Court File and Parties
Court File No.: FS-18-03038 Date: 2024-01-05 Ontario Superior Court of Justice
Between: Nancy Wu Applicant
– and –
Anthony Di Iorio, 8821488 Canada Ltd & Decentral Inc. Respondents
Counsel: Aaron Franks, Adam Prewer, Ilana Zylberman-Dembo and Diana Enache, lawyers for the Applicant Meysa Maleki and Jorge Cartaya, lawyers for the Respondent Anthony Di Iorio Duncan Boswell, lawyer for 8821488 Canada Ltd. & Decentral Inc.
Heard: December 19, 2023
Endorsement
DIAMOND J.:
Overview
[1] As per the contents of my brief Endorsement released on December 19, 2023, on that day the Court heard argument on three issues forming part of the Applicant’s long motion. The balance of the applicant’s long motion is scheduled to conclude before me on February 27, 2024.
[2] At the conclusion of argument on December 19, 2023, I took my decision on all three issues under reserve.
[3] This Endorsement disposes of two of those three issues, namely:
(a) The respondent’s request for leave under Rule 39.02(2) to file the affidavit of Justin Maile (“Maile”) sworn August 28, 2023, and
(b) The applicant’s request for an order mandating the respondents to answer nine questions refused at questioning.
[4] This Court’s disposition of the third issue (the applicant’s request for a search of the Decentral Server using additional search terms) is awaiting, pursuant to a timetable, the provision of additional charts by counsel for the parties.
Issue #1 The respondent’s request for leave under Rule 39.02(2)
[5] This action was commenced over five years ago. The parties remain in the disclosure stage.
[6] In advance of the applicant’s original long motion (which had been framed as “the disclosure motion”), the parties proceeded with questioning. The respondent Anthony Di Iorio (“Di Iorio”) was questioned on June 9 and 27, 2023.
[7] The respondents had previously cross examined the applicant on her long motion on May 19, 2023.
[8] Part of the applicant’s motion materials includes an affidavit from Joshua McDougall, who has been retained by the applicant as a litigation expert in this proceeding, but whose evidence filed on the long motions did not include an Acknowledgement of Experts Duty and/or curriculum vitae.
[9] A case conference took place before Justice Kristjanson on August 31, 2023. Most of that attendance was focused upon scheduling issues so that the applicant’s long motion proceeded as planned on October 17, 2023.
[10] On August 31, 2023, Justice Kristjanson addressed the applicant’s submission that the long motion ought to include the applicant’s request for various undertakings and refusals to be answered by the respondents. Justice Kristjanson ordered the applicant to serve a detailed chart summarizing all of the undertaking, refusals and questions taken under advisement, and permitted the respondents an opportunity to revise that chart with their positions on each undertaking, refusal or question taken under advisement. Justice Kristjanson ordered the parties to upload the chart to Caselines for the benefit of the long motion judge.
[11] The relevant excerpts from Justice Kristjanson’s Endorsement are as follows:
“I order the Applicant to provide a chart to the Respondents by September 15th, in word format. Given the constraints of Caselines, landscape charts do not work well. The Applicant is to take the chart at Master A534, make the two left columns narrower, eliminate the third column, and expand the narrative column.
In the narrative column, the Applicant has already summarized the R/UA/UT. Beneath this, in four or five sentences, the Applicant is to summarize relevance/importance/why this is not a fishing expedition, or unduly onerous, etc., but is essential information to the Applicant’s case, not already provided. The Applicant is also to assign a priority by simply inserting a number in the left most column: (1 is most essential, 2 is of medium importance, 3 is of least importance). This will help focus time in oral argument and guide the motion judge. No more than 1/3 of the requests should be deemed #1, and no more than 1/3 deemed #2.
The Applicant is to provide the revised chart to the Respondents by September 15th.
The Respondents are to input their responses in the same narrative portion in the same chart, explaining why not relevant/information already provided/etc., in a similar 4 or 5 sentences. The Respondents must provide their responses by September 28th.
The Applicant is to upload the Joint Chart in their bundle for the long motion.
I appreciate the Chart will be long, but at least it can be properly viewed in Caselines. If the Applicants wish to deliver a landscape version of the Chart for the motion judge’s use (in Word), they should provide the Word Document both in paper and electronically to the Family Office with a request that it be delivered to the motion judge. They may also hand up a Work landscape version of the chart on the day of the motion. While long motions are generally heard in person, sometimes (depending on the judge’s availability) they are heard by Zoom. That is why it should be delivered in advance.
[12] In paragraph 14 of Justice Kristjanson’s Endorsement, Her Honour stated as follows:
“I am presuming the Applicant’s affidavit evidence is complete. If not, final affidavit evidence is also due September 15. The final Respondents’ affidavits are due September 28.”
[13] On September 28, 2023, the respondents delivered supplementary affidavit material including the affidavit of their expert Maile.
[14] The applicant objects to the admissibility of the Maile affidavit, as the Maile affidavit was served well after the respondents had cross-examined the applicant upon her motion materials. As such, the applicant contends that the Maile affidavit was delivered in contravention of Rule 39.02(2) of the Rules of Civil Procedure, and the respondents thus require leave of the Court pursuant to Rule 39.02(2) to file the Maile affidavit.
[15] I agree that the respondents do require leave under Rule 39.02(2). The contents of that rule state:
“A party who has cross-examined on an affidavit delivered by an adverse party shall not subsequently deliver an affidavit for use at the hearing or conduct an examination under rule 39.03 without leave or consent, and the court shall grant leave, on such terms as are just, where it is satisfied that the party ought to be permitted to respond to any matter raised on the cross-examination with evidence in the form of an affidavit or a transcript of an examination conducted under rule 39.03.
[16] As held by Regional Senior Justice Morawetz (as he then was)in In The Matter of the Receivership of Redstone Investment Corporation 2016 ONSC 513, the test for leave under Rule 39.02(2) is comprised of the following four elements:
(a) Is the evidence relevant?
(b) Does the evidence respond to a matter raised in cross-examination, not necessarily raised for the first time?
(c) Would granting leave to file the evidence result in non-compensable prejudice that could not be addressed by imposing costs, terms or an adjournment?
(d) Did the party seeking leave provide a reasonable or adequate explanation for why the evidence was not included at the outset?
[17] The relevant jurisprudence confirms that there is a high threshold for admissibility under Rule 39.02(2), and historically leave has been granted sparingly. The policy behind the rule is to require parties to put their evidence forward in the record before embarking upon cross-examination of an opposing party.
[18] As required by the Divisional Court in First Capital Reality Inc. v. Centre Corp. Management Services Ltd. 2009 Carswell ONT 6914 (Div. Court), when assessing the four elements of the test for leave under Rule 39.02(2), the Court should utilize a flexible, contextual approach having regard to the overriding principle that the rules, where possible, should be interpreted liberally to ensure a just and timely resolution of the dispute.
[19] While I appreciate that the test relieve under Rule 39.02 may need to be applied using a flexible and contextual approach, as stated the parties still remain in the disclosure stage of this five-year-old proceeding, and the applicant’s long motion has been adjourned on several prior occasions. This proceeding needs to move forward without further delay, a conclusion shared by Justice Kristjanson several months ago.
[20] Dealing with the first element of test for leave, there is no doubt that the evidence in the Maile affidavit is relevant. To resolve disclosure issues, and the financial issues at trial, the Court will no doubt require the assistance of expert evidence in the cryptocurrency industry.
[21] However, in my view the respondents do not meet the second and fourth elements of the test, and their failure to do so results in the type of prejudice that cannot be adequately addressed by a further adjournment to permit the applicant the opportunity to cross-examine on the Maile affidavit (ie. the respondents in turn do not meet the third element of the test).
[22] In attempting to explain to the Court that (a) the Maile affidavit responds to a matter raised on cross-examination, and (b) there is a reasonable or adequate explanation for why the Maile affidavit was not included at the outset, the respondents submit that it was only during the course of the applicant’s cross-examination when Di Iorio first realized that he required expert evidence to address the applicant’s evidence on the long motion (including the evidence from McDougall).
[23] Di Iorio allegedly came to this conclusion when counsel for the applicant took the position in responding to questions posed of the applicant by counsel for the respondent that Di Iorio could not give opinion evidence about the cryptocurrency industry, and that is why the applicant retained McDougall. In other words, (a) Di Iorio allegedly believed at the outset that his evidence dealing with cryptocurrency issues would be sufficient for argument of the applicant’s long motion, and (b) when counsel for the applicant pointed out that the applicant did not agree with Di Iorio’s position/assumption, it was only then that Di Iorio realized that expert evidence would be necessary.
[24] The respondents’ submission is rejected for two reasons:
- There is no affidavit from Di Iorio on the long motion (and no motion for leave under Rule 39.02 was ever formally filed) stating that he had made that original assumption at the outset, and then came to different conclusion as a result of what had occurred at the applicant’s cross-examination. There is simply no evidence before this Court to satisfy the second and fourth elements of the test for leave under Rule 39.02(2), and the respondent’s submission is no more than just that - a submission without supporting evidence.
- Even if this Court was being asked to draw the appropriate inferences from the existing record to support the respondents’ submission, there is sworn evidence from Di Iorio on the applicant’s long motion that runs completely contrary to the respondents’ submission and renders that submission disingenuous.
At paragraph 3 of his affidavit sworn March 6, 2023, Di Iorio stated as follows (my emphasis in bold):
“My involvement in the crypto space dates back as far as mid-2012. It was at approximately this time when I purchased my first cryptocurrency. For this reason alone, part of Nancy’s crypto disclosure request extending as far back as 2011, is simply impossible to provide as I only became aware of Bitcoin in 2012. I am currently in the process of retaining my own expert whom I expect to review, respond, and provide an opinion with respect to the cryptocurrency disclosure sought by Nancy, as well as Nancy’s and Joshua’s affidavits overall. In the meantime, I respond as follows with respect to Nancy’s and Joshua’s affidavits.”
[25] The evidence in the Maile affidavit does not respond to a matter raised on cross-examination. It was already live and in existence prior to the applicant’s cross-examination.
[26] The respondents have not provided a reasonable or adequate explanation for why the Maile affidavit was not included at the outset, especially given Di Iorio’s sworn evidence that he was in the process of retaining a cryptocurrency expert as far back as early March 2023. Simply put, the contents of Di Iorio’s affidavit sworn March 6, 2023 render the respondents’ submission disingenuous.
[27] As a final (and somewhat desperate) stab at the issue, the respondents point to paragraph 14 of Justice Kristjanson’s Endorsement dated August 31, 2023 as evidence of the Court having already granted the respondents permission to file “final affidavits” on the applicant’s long motion. In my view, paragraph 14 of Justice Kristjanson’s Endorsement clearly relates to the parties’ request to file additional motion materials dealing with the undertakings and refusals motion which was added to the long motion that day. To interpret paragraph 14 any other way would allow the respondents the chance to file evidence without giving the applicant a chance to respond to that evidence. As confirmed during argument before me, the issue of timetabling further expert evidence was not raised at the case conference before Justice Kristjanson, nor was the requirement for leave under Rule 39.02(2) canvassed before Justice Kristjanson’s at that time.
[28] For these reasons, the respondent’s request for leave under Rule 39.02(2) to file the Maile affidavit is dismissed, and the long motion shall proceed before me without regard to the Maile affidavit.
Issue #2 The applicant’s request for an order mandating the response to answer nine questions refused at the respondents questioning
[29] This Court’s disposition of the respondents’ eight outstanding refusals is as follows:
| Q. | Question | Disposition |
|---|---|---|
| 19 | To provide Khaled Jarrar’s content information. | Mr. Jarrar is a former Decentral employee who conducted the document review of the Decentral Server. It is clear he has relevant information to the issues in this proceeding, and the respondent’s alleged privacy concerns for Mr. Jarrar do not apply. The respondents are to provide the applicant with Mr. Jarrar’s last known content information |
| 1244 | To provide copies of all Slack Communications involving Nancy, i.e. that name her or that reference her by name or nick name from the beginning of Decentral using Slack until the deactivation of Nancy’s account. | Counsel for the respondents shall review all of the Slack message communications which mention “Nancy” and prepare a list for the applicant of any messages not produced. That list shall identify each message by date, sender and receiver and provide a basis for its non-production. |
| 1245 | To provide all of the Slack audit logs from the time that Decentral began using Slack until the deactivation of Nancy’s account. | In this Court’s view, the frequency of the applicant accessing the Slack Communication System is not sufficiently relevant to the issue of her role at Decentral. However, the respondents shall produce Slack audit logs which evidence the applicant’s administration level if possible, |
| 1264 | To provide a copy of Nancy’s entire email box, including inbox, sent items, trashed email, archived emails, calendar appointments and contacts with their Meda Data intact | This Court sees no reason why the applicant’s emails and/or calendar entries should not be produced to her. This question must be answered. |
| 1266 | To provide a list of all email accounts that Mr. Di Iorio held from 2014 to October 2017 and identify which of those email addresses that Nancy had access to. | During argument, counsel for the respondents confirmed that it is Mr. Di Iorio’s position that he cannot remember whether the applicant had access to any of his email addresses in the relevant time period. The respondents are nevertheless to provide the email accounts that Mr. Di Iorio held and used from 2014 to October 2017. |
| 1268 | To advise specifically what Nancy did not have access to in regards to his Decentral email account. | This question has already been answered as counsel for the respondents confirms that Mr. Di Iorio has no recollection. |
| 1309 | To provide copies of the documents that are not privileged that arise for the term “Vitalik Buterin”. | There is insufficient content in the pleadings to support a sufficient nexus of relevancy between Mr. Buterin and the issues joined in this proceeding. While the applicant claims an equal interest in the respondent’s cryptocurrency holdings, the pleadings do not disclose any business or other relationship between the applicant and Mr. Buterin, and as such, this request is refused. |
| 1310 | To provide a list of the documents, by date, description, sender and recipient, of any documents that have the search term “Vitalik Buterin” in them. | This question is also refused for the reasons set out in the Court’s disposition of question 1309. |
Costs
[30] The costs of the December 19, 2023 attendance have already been reserved to me as the judge hearing the balance of the applicant’s long motion on February 27, 2024.
Diamond J.
Released: January 5, 2024