Docket: 1845 Agracity Ltd. v. Farms and Families of North America, 2013 SKCA 7

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2013 SKCA 7 Date: 2013-01-29 Between: Docket: 1845 Agracity Ltd. and Farms and Families of North America Incorporated (operating as Farmers of North America and/or “FNA” ) Appellants - and - Ashley M. Skinner, James G. Skinner, Dean R. Skinner, Great Northern Growers Inc., Rayglen Commodities Inc. (also operating as Rayglen Consulting Services) and Top Trade Commodities Ltd. Respondents Coram: Klebuc C.J.S., Gerwing & Herauf JJ.A. Counsel Rod Pantony for the Appellants Robert G. Kennedy, Q.C. for the Respondents, Ashley M. Skinner and Top Trade Commodities Ltd.

Murray W. Douglas for the Respondents, James G. Skinner, Dean R. Skinner and Great Northern Growers Inc. Joel A. Hesje, Q.C. for Rayglen Commodities Inc. Appeal: From: 2009 SKQB 362 Heard: April 14, 2011 Disposition: Appeal Dismissed Written Reasons: January 29, 2013 By: The Honourable Chief Justice Klebuc In Concurrence: The Honourable Justice M. Gerwing The Honourable Justice M. Herauf Klebuc C.J.S.

Klebuc C.J.S. [1] The appellants obtained an Anton Piller order by way of an ex parte application to a Queen’s Bench judge, other than JusticeDufour. The order authorized specific persons to search the business and residential premises of the respondents and to removedocuments, computers and other items relevant to the within action. [2] Following a number of searches pursuant to the Anton Piller order during which documents and several computers were takenfrom the respondents, the respondents applied under Rule 441(3) of The Queen's Bench Rules for an order setting aside the Anton Pillerorder on two grounds: (

a) the evidence provided by the appellants did not meet the test governing the issuance of Anton Piller orders;and (

b) the appellants provided incomplete and misleading evidence to the judge who granted the subject order and thereby breachedtheir obligation to provide the court with full and fair disclosure of all admissible evidence material to their ex parte application. [3] The respondents’ application came before Dufour J. (“the Chambers judge”).

Following a de novo hearing during which heconsidered the submissions by the parties and the affidavits filed by the parties, including those filed by the appellant in support of the exparte application, the Chambers judge set aside the Anton Piller order and directed all documents and computer images seized pursuantto the order be returned to the respondents. [4] The appellants appeal from the decision of the Chambers judge on the grounds that he misinterpreted or misapplied the lawgoverning Anton Piller orders and misinterpreted or ignored relevant evidence which established that Ashley Skinner was a person whowould wrongfully take and misuse their documents. [5] The material facts are fully set out in the decision of the Chambers judge and are well known to the parties.

Thus, a reviewthereof is unnecessary beyond noting that the appellants claimed Ashley Skinner had a fiduciary duty to act with the utmost good faithand honesty in the best interests of the appellants and breached his duty by using confidential information belonging to the appellants toadvance his personal interests and the interests of Top Trade Commodities Ltd., James Skinner, Dean Skinner, Great Northern GrowersInc. and Rayglen Commodities Inc.

They also claimed that James Skinner, Dean Skinner, Great Northern Growers Inc., RayglenCommodities Inc. and Top Trade Commodities Ltd. conspired with each other and with Ashley Skinner, with the intention of injuring theappellants by unlawful means. [6] In his analysis, the Chambers judge applied the test for an Anton Piller order articulated by Binnie J. in Celanese Canada Inc. v.Murray Demolition Corp., 2006 SCC 36, [2006] 2 S.C.R. 189 to the evidence. At para. 35, Binnie J. said: Requirements for an Anton Piller Order [35] There are four essential conditions for the making of an Anton Piller order.

First, the plaintiff must demonstrate a strong primafacie case. Second, the damage to the plaintiff of the defendant’s alleged misconduct, potential or actual, must be very serious. Third,there must be convincing evidence that the defendant has in its possession incriminating documents or things, and fourthly it must beshown that there is a real possibility that the defendant may destroy such material before the discovery process can do its work: Nintendoof America, Inc. v. Coinex Video Games Inc., (FCA), [1983] 2 F.C. 189 (C.A.), at pp. 197-99; Indian ManufacturingLtd. v.

Lo (1997), (FCA), 75 C.P.R. (3d) 338 (F.C.A.), at pp. 341-42; Netsmart Inc. v. Poelzer, [2003] 1 W.W.R. 698,2002 ABQB 800, at para. 16; Anton Piller KG, at pp. 58-61; Ridgewood Electric, at para. 27; Grenzservice, at para. 39; PulseMicrosystems Ltd. v. SafeSoft Systems Inc. (1996), (MB CA), 67 C.P.R. (3d) 202 (Man. C.A.), at p. 208; OntarioRealty Corp. v. P. Gabriele & Sons Ltd. (2000), (ON SC), 50 O.R. (3d) 539 (S.C.J.), at para. 9; Proctor & GambleInc. v. John Doe (c.o.b. Clarion Trading International), [2000] F.C.J. No. 61 (QL) (T.D.), at para. 45; Netbored, at para. 39; AdobeSystems Inc. v.

KLJ Computer Solutions Inc., (FC), [1999] 3 F.C. 621 (T.D.), at para. 35. [36] Both the strength and the weakness of an Anton Piller order is that it is made ex parte and interlocutory: there is thus no cross-examination on the supporting affidavits. The motions judge necessarily reposes faith in the candour and complete disclosure of theaffiants, and as much or more so on the professional responsibility of the lawyers participating in carrying out its terms. We are advisedthat such orders are not available in the United States (Transcript, at p. 70).

The Supreme Court reiterated the four requirements in British Columbia (Attorney General) v. Malik, 2011 SCC 18, [2011]1 S.C.R. 657at para. 29. [7] The Chambers judge concluded it was unnecessary to address the first three conditions set out in Celanese because the evidencepresented by the appellants did not meet the fourth condition, namely: show a real possibility that relevant documents and other itemsmight be destroyed by the respondents before such items are disclosed as part of the discovery process.

Based on his assessment of theevidence, the Chambers judge concluded the admissible evidence “does not even clearly show that Ashley behaved wrongfully, muchless that he engaged in ‘deliberate dishonest’ conduct” (at para. 101). Moreover, he found that none of James Skinner, Ashley Skinner orDean Skinner beneficially owned Rayglen Commodities Inc., as the appellants had alleged in their Anton Piller application. [8] In their submissions, the appellants raised these issues: A. Did the Chambers judge incorrectly interpret the test for issuance of an Anton Piller order? B.

Did the Chambers judge err in his assessment of the evidence when he concluded the appellants failed to establish a real possibilitythat one or more of the respondents might destroy documents or other items before the discovery process could do its work? C. Did the Chambers judge err in his application of the law to the evidence, or fail to exercise his discretion appropriately? D. Did the Chambers judge err in directing that all documents, computer images and copies thereof be returned to their owners?

That said, I turn to the first issue. A. Did the Chambers judge incorrectly interpret the test for the issuance of an Anton Piller order? [ 9 ] The appellants agreed that the test for the issuance of an Anton Piller order is set out in Celanese, supra, but maintained the Chambers judge misinterpreted the fourth requirement by requiring them to prove the respondents were contemptuous rogues of the kind described in Yousif v. Salama , [1980] 3 All E.R. 405 (C.A.) .

They submitted the burden of proof associated with the term “contemptuous rogues” is implicitly higher than the burden contemplated in Celanese. [ 10 ] In my view, the Chambers judge correctly interpreted the test for the issuance of an Anton Piller order and correctly set out the burden of proof to be met by a party seeking an Anton Piller order. Of particular note are his observations at para. 54: [54] It is not my mandate to make findings of fact. That is the task of the trial judge. My mandate is to determine whether the plaintiffs have discharged their onus in respect of the fourth Celanese condition.

That which they must establish was described in two ways in Celanese . At para. 30, Justice Binnie quoted with approval that portion of Anton Piller KG v. Manufacturing Processes Ltd. and Others , [1976] 1 All E.R. 779, [1976] 2 W.L.R. 162 (Eng.

C.A.) that required the plaintiffs to prove that there is a “ grave danger of property being smuggled away or of vital evidence being destroyed.” Later, at para. 35, Justice Binnie held that the plaintiff must adduce evidence to show “a real possibility that the defendant may destroy such material before the discovery process can do its work.” (emphasis in original) [ 11 ] The Chambers judge did state: “[t]he plaintiffs’ case must be strong–the granting of an Anton Piller order means that a court of law is satisfied that the defendants are the kind of contemptuous rogues described in Yousif v.

Salama, supra ” (at para. 56). However on reading his reasons, I am satisfied the Chambers judge did not interpret Yousif as having increased the burden of proof to be met by the appellants beyond the level contemplated in Celanese, supra . In Yousif , the court never used or referred to the words “contemptuous rogues.” B.

Did the Chambers judge err in his assessment of the evidence when he concluded the appellants failed to establish a real possibility that one or more of the respondents might destroy documents or other items before the discovery process could do its work? [ 12 ] The appellants argued the Chambers judge erred in his assessment or

interpretation of the evidence and referred to specific items. I disagree. The Chambers judge correctly assessed admissible evidence as falling short of establishing that Ashley Skinner or any other non-corporate respondent was untrustworthy or a person who would destroy or conceal documents relevant to the within action. C.

Did the Chambers judge err in his application of the law to the facts, or fail to exercise his discretion appropriately? [ 13 ] The answer is “no.” The Chambers judge correctly set aside the Anton Piller order based on the appellants having failed to meet the fourth condition prescribed in Celanese , namely: a real possibility existed that one or more of the respondents would destroy or conceal documents or other items relevant to the within action before the discovery process could do its work. He also exercised his discretion appropriately.

I further note that the appellants failed to provide full and fair disclosure of all relevant matters to the judge who heard their ex parte application. If they had, I am confident that the judge would not have granted the Anton Piller order. D. Did the Chambers judge err in directing that all documents, computer images and copies thereof be returned to their owners? [ 14 ] The answer to this question is “no.” The Chambers judge concluded that none of the respondents were persons or legal entities who would destroy or conceal documents that should be disclosed in the within action.

Thus, no credible reason existed for not returning the seized items to their owners. [ 15 ] The within appeal is dismissed. The respondents shall have their costs in the usual manner. DATED at the City of Regina, in the Province of Saskatchewan, this 29 th day of January, A.D. 2013. __ “Klebuc C.J.S.” ______________ Klebuc C.J.S. ___ “Klebuc C.J.S.” ____________ for Gerwing J.A.

__ “Herauf J.A.” _______________ Herauf J.A.