Court File and Parties

Court File No.: CV-25-0324-00

Date: 2025-09-11

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Hornepayne First Nation

Chief Ron Kocsis, appearing on behalf of the Applicant

Applicant

- and -

Marie Josee Payette Professional Corporation, and Marie Josee Payette, and Deborah Tropea Holdings Inc., and Deborah Tropea, and Johnston Beaudette, Chartered Professional Accountants

Vagmi Patel, appearing on behalf of the Respondents

Respondents

HEARD: in Motions Court September 4, 2025, at Thunder Bay, Ontario

Mr. Justice S.J. Wojciechowski

Decision On Application

Introduction

[1] This application, brought by the applicant, Hornepayne First Nation ("HFN"), sought relief against a number of respondents, namely Marie Josee Payette Professional Corporation, and Marie Josee Payette, and Deborah Tropea Holdings Inc., and Deborah Tropea, and Johnston Beaudette, Chartered Professional Accountants.

[2] The relief sought by the HFN included the following:

(a) a direction that documents be returned;

(b) a declaration that obligations under an agreement had been breached in that confidential financial records were not safeguarded; and

(c) a further declaration that obligations under an agreement had been breached in the unauthorized disclosure of financial records to a third party.

[3] These are my reasons for dismissing the application.

Background

[4] As part of an arrangement between the government of Ontario and a number of First Nations to receive funding from a share of the profits derived from the operation of the Ontario Lottery and Gaming Corporation ("the OLGC"), a Gaming Revenue Sharing and Financial Agreement dated February 19, 2008 ("the GRSFA") was signed. While HFN was not a named party to the GRSFA, provisions within the GRSFA provided for the distribution of funds to First Nations who agreed to participate in the arrangements. The participating First Nations are referred to as "Limited Partners" within the GRSFA. In a schedule which named all the Limited Partners, HFN is listed.

[5] Another party to the GRSFA was the Ontario First Nations (2008) Limited Partnership ("OFNLP 2008") which was formed in order to oversee and coordinate the distribution of funds and profits from the OLGC.

[6] In order to receive funding, First Nations were required to provide audited financial statements to OFNLP 2008 for the purpose of accounting for funds which had been paid out by OLGC to Limited Partners in the previous fiscal year. This accounting would then be reviewed and assessed in order to determine ongoing eligibility and entitlement of First Nations to monies from OLGC. In order to conduct this review and assessment, an independent third party was identified and defined in the GRSFA as "the Joint Appointee".

[7] The role of the Joint Appointee shall, in accordance with article 5.4 of the GRSFA, was to

(a) review the documents submitted by Limited Partners and prepare a report confirming whether the Limited Partners have complied with section 5.1 of the GRSFA requiring, among other information, audited financial statements, and

(b) review reports and financial statements submitted by OFNLP 2008 to the province of Ontario and determine whether these documents comply with the requirements of section 5.2 of the GRSFA.

[8] In the present case, HFN is a Limited Partner, and the respondents, Marie Josee Payette Professional Corporation, and Marie Josee Payette, and Deborah Tropea Holdings Inc., and Deborah Tropea, and Johnston Beaudette, Chartered Professional Accountants, were collectively the Joint Appointee ("the Joint Appointee").

[9] The manner in which the Joint Appointee receives documents for review is also set out in Article 5 of the GRSFA.

[10] Article 5.1 states that HFN, as a Limited Partner, is to provide audited financial statements to OFNLP 2008, with the form and content of these statements prescribed by Article 4.2(a) and Schedule 5.1. In other words, the information to be provided by HFN to OFNLP 2008 was to include specific details of distributions and expenses relating to the OLGC funding which was available.

[11] Article 5.2 then provides the manner in which OFNLP 2008 is to report back to Ontario with respect to its fiscal year in the form provided by Schedule 5.2, and includes a requirement to provide a list of projects, programs or other initiatives which were operated by the Limited Partners pursuant to the OLGC funding.

[12] Article 5.3 sets out the manner in which the Joint Appointee is appointed. The Joint Appointee shall be neutral, not associated with either Ontario nor OFNLP 2008 nor any Limited Partner. The appointment of the Joint Appointee shall be agreed upon as between Ontario and OFNLP 2008, and the appointment shall be subject to terms of a retainer agreement signed by the Joint Appointee, OFNLP 2008 and Ontario.

[13] The role of the Joint Appointee is the further described in Article 5.4.

[14] The Joint Appointee is to receive the documents which Limited Partners, including HFN, provide to OFNLP 2008 in accordance with Article 5.1. These documents are first created and assembled by the Limited Partners, and then sent directly to OFNLP 2008. OFNLP 2008 then forwards the information to the Joint Appointee. After reviewing the documents, the Joint Appointee prepares a report which is then to be delivered to OFNLP 2008 and Ontario in accordance with Article 5.5. This report is to confirm:

(a) whether the Limited Partners have complied with Article 5.1 and provided OFNLP 2008 with audited financial statements;

(b) whether OFNLP 2008 has complied with Article 5.2 and provided Ontario with the stipulated financial statements and reports; and

(c) whether there has been non-compliance with Article 4 – prescribing the use and purpose of the OLGC funding – or Article 5.

[15] The reports to be prepared by the Joint Appointee, as already stated, involve Article 5.4(a) which directs OFNLP 2008 to send the Joint Appointee the information it received from the Limited Partners.

[16] If the Joint Appointee has questions about the information provided, or needs additional information in order to conduct the review necessary to prepare the Article 5.5 report, the Joint Appointee is directed in Article 5.4(b) to go back to OFNLP 2008 with its requests for additional information. By this same article, OFNLP 2008 is then to go back to the Limited Partner and pass along the request, with any responses coming back to OFNLP 2008 and then forwarded to the Joint Appointee.

[17] Article 5.4(b) also gives the Joint Appointee the option to make requests for information from a Limited Partner and not through OFNLP 2008. However, this option can only be exercised after an initial request was made which resulted in information flowing from a Limited Partner through OFNLP 2008 to the Joint Appointee, and then the Joint Appointee determining "that a direct approach to the Limited Partner is required to obtain further information or documents".

[18] Article 5.4(c) provides consequences of not complying with requests of the Joint Appointee for information.

[19] And then Article 5.4(d) requires the Joint Appointee to treat all information, records or documents it receives as confidential and "not disclosed to any party to this Agreement", except:

(i) as required by the terms of the Agreement;

(ii) in accordance with the terms of the retainer agreement signed by the Joint Appointee, OFNLP 2008 and Ontario; and

(iii) for the purposes of recommending the identification of a Dispute pursuant to Article 9.

[20] The retainer agreement referenced in Article 5.4(d)(ii) which was signed by the Joint Appointee, Ontario and OFNLP 2008 ('the Retainer Agreement"), required the Joint Appointee to review the following documents which it received from OFNLP 2008:

a. audited financial statements for the distributions and expenses during such fiscal year by each Limited Partner;

b. OFNLP 2008's annual report to Ontario aggregating the foregoing reports of individual Limited Partners;

c. supplemental reports if a Limited Partner had failed to provide the information contemplated with int eh time period specified under the GRSFA;

d. audited financial statements of OFNLP; and

e. OFNLP annual audited report to confirm that monies from OLGC were expended or invested in accordance with the relevant agreements.

Consideration of the Issues Raised by HFN in this Application

[21] In 2020, HFN submitted an audited financial statement to OFNLP 2008 for the 2014 fiscal year. While there is more to the background relationship between OFNLP 2008 and HFN, these issues are not specifically relevant to this application. The initial audited financial statement sent to OFNLP 2008 was deemed to be non-compliant with the GRSFA, and HFN was advised. In response, HFN forwarded a second version of its audited financial statement for the fiscal year 2014 to OFNLP 2008, and that second version was also deemed non-compliant by OFNLP 2008.

[22] On February 26, 2021, HFN sent a third audited financial statement to OFNLP 2008 for the fiscal year 2014, and this one was forwarded to the Joint Appointee in accordance with the GRSFA.

[23] When the HFN audited financial statement was reviewed by the Joint Appointee, questions arose which were reduced in writing in a letter created by the Joint Appointee and sent to OFNLP 2008 as per the terms of the GRSFA.

[24] The evidence of the Joint Appointee was that while Article 5.4(b) of the GRSFA allowed the Joint Appointee, in specific circumstances, to communicate directly with Limited Partners, the decision of the Joint Appointee and practice undertaken by the Joint Appointee was that it would only make requests for information through OFNLP 2008. This was contemplated by the GRSFA, and the Joint Appointee never adopted a practice to go straight to a Limited Partner, including HFN.

[25] In the affidavit evidence of HFN, affirmed by Chief Ron B. Kocsis, paragraph 8 indicates that HFN received a written request from the Joint Appointee for financial documents, which was made through OFNLP 2008. The evidence does not indicate that the Joint Appointee's letter was sent to HFN, but instead the information requested by the Joint Appointee was communicated by OFNLP 2008.

[26] The letter dated March 17, 2021, to HFN is on OFNLP 2008 letterhead, and sets out the concerns with the first two audited financial statements from HFN which were rejected. This letter from OFNLP 2008 also provides a detailed list of documents which OFNLP 2008 was requesting be provided in order to address some of the issues found in all three versions of the audited financial statements for the fiscal year 2014 which HFN submitted to OFNLP 2008.

[27] In response, HFN pulled some documents together and sent them directly to the Joint Appointee. This is notwithstanding the direction provided by OFNLP 2008 to HFN in its letter of March 17, 2021. This is also notwithstanding the clear provisions of the GRSFA directing all correspondence from Limited Partners, such as HFN, to go to OFNLP 2008.

[28] These documents, sent directly to the Joint Appointee by HFN on April 6, 2021, are at the heart of this application.

[29] Ultimately, after receiving these documents, they were forwarded by the Joint Appointee to OFNLP 2008. This is what HFN was told to do as noted above, and this is what the GRSFA required HFN to do. On account of this action taken by the Joint Appointee, HFN is now seeking a declaration that the Joint Appointee breached the GRSFA by its actions.

[30] In advancing this application, HFN relies upon a narrow reading of Article 5.4(d) which provides:

All information, records or documents provided to the Joint Appointee will be treated by the Joint Appointee as confidential and not disclosed to any party to this Agreement or to any other Person except as specifically required by the terms of this Agreement or the terms of the formal written retainer agreement with the Joint Appointee . . . [emphasis added]

[31] HFN alleges in this application that the Joint Appointee breached its obligation to treat all information as confidential and not disclose any documents to any party to the GRSFA. Once documents were provided by HFN directly to the Joint Appointee, HFN submits that the Joint Appointee was obligated to not disclose these documents to anyone, including OFNLP 2008, as per the language in Article 5.4(d).

[32] In the case of Sattva Capital Corp. v. Creston Moly Corp, 2014 SCC 53, [2014] 2 S.C.R. 633, the Supreme Court of Canada provides some direction with respect to the interpretation of contracts, which applies to the GRSFA. The court notes that there has been an evolution towards a practical, common-sense approach to contract interpretation which is not focused on technical rules of construction. The primary goal is to determine the intent of the parties and the scope of their understanding, which requires a court to read contracts as a whole, providing an ordinary and grammatical meaning to the words of the contract, consistent with the surrounding circumstances known to the parties when the contract was formed: see Sattva, at para. 47.

[33] In taking this approach, a decision maker is to only consider objective evidence of any background facts which existed at the time the contract was signed. This leaves out any consideration of subjective evidence from the parties as to what each thought the contract language means, and focusses on any knowledge that was or reasonably ought to have been within the knowledge of both parties at the time.

While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement. . . . The goal of examining such evidence is to deepen a decision-maker's understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. The interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract. . . . While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement.

See Sattva, at para. 57.

[34] With this in mind, the objective intentions of the parties to the GRSFA was to assemble information which would be shared by the parties to the GRSFA so that the OLGC, Ontario, and OFNLP 2008 could be assured that the monies being distributed to the Limited Partners were being used the manner which was contemplated by the parties.

[35] Inherent in these goals was a desire to be truthful and transparent, which could only be accomplished by the sharing of information.

[36] Notwithstanding the objective intent for creating the GRSFA, HFN maintains that the Joint Appointee was required to treat all information as confidential and not disclose any documents to any party to the GRSFA, including OFNLP 2008.

[37] However, this position does not make sense given that the terms of the GRSFA – which HFN did not follow – require HFN to provide the documents it sent to the Joint Appointee directly to OFNLP 2008 first. The documents which HFN allege the Joint Appointee should not have sent to OFNLP 2008 are the very documents requested by OFNLP 2008 in its letter of March 17, 2021. And in accordance with Articles 5.1 and 5.4(b), as a party to the GRSFA, HFN agreed to send these documents to OFNLP 2008 first so that they could be, in turn, forwarded to the Joint Appointee for review and assessment.

[38] Not only did HFN breach the terms of the GRSFA and disregard the letter of March 17, 2021, but HFN also ignored correspondence from OFNLP 2008 dated March 29, 2021.

[39] It appears that HFN wrote to the Joint Appointee on March 26, 2021 – although that correspondence was not part of the application record filed in this matter – and copied this letter to OFNLP 2008. In responding to that letter, OFNLP 2008 wrote to HFN and confirmed that "[t]he Joint Appointee has not chosen to engage directly with [HFN] in connection with the 2013-14 audit. The Joint Appointee directs that HFN communicate solely with OFNLP2008 about this audit . . ." In addition, OFNLP 2008 advised HFN that if any documents are sent directly to the Joint Appointee, those documents would be forwarded directly to the OFNLP 2008 before the Joint Appointee reviewed them.

[40] HFN then sent its documents – requested in the letter from OFNLP 2008 dated March 17, 2021 – directly to the Joint Appointee on April 8, 2021. A letter from OFNLP 2008 to HFN dated May 18, 2021, explains what then happened:

The Joint Appointee advised OFNLP2008 on April 8, 2021 that she had received a delivery of documents from HFN, despite OFNLP2008 having asked you multiple times not to send these documents directly to the Joint Appointee. The Joint Appointee forwarded these documents to OFNLP2008. The package arrived in OFNLP2008's possession on April 13, 2021.

OFNLP2008 reviewed the documents. However, the documents provided were only partially responsive to the request for documents and information set out in the March 17, 2021 letter. As a result, OFNLP2008 wrote to you on May 6, 2021 and provided a specific list of questions for HFN to answer in order to provide the missing information . . . . We asked you to provide HFN's responses to these questions, and the supporting documents, by May 14, 2021 so that OFNLP2008 would have sufficient time to review them in advance of the June 7, 2021 deadline for audit compliance . . . .

As of the date of this letter, HFN has not provided the documents and information OFNLP2008 requested in its May 6, 2021 letter . . . .

[41] Clearly, HFN breached the terms of the GRFSA by sending documents directly to the Joint Appointee.

[42] Clearly, HFN ignored directions from OFNLP 2008 to comply with the GRFSA and send documents directly to OFNLP 2008.

[43] And clearly HFN ignored the advice of OFNLP 2008 as to what would happen to any documents directly sent to the Joint Appointee.

[44] It therefore is unclear to me why HFN brought the application asking this court to find the GRSFA was breached, and that the Joint Appointee was responsible for that breach. The Joint Appointee was simply following the process contemplated by the GRSFA. In addition, the Joint Appointee was following the reporting obligations and mandate set out in the Retainer Agreement it was bound to follow, which required disclosure of information and records to OFNLP 2008 as per Article 5.4 of the GRSFA.

[45] HFN is also seeking a return of the documents it sent to the Joint Appointee which were, in turn, sent to the OFNLP 2008. However, it was clear from the submissions I received during the hearing of this application that the Joint Appointee does not have these documents.

[46] HFN was advised on May 18, 2021, that OFNLP 2008 had the documents.

[47] In addition, a letter dated May 22, 2025, from HFN to OFNLP 2008 confirms the understanding of HFN that the documents sent to the Joint Appointee with HFN's correspondence of April 6, 2021, were in the possession of OFNLP 2008. This is further confirmed in a letter dated July 21, 2025, from counsel representing the Joint Appointee, which states:

You know full well from . . . [past] communications that the relevant records about which you continue to inquire were provided to OFNLP2008 in April 2021. As we have asked you multiple times, please direct all your further inquiries about this matter to OFNLP2008.

[48] No evidence was filed which explains why HFN did not pursue OFNLP 2008, when it clearly understood that the documents which are at the heart of this litigation were sent to OFNLP 2008 shortly after HFN provided them to the Joint Appointee. HFN has known this for over four years, yet still advanced its application for the return of documents against the Joint Appointee.

[49] Based upon this evidence, and the fact that the Joint Appointee does not possess the documents of HFN, no order shall issue directing the Joint Appointee to turn over what it does not have.

[50] The application of HFN is dismissed.

Costs

[51] In terms of the costs of this application, both parties submitted a Bill of Costs for the court's consideration.

[52] Costs awards are entirely within the discretion of the judge hearing the matter: s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. In addition to the result in the proceeding and any offers to settle which were exchanged, r. 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, sets out guidelines for the court to consider when exercising its discretion.

[53] A successful party is presumptively entitled to costs. Rule 57.03 addresses costs of a contested motion, and unless a court is satisfied that a different order would be more just, costs shall be fixed and payable within a period of thirty days.

[54] Costs awards address several important principles. They partially indemnify successful litigants for the costs of litigation, they encourage settlement, and they discourage and sanction inappropriate behaviour. An award of costs should reflect a fair and reasonable amount, as determined by the judge hearing the matter, which an unsuccessful party should pay. It is not meant to be an exact measure of the actual costs of the successful party. In considering what a fair and reasonable amount should be, a court should consider what the unsuccessful party should expect to pay in the circumstances: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 26.

[55] A review of the Bill of Costs filed by both parties speaks to the expectation of the parties. HFN sought $11,734.03 in partial indemnity costs and $15,109.03 in substantial indemnity costs if it was successful with its application. The Joint Appointee's Bill of Costs suggests that partial indemnity costs of $8,353.20 would be appropriate based upon actual costs incurred of $13,732.00. All of these figures are inclusive of fees, disbursements and HST.

[56] My decision with respect to costs is based upon the factors set out above, in addition to the fact that HFN brought this application after it breached the terms of the GRSFA, ignored the directions provided by the OFNLP 2008, and despite knowing the Joint Appointee did not have the documents it was seeking, still pursued the Joint Appointee in this regard.

[57] The costs of the Joint Appointee shall be assessed on the basis of partial indemnity costs in the amount of $8,353.20, which shall be payable by HFN within 30 days of this decision.

The Hon. Mr. Justice S.J. Wojciechowski

Released: September 11, 2025