu and Opus say that the documents and records sought by OCEL are not and have not been in their possession, control or power.

[3] This action was commenced in November 2014. At that time, in addition to Mr. Wu and Opus, the statement of claim named Dan Pompilii (The Athletic Club’s CFO), Charles Kelly (The Athletic Club’s CEO), and 2425097 Ontario Inc. as defendants. The action was discontinued against Mr. Pompilii, Mr. Kelly, and 2425097 Ontario on terms set out in a settlement and tolling agreement, including that Mr. Pompilii, Mr. Kelly, and 2425097 Ontario would be examined as non-parties and were required to produce certain documentation.

[4] Mr. Wu and Opus delivered their initial productions in November 2019 and delivered supplementary productions in October 2020. The parties attended examinations for discovery in May 2021. Answers to the undertakings of the parties have been delivered. Examinations of the non-parties were conducted in November 2023. Answers to the undertakings of the non-parties were delivered in January 2024.

[5] OCEL maintains that it became apparent following the examinations for discovery of the non-parties that Mr. Wu and Opus have failed to produce materially relevant documents.

[6] Rule 30.02(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 requires that every document relevant to any matter in issue in an action that is or has been in the possession, control or power of a party shall be disclosed whether or not privilege is claimed for the document. The documents sought by OCEL on this motion are not within the defendants’ possession, control or power. The motion is dismissed with costs to the defendants.

Category 1: Emails sent and received by Mr. Wu using “caymus1968@gmail.com”

[7] The non-parties have produced two email strings in which Mr. Wu is communicating with individuals within The Athletic Club and the Club’s investment bankers using the email address “caymus1968@gmail.com”. OCEL points to these two email strings as evidence that relevant communications from this email address are in the possession, control or power of Mr. Wu.

[8] This submission ignores the sworn evidence of previous counsel with carriage of this matter on behalf of Mr. Wu and Opus: pursuant to the discovery plan, Lerners LLP searched Mr. Wu’s “caymus1968@gmail.com” email address for relevant documents in the fall of 2016, before Mr. Wu and Opus’ affidavit of documents was sworn or their documents produced. The evidence before me is that no other relevant communications from Mr. Wu’s email records in this email account as reviewed by Lerners LLP exist.

[9] The email address was searched by counsel. No relevant documents were located. The court cannot order disclosure and/or production of documents that are not and have not been in the party’s possession, control or power.

Category 2: BBM Chats/Messages

[10] Mr. Wu and Opus have produced two messages sent by Mr. Wu using BBM. These messages were disclosed in the defendants’ supplementary affidavit of documents. OCEL says that it is apparent from these messages that Mr. Wu and others at The Athletic Club were communicating through BBM about matters relevant to the transactions complained about by OCEL. Both Mr. Kelly and Mr. Pompilii confirmed during their non-party examinations that they communicated with Mr. Wu through BBM. OCEL questions why only two BBM messages were produced by Mr. Wu, and essentially submits that there must be more messages that have not been disclosed.

[11] The evidence is that the cell phone device used by Mr. Wu was owned by Movati. The cell phone was replaced by Movati before the statement of claim was issued. The phone, and by extension, any BBM chats and messages on it, are not in the possession, control or power of Mr. Wu. OCEL has been advised, repeatedly, that Mr. Wu used a Movati-owned device and that the device was replaced before the litigation commenced.

[12] In October 2021, Movati’s counsel confirmed to OCEL that Movati replaced cellular phones before the litigation commenced; as a result, Movati does not have possession of, or access to, any cell phone records or text messages for the time period requested. In January 2024, Movati’s counsel reiterated that he does not have any further information regarding the availability of the BBMs.

[13] Any BBM messages and chats that do exist are not in the possession, control or power of Mr. Wu.

Category 3: Emails with Blake, Cassels & Graydon LLP

[14] In seeking production of these documents, OCEL has proceeded on the basis that Blakes was legal counsel to the minority shareholders of The Athletic Club, including Mr. Wu and Opus. This is incorrect. Blakes was counsel to The Athletic Club. Mr. Wu was an officer and a director of The Athletic Club and had his own counsel.

[15] Communications involving Mr. Wu and Blakes are listed among the defendants’ Schedule “B” productions. Common interest privilege is claimed in respect of these documents and that claim has not been challenged. Mr. Wu does not have possession, control or power of any other documents that may be in Blakes’ possession. In any event, the holder of the privilege – The Athletic Club – has not waived privilege.

Category 4: Careworx records

[16] When Mr. Wu’s employment relationship with Movati was terminated, he was required to return the Movati-owned smartphone and computer that he had used. The settlement agreement with Mr. Wu provides for Movati taking a forensic copy of the smartphone and the computer once they were no longer in Mr. Wu’s possession.

[17] Mr. Wu does not know whether Movati did take a forensic copy of these items. While OCEL suggests that Mr. Wu “has the right” to request production of any such documents from Careworx, he was not asked to do so. It was Movati that had the right under the settlement agreement to make forensic copies of the devices that Movati owned. If these records do exist, they are not in Mr. Wu’s possession, control or power.

Conclusion

[18] The motion is therefore dismissed.

[19] The defendants maintain that they are entitled to costs of the motion on a substantial indemnity basis because OCEL was advised, repeatedly, that the BBM messages and texts are not in Mr. Wu’s power, control, or possession. This is not conduct that warrants the sanction of the court through an award of substantial indemnity costs.

[20] The defendants’ partial indemnity costs as set out in their costs outline are approximately $5,600 (not including an appearance fee); OCEL’s partial indemnity costs are approximately $9,750 (including time incurred in respect of other aspects of the motion that were dealt with before Perron A.J.). The motion as it proceeded before me was a straightforward disclosure/production motion. In my view, a fair and reasonable amount of costs to be paid by OCEL, as the unsuccessful party, is $5,000, all inclusive. This amount is to be paid by OCEL to the defendants within 30 days.

Justice R. Ryan Bell Date: August 30, 2024