Clifford Matchim First Plaintiff/Applicant And: Matchim & Associates Insurance Incorporated Second Plaintiff/applicant And: Manulife Securities Investment Services Incorporated Defendant/respondent, 2020 NLSC 90

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Matchim v. Manulife Securities Investment Services Incorporated , 2020 NLSC 90 Date : June 23, 2020 Docket : 201901G7167 Between: Clifford Matchim First Plaintiff/Applicant And: Matchim & Associates Insurance Incorporated Second Plaintiff/applicant And: Manulife Securities Investment Services Incorporated Defendant/respondent Before: Justice Vikas Khaladkar Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: June 8, 2020

Summary: The Applicants seek an Order of the Court compelling answers to interrogatories that the Respondent refused to answer. The Application

is allowed in part. As a result of the mixed result there is no Order as to costs. Appearances: Gregory M. Anthony Appearing on behalf of the Applicants and Elliott Bursey J. David B. Eaton, Q.C. Appearing on behalf of the Respondent Authorities Cited: CASES CONSIDERED: Jacques c. Pétroles Irving inc., 2014 SCC 66; Unifund Assurance Co. v. Churchill, 2016 NLCA 73; Szeto v.Dwyer, 2010 NLCA 36; John Doe v. Roman Catholic Episcopal Corp. of St. John’s (2000), (NL SC), 194 Nfld. &P.E.I.R. 143, 584 A.P.R. 143 (Nfld. S.C. (T.D.)) RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch.

D REASONS FOR JUDGMENT Khaladkar, J.: INTRODUCTION [1] The Applicant, Clifford Matchim, had entered into an agency agreement with Berkshire Investment Group Inc. (“Berkshire”)on July 29, 2002 by virtue of which he would become an independent mutual funds dealer on behalf of Berkshire. [2] Berkshire amalgamated with Manulife Securities International Ltd. and the Respondent, Manulife Securities InvestmentServices Incorporated (“Manulife”) was formed as a result. [3] The agreement between the Applicant, Clifford Matchim, and Berkshire contained clauses, inter alia, as follows: a.

A clause specifying that the contract would enure to the benefit of any successors and assigns of Berkshire; b. A clause preventing Berkshire from attempting to approach the clients of Clifford Matchim, upon termination of the agreement,with a view to Berkshire attempting to retain those clients; and c. A clause, upon termination, allowing Berkshire to obtain copies of Clifford Matchim’s client files. [4] The Respondent, being a successor of Berkshire, is bound by these contractual undertakings. [5] The Statement of Claim in this matter makes various allegations: a.

That the contract was unilaterally terminated by Manulife on July 15, 2013. b. That Clifford Matchim, through Matchim & Associates Insurance Incorporated, continued to operate as a dealer in segregated fundsthrough insurance companies and began to transfer client accounts away from the Respondent and into segregated funds offered byinsurance companies. c. The Applicants allege that the Respondent breached its agreement with them by soliciting their clients and/or advising the clientsthat they would be personally responsible for fees because of the early withdrawal of their investment. d.

The Applicants allege that the Respondent knowingly misled the clients of the Applicants regarding the quantum and liability forfees attendant on early withdrawal. Alternatively, the Applicants allege that the Respondent acted maliciously or with reckless disregardin relation to the issue of the fees for early withdrawal.

e. The Applicants allege that the Respondent has violated the agreement by misusing the Applicants’ client files for the purpose oftouting the Applicants’ client. f. The Applicants allege breach of contract, unlawful interference with economic relations and the tort of inducing breach ofcontractual obligations. g.

The Applicants allege that the Respondent has inordinately delayed the transfer of client funds to other investments, evidencing badfaith on the part of the Respondent, and the Applicants say that this is done in order to retain the business book of the Applicants. [6] The Respondent refused to answer some of the interrogatories on the basis of relevance and, as well, on the basis of privilege. [7] At the hearing of this matter, Mr. Anthony, on behalf of the Applicants indicated that he was satisfied that the Affidavit ofCatherine M.

Wiley, Associate Chief Counsel of the Respondent, set out sufficient information allowing him to determine that a portionof the meeting of the Compliance Committee of July 14, 2013 was indeed protected by solicitor/client privilege. As a result, theApplicants were abandoning the portion of their Application that dealt with the divulging of that privileged information. issues Is the Respondent required to divulge the information requested by the Applicants? The law [8] Rule 31.02(1) of Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch.

D sets out, by reference to Rule 30.08, the mattersthat may be dealt with in interrogatories. [9] Rule 30.08(1) states: Unless it is otherwise ordered, a person, being examined upon an examination for discovery, shall answer any question within thatperson’s knowledge or means of knowledge regarding any matter, not privileged, that is relevant to the subject matter of the proceeding,even though it is not within the scope of the pleadings. [10] In Jacques c.

Pétroles Irving inc., 2014 SCC 66, Lebel J. and Wagner J. (as he then was), for the Court, explained atparagraphs 30 and 31: 30. … To be relevant, the requested document must relate to the issues between the parties, be useful and be likely to contribute toresolving the issues … 31. This relevance requirement ensures that the parties do not conduct “fishing expeditions”. It also ensures that the conduct of theproceedings is not delayed, complicated or even jeopardized by the introduction of evidence that does not assist in establishing the rightsbeing claimed….

In this sense, the relevance rule is a procedural balancing rule that ensures the efficiency of the judicial process whilefacilitating the search for truth. [11] The Newfoundland and Labrador Court of Appeal, in Unifund Assurance Co. v. Churchill, 2016 NLCA 73 cited the foregoingquotation from Jacques c. Pétroles Irving inc. with approval. [12] In Szeto v. Dwyer, 2010 NLCA 36 the Newfoundland and Labrador Court of Appeal discussed the application of Rule 31.03. Itsaid: 31.

It is true, of course, that rule 31.03 provides that an objection to answering an interrogatory cannot be made on the basis that thequestion is “outside the scope of the pleadings”; however, the rule also provides that an objection can be taken that it is “not relevant tothe subject matter”. These two criteria must be read together. If there is some basis, other than a review of the pleadings, for concludingthat the questions are relevant to the subject matter of the dispute then a question that might be technically outside the scope of thepleadings might still be permissible.

Where, however, as in this case, the judge has nothing else to go on to determine the scope of thedispute except the pleadings, the state of the pleadings becomes important. The search for relevance becomes virtually meaningless inthe context of pleadings that do little to set meaningful parameters to the dispute. In such a case, the judge faced with determiningwhether the interrogatories are relevant to the subject matter of the dispute, should require the parties to define the area of dispute, eitherby formal delivery of particulars or by stipulating to the court what matters are in issue. [13] In John Doe v.

Roman Catholic Episcopal Corp. of St. John’s (2000), (NL SC), 194 Nfld. & P.E.I.R. 143,584 A.P.R. 143 (Nfld. S.C. (T.D.)) this Court held that interrogatories must be connected in some matter to a live issue in the dispute. Questions may be asked if the answers sought are reasonably calculated to lead to the discovery of admissible evidence. Fishingexpeditions are allowed subject to the general principle that an examination must be conducted in good faith and in a reasonable mannerso as not to annoy, embarrass or oppress the examinee. [The Jacques c. Pétroles Irving inc. and Unifund Assurance Co. v.

Churchill mayhave tempered the decision in John Doe]. analysis [14] It is best to deal with each objection separately. I’ve provided my decision where so indicated in italics. [15] Question 1(j): The Compliance Committee meeting minutes of July 4, 2013 indicate that 1300 letters were sent out in relation to the leverageremediation project. The Applicants asked how many leverage remediation letters were sent out to clients. The Respondent provided an

answer with respect to the Applicants’ clients but refused to provide any additional information on the basis of relevance. Decision: The Applicant has information that 1300 letters were sent out. It is irrelevant to the action between the parties if there were in excess of 1300. I hold that it is not necessary for the Respondent to answer this question. The Respondent did not provide a copy of each of the letters sent out to the clients of the Applicants’ branch in Gander, but advised that the letters were a type of form letter that were modified by the client’s risk tolerance and age.

Decision: It is alleged by the Applicants that the Respondent improperly contacted the Applicants’ clients with a view to retaining their business in breach of its contractual obligations to the Applicants. Who, and how, clients were contacted is germane to the issues between the parties. The persons contacted may well be witnesses in these proceeding. I order that the Respondent provide to the Applicants the names, addresses, age and risk tolerance for each of the 159 letters that were sent to the Applicants’ clients.

The Respondent refused to answer how many other branches had clients who received leverage remediation letters in relation to the leverage remediation project.

Decision: I hold that this question asks for information that is beyond the scope of the present proceedings and are not relevant to the proceeding between the parties, and I order that it is not necessary for the Respondent to answer same. [ 16 ] Question 1(l): The Applicants asked, in relation to the leverage remediation letters, how many complaints had been received by the Respondent, how many related to the Gander branch, how many to Clifford Matchim personally, how many other employees, agents or advisors outside of the Gander branch were the subject of complaints and how many branches other than Gander were the subject of complaints?

The Respondent answered that nine complaints about Clifford Matchim were received following the mailing of the letters, but the Respondent refused to answer any of the remaining questions on account of relevance. Decision: I order that the Respondent must answer the question related to any complaints made against Clifford Matchim. The balance of the questions asked are outside the scope of the proceedings and are not relevant to the proceedings between the parties. [ 17 ] Question 1(m)(

i) and (ii): As of July 4, 2013, 22 complaints had been received as a result of the leverage remediation project relating to the Gander branch. The Applicants asked the identities of the persons who had filed the complaints and for a copy of each complaint. The Applicants also wished to know who the complaints had been filed against. The Respondent replied that both questions were not relevant to the issues raised in the proceedings.

Decision: I order that the Applicants are entitled to be advised of the identity of any person who filed a complaint against Clifford Matchim and that he is entitled to receive a copy of the complaint that was filed. Decision: I order that the Applicants are not entitled to receive a listing of the clients who filed complaints against persons other than Clifford Matchim because such information is beyond the scope of the present proceedings and is not relevant to same. [ 18 ] Question 1(m)(vii): The Applicant asked whether the complaint against Clifford Matchim was resolved and, if so, how?

The Respondent replied that the complaint was resolved but declined to provide any details of the resolution owing to the confidentiality of the information and its relevance to the proceedings.

Decision: I order that the manner in which the complaint against Clifford Matchim was resolved could be germane to these proceedings and that the question should be answered. [ 19 ] Question 1(n): The Applicants asked, in relation to the leverage remediation project, how many complaints had been received since July 4, 2013, how many of those complaints related to the Gander Branch of the Respondent and how many relate to branches of the Respondent other than the Gander Branch?

Decision: I order that if complaints were received by the Respondent in relation to Clifford Matchim after July 4, 2013 then the particulars of such complaints should be disclosed to the Applicants. The Respondent is not required to provide any additional information in relation to this question because it is beyond the scope of these proceedings and it is not relevant to the issues between them. [ 20 ] Question 2: On July 4, 2013 Margo Buchanan provided a report to the Committee concerning a supervisory review of Clifford Matchim’s book of business.

It was on the basis of this report that it was resolved that the Respondent would terminate its relationship with the Applicant, Clifford Matchim. [ 21 ] Question 2(a): The Applicants asked whether a written report was provided to the Committee and, if so, requested a copy. Decision: I order that the report could be relevant to the Respondent’s rationale for resolving to terminate its relationship with the Applicant. While the Applicants have not pleaded that the termination of the agreement was improper, the Applicants have asserted that

the Respondent was intent on retaining Clifford Matchim’s clients for its own book of business. The Buchanan report might be relevant to these issues and I order that it must be disclosed. [ 22 ] Question 2(b): The Applicants asked whether Margo Buchanan maintained a file in relation to the supervisory review and, if so, requested all particulars in relation to same. Decision: I have ordered that the report is relevant and should be disclosed.

Similarly, any information used by Margo Buchanan in compiling the report is also relevant and I order that it be disclosed. [ 23 ] Question 2(c) - (f): The Applicants asked when the supervisory review commenced, when it concluded, what was its purpose and what conclusions or recommendations flowed from it?

Decision: I order that each of these questions are germane to the issues between the parties and should be answered. [ 24 ] Question 3(a) – (d): The Applicants were interested in receiving information concerning a proposal for Clifford Matchim’s termination that was presented to the Compliance Committee by Margo Buchanan on July 11, 2013. The Respondent replied that the Applicants had not alleged any issues with the termination of the agreement between the parties and, therefore, the reason for termination is not relevant. On that basis several of the questions posed were not answered.

Decision: I order that the reasons for termination could be germane to the proceedings if, as alleged by the Applicants, the contract was terminated in order for the Respondent to retain the Applicants’ clients. As a result, I order that the questions posed in interrogatories 3(a) – (

b) be answered. Decision: I order that the documentation requested in 3(

c) is not necessary for the Applicants’ purposes since the Respondent is already being ordered to provide the termination proposal. Similarly, in relation to 3(d), the written notes or recordings made by those in attendance at the meeting where the termination proposal was discussed need not be disclosed.

The background information that has been requested will not further the Applicants’ preparation for trial. [ 25 ] Question 10: The Applicants asked how many complaints were filed with the Respondent and/or the Mutual Fund Dealers Association of Canada arising from the leverage remediation project between March and June of 2013. The Respondent refused to answer this question on the grounds that it is not relevant to the issues raised in the proceedings.

Decision: I agree that the information is not relevant to the issues raised in the proceedings and is beyond the scope of the proceedings and decline to order the production of that information. [ 26 ] Questions 11 and 12: The Applicants asked how many employees, agents or advisers were the subject of complaints filed with the Respondent or the Mutual Fund Dealers Association of Canada arising from the leverage remediation project between March and June of 2013? And as a follow-up question the Applicants asked how many employees, agents or advisors were terminated following the receipt of those complaints?

Decision: I find that both of these questions go well beyond the scope of the proceedings between the Applicants and the Respondent and I decline to make an order for the production of that information. [ 27 ] Under the circumstances, and owing to the mixed results, there will be no Order as to costs. _____________________________ Vikas Khaladkar Justice