Lloyd Power Applicant And: Beothuk Energy Inc. Respondent And: BEOTHUK ENERGY INC. APPLICANT BY COUNTER CLAIM AND: LLOYD POWER RESPONDENT BY COUNTER CLAIM - v. -, 2018 NLSC 26

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Power v. Beothuk Energy Inc. , 2018 NLSC 26 Date : February 9, 2018 Docket : 201601G6635 Between: Lloyd Power Applicant And: Beothuk Energy Inc. Respondent And: BEOTHUK ENERGY INC. APPLICANT BY COUNTER CLAIM AND: LLOYD POWER RESPONDENT BY COUNTER CLAIM - AND - Docket : 201601G6643 Between: Lloyd Power Applicant And: Beothuk Energy Inc. First Respondent And: Kirby Mercer Second Respondent

Before: Justice Vikas Khaladkar Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: February 2, 2018

Summary: The Applicant is seeking relief under sections 371 and 374 of the Corporations Act, for rectification of oppression and consequentialrectification of the corporation’s records. He has also sued for damages for wages he claims are owing to him. He seeks production ofdocuments pursuant to Rule 32.07 of the Rules of the Supreme Court, 1986.

The Respondents argue that the application, supported by the solicitor’s affidavit based upon his “knowledge, information and belief”, bestruck since the solicitor has no personal knowledge of the matters deposed to and, it is submitted, he is in breach of the Rules and theCode of Professional Conduct of The Law Society of Newfoundland and Labrador. An advocate cannot attest to the truth of matters in his client’s cause unless such matters are purely formal or uncontroverted. However,in this case the Applicant has also filed an affidavit averring to the truth of the matters referred to in the application.

But for theApplicant’s affidavit, the requested relief would have been granted. The test for disclosure of documents pursuant to Rule 32.07 is whether or not the documents relate to the matters in issue and where it isreasonable to suppose that the documents would either assist the Applicant’s case or harm the Respondent’s case. Relevance is not afactor to be considered in making the determination.

The financial and other records that have been requested could show a relationshipbetween the parties that relates to the alleged promise of shareholder interest and/or payment of wages – both of which are matters inissue. Appearances: Cletus E. Flaherty Appearing on behalf of the Applicant Caitlin M. G. Urquhart Appearing on behalf of the First Respondent John A. Bruce Appearing on behalf of the Second Respondent Authorities Cited: CASES CONSIDERED: MacDonald Estate v. Martin, (SCC), [1990] 3 S.C.R. 1235; Carter v. Municipal ConstructionLtd. (2001), (NL SC), 204 Nfld. & P.E.I.R. 112, 107 A.C.W.S. (3d) 750 (Nfld.

S.C. (T.D.)); Dufault v. Stevens

(1978), (BC CA), 6 B.C.L.R. 199, 86 D.L.R. (3d) 671 (C.

A) STATUTES CONSIDERED: Corporations Act, R.S.N.L. 1990, c. C-36 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D TEXTS CONSIDERED: The Law Society of Newfoundland and Labrador, Code of Professional Conduct, (Newfoundland andLabrador: 2013) REASONS FOR JUDGMENT Khaladkar, J.: INTRODUCTION [1] The Applicant alleges that he entered into an agreement with the First Respondent, through the agency of the SecondRespondent, to provide labour and services to advance the First Respondent’s business.

He states that in consideration of him so doingthe Second Respondent, who was a principal shareholder and director of the First Respondent, agreed to make him an equal shareholderand agreed to a salary of $10,000 per month – to be paid when the First Respondent became able to do so. The Applicant says that boththe First Respondent and the Second Respondent failed to honour the terms of the agreement and sues for rectification of the corporateregister and damages in relation to the income he says he ought to have received.

ISSUES [2] The following issues are submitted as relevant to the determination of this matter: 1. Does the Second Respondent have standing to be heard with respect to the interlocutory application for the production of documentsin this matter? 2. Are the applications before the Court supported by proper affidavit evidence? 3. To what relief is the Applicant entitled in relation to the disclosure of the documentation that he has requested?

ANALYSIS ISSUE NO. 1: Does the Second Respondent have standing to be heard with respect to the interlocutory application for the production ofdocuments in this matter? [3] The genesis of this issue stems from two separate actions that the Applicant had commenced – one by way of OriginatingNotice against the First Respondent, the Second by way of Statement of Claim against the First Respondent and the Second Respondent.

The Applicant applied to have these matters consolidated – and the Court ordered that both matters be heard together with evidence fromone being considered evidence in the other. [4] The Applicant has brought two applications, pursuant to Rule 32.07, Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42,Sch. D., (the “Rules”) seeking orders to have the First Respondent produce documents. One of these applications relates to theOriginating Notice application, the other relates to the action commenced by way of Statement of Claim. Both applications requestsubstantially the same materials.

When the two matters were first called, the Applicant took the position that the Second Respondenthad no standing to be heard on the applications since he was not named therein. [5] Inasmuch as the matters are now joined, for all intents and purposes, at the Applicant’s request, there would seem to be noreason why one of the parties ought to be excluded from any of the steps ordinarily taken until the matter is set down for trial.

This isparticularly so since the Applicant has alleged that the Second Respondent played an integral role in bringing about, and severing, theApplicant’s involvement with the First Respondent. The Second Respondent has standing with respect to the interlocutory applicationscurrently before the Court and any future applications that may be brought in this matter in order to do justice between the parties. ISSUE NO. 2: Are the applications before the Court supported by proper affidavit evidence?

[6] Both Respondents take the position that the application is supported, improperly, by the affidavit of the Applicant’s solicitor– who, it is suggested, has no personal knowledge of the matters deposed to and bases his affidavit on information and belief. [7] Rule 48.02 of the Rules states as follows: 48.02

(1) An affidavit used on an application may contain statements as to the belief of the deponent with the sources and groundsthereof.

(2) Unless the Court otherwise orders, an affidavit used on a trial shall contain only such facts as the deponent is able of his or her ownknowledge to prove. [8]

Article 5.2-1 of The Law Society of Newfoundland and Labrador’s Code of Professional Conduct states as follows: 5.2-1 A lawyer who appears as advocate must not testify or submit his or her own affidavit evidence before the tribunal unlesspermitted to do so by law, the tribunal, the rules of court or the rules of procedure of the tribunal, or unless the matter is purely formal oruncontroverted. [9] The commentary following the rule states as follows: [1] A lawyer should not express personal opinions or beliefs or assert as a fact anything that is properly subject to legal proof, cross-examination or challenge.

The lawyer should not, in effect, appear as an unsworn witness or put the lawyer’s own credibility in issue.The lawyer who is a necessary witness should testify and entrust the conduct of the case to another lawyer.

There are no restrictions onthe advocate’s right to cross-examine another lawyer, however, and the lawyer who does appear as a witness should not expect or receivespecial treatment because of professional status [10] Rules of professional conduct are not binding on the Court, but are important, persuasive, statements of public policy that areworthy of judicial consideration and deference: MacDonald Estate v. Martin, (SCC), [1990] 3 S.C.R. 1235 at para. 21. [11] The fact that the Applicant, himself, swore an affidavit that averred to virtually the same facts deposed to by his solicitor, savedthe application.

Had he not done so, the Court would have struck the application because it was grounded on an affidavit sworn by asolicitor who could not have had any factual basis for making the claims therein. [12] The solicitor’s affidavit is in breach of the Code of Professional Conduct of The Law Society of Newfoundland and Labradorand, as well, the Rules.

Unless the affidavit is sworn in relation to routine matters of an uncontested nature, a solicitor ought not assertanything by way of affidavit that is potentially subject to challenge. [13] Counsel for the Second Respondent argued that since the Applicant’s own affidavit was based upon information and belief, itwas not sufficient to ground the Application to produce further disclosure. With respect, Rule 48.02 makes a distinction betweenaffidavits used in applications versus those used at a trial.

It is permissible, according to Rule 48.02(1) for affidavits used in applicationsto be made based on information and belief. Whereas Rule 48.02(2) requires that the facts alleged in an affidavit used at trial must bewithin the deponent’s personal sphere of knowledge. ISSUE NO. 3: To what relief is the Applicant entitled in relation to the disclosure of the documentation that he has requested? [14] The Respondents argue that the Applicant must do more than assert his desire to see certain documentation.

It is their positionthat the Applicant must set out some grounds indicating how the documents requested are likely to advance his case. [15] The Respondents cite the decision of Green, C.J.T.D. (as he then was) in Carter v. Municipal Construction Ltd. (2001), (NL SC), 204 Nfld. & P.E.I.R. 112, 107 A.C.W.S. (3d) 750 (Nfld.

S.C. (T.D.)) as authority for that proposition. [16] In Carter the Plaintiff also asserted that he was entitled to a shareholder’s interest in the defendant corporation based onundertakings that had been given to him. [17] With due respect to the Respondents’ position, the Carter case ought not to be restricted to the extent that they seek. It is notnecessary to conduct examinations for discovery in order to ground an application for the production of further documentation.

It is clearfrom the pleadings, and materials filed, in this case what issues are relevant. [18] Green, C.J.T.D. had noted in Carter that the Supreme Court of Canada had, unanimously, noted with approval the decision ofthe British Columbia Court of Appeal in Dufault v. Stevens (1978), (BC CA), 6 B.C.L.R. 199, 86 D.L.R. (3d) 671(C.

A) wherein Craig, J.A. commented at pages 203-205: …The comments of Brett, L.J. in Cie Financière du Pacifique v.

Peruvian Guano Co., (1882) 11 Q.B.D. 55 at 63 (C.A.) as to whatconstitutes a document relating to a matter in question has been quoted by this court on several occasions It seems to me that every document relates to matters in question in the action, which not only would be evidence upon any issue, butalso which it is reasonable to suppose, contains information which may – not which must – either directly or indirectly enable the partyrequiring the affidavit either to advance his own case or to damage the case of his adversary… It follows from this that an applicant need not show that a document is admissible in evidence at the trial as the condition of his obtaining

an order under this rule. If a party seeking the order is able to satisfy the judge that the document, or information in a document, may relate to a matter in issue, the judge should make the order unless there are compelling reasons why he should not make it, e.g. the document is privileged …(emphasis added). [ 19 ] The Applicant has requested all banking records of the First Respondent from March 5, 2011 until January 31, 2017.

It appears, however, from the Applicant’s Originating Application that he ceased working full time for the First Respondent on January 1, 2015 and, sometime in 2015, he learned that he had been removed as an officer and director of the First Respondent. [ 20 ] It seems that the banking records of the First Respondent may be useful to the Applicant. The Second Respondent avers that the bank account was opened in May, 2012. Banking documents, says the Second Respondent, have already been provided from inception to July, 2014.

It would be appropriate to order that banking records be provided to the Applicant from the date that the account was opened in 2012 until December 31, 2015 – being the last day of the year in which the Applicant ceased working for the First Respondent. [ 21 ] The Applicant has requested correspondence sent by the First Respondent to ScotiaBank, or any other bank, or any documents received from them, during the period March 5, 2011 to December 31, 2015.

The Second Respondent says that he has already disclosed all of the documentation in his possession and, as well, that some of the documentation is already in the possession of the Applicant. The First Respondent echoes the Second Respondent’s position. Since the documentation has already been disclosed, no order is necessary in this regard. [ 22 ] The Applicant also requests disclosure of documentation relating to Jameson Bank. In that regard, the Second Respondent says that while he recalls discussions for an international funds transfer facility through Jameson Bank, this was never activated.

He has no correspondence in this regard. The Second Respondent concurs in the First Respondent’s position. No order is made with respect to Jameson Bank. [ 23 ] The Applicant has requested

Schedule 50 of the First Respondent’s T2 corporate tax returns for the period 2011 to 2016. The information relating to shareholders from 2011 to the end of 2015 is germane to the Applicant’s desire to advance his claim. However, the return for the year 2016 is not necessary since, by that time, the relationship between the Applicant and Respondents was completely severed. The Second Respondent says that no income tax returns were filed during that period of time, but that they are being currently finalized.

There shall be an Order to provide the requested schedules to the Applicant up to, and including, the 2015 income tax return as soon as they are available. In the event that the Applicant is successful, and rectification is ordered, it is not necessary for the Court to have a list of shareholders and their individual shareholdings in order to provide the relief that would be required. For that reason, the First Respondent shall provide to the Applicant the

Schedule 50 documentation from the First Respondent’s corporate tax returns for the years 2011 to 2015, both years inclusive, when they are submitted to the Canada Revenue Agency. [ 24 ] The Applicant has requested “all documents submitted to or received by the (First Respondent) to/from the Atlantic Canada Opportunities Agency” (the “ACOA”). The Second Respondent says that the Applicant was the only person who corresponded with ACOA and that he, the Second Respondent, does not have any documents in his possession concerning ACOA. The First Respondent says that it does not possess any ACOA documentation.

The Court cannot order a party to deliver up something that he (it) does not possess. The Applicant has the option of serving a subpoena duces tecum on the appropriate officer of ACOA and having her/him testify at trial or to obtain an order for the production of documents from ACOA if that avenue is a more appropriate one to follow.

However, in order to save judicial time and resources, the Court would urge the First Respondent to obtain any documentation in the possession of ACOA (since it would be the only party legally entitled to request it from ACOA without Court order) and to disclose same upon receipt. [ 25 ] The Applicant has requested all Minute Book documentation and filings of the First Respondent for the period January 1, 2011 to January 31, 2015.

In order to do justice between the parties, and with a view to having a consistent time frame relating to disclosure, it would be appropriate to order that these documents be disclosed from January, 2012 to December 31, 2015. [ 26 ] The Applicant has requested that he be provided with any correspondence sent to, or received by, the following email account which presumably, is in the management and control of the First Respondent: lpower@beothukenergy.com.

The Second Respondent says that all such documentation in his possession, and in the possession of the First Respondent, has already been disclosed to the Applicant. No order is, therefore, necessary in relation to email correspondence. If, after interrogatories or an examination for discovery, it is determined that there are additional documents that were not disclosed, then the parties can follow up in accordance with the Rules . [ 27 ] And lastly, the Applicant has requested all documents in possession of the First Respondent featuring the words “Lloyd Power”, “Lloyd” or “L. Power”.

Both Respondents argue that the request is overbroad, that it would cause unnecessary hardship, inconvenience and expense to the Respondents and, in any event, that all related documents have already been provided to the Applicant or are already in his possession. Counsel for the Second Respondent argued that the request for this documentation was contained in the Applicant’s prayer for relief but was not supported in any fashion in the Applicant’s affidavit in support of his Application.

He took the position that, for that reason, in addition to the vagueness of the request, the requested relief ought not to be granted. [ 28 ] The request for all documentation containing the Applicant’s name, or portions thereof, is overbroad. As stated it could result in an order for the production of all manner of documents having nothing to do with the issues before the Court. The request is denied. [ 29 ] I wish to thank counsel for their extensive briefs and summation. They were of benefit in arriving at a decision.

However, it would appear that the acrimony that exists between the litigants may be spilling over and affecting the relationship of counsel. Counsel are reminded that while they may have a duty to vigorously pursue their client’s claims, they also have an obligation and professional duty to treat each other with respect. [ 30 ] Counsel for the Respondents urged the Court to declare that any documents ordered to be disclosed contain private, commercially sensitive, information that, if publicized, would have materially adverse consequences on the First Respondent’s operations.

It was suggested that the Court order the entire file sealed.

[ 31 ] The Court has considered this request but has decided that it would be inappropriate to grant the order in the absence of an application, supported by appropriate affidavit evidence and the ability, on the part of the Applicant, to file his position – be it neutral or contra – and to make submissions. [ 32 ] It was urged upon the Court by the Applicant that costs should be awarded against the First Respondent and the Second Respondent’s solicitor personally due to the fact that the Applicant had been subpoenaed, required to attend Court and, then, not cross- examined on his affidavit.

Such are the vagaries of Court proceedings. Respondent’s counsel determined that the cross-examination of the Applicant on his affidavit was not required, and he is entitled to make that determination without penalty.

CONCLUSION [ 33 ] The Second Respondent has standing to appear on this Application and any others that may become necessary as the matter proceeds to trial. [ 34 ] The Affidavit of the Second Respondent cured the potential deficit caused by the solicitor swearing an affidavit in a contentious matter without having personal knowledge. [ 35 ] The Applicant is entitled to request, and receive, additional documentation that may assist his cause or damage the case of his adversary.

The Court has discretion to determine, based upon the pleadings and other documentation before it, what should, or should not, be disclosed. [ 36 ] Costs shall be in the cause. _____________________________ Vikas Khaladkar Justice