GOODMAN v. J. STOLLAR CONSTRUCTION LIMITED, 2011 ONSC 3834

CITATION: GOODMAN v. J. STOLLAR CONSTRUCTION LIMITED, 2011 ONSC 3834 COURT FILE NO.: CV-09-387422 MOTION HEARD: June 16, 2011 SUPERIOR COURT OF JUSTICE - ONTARIO RE: Randy Goodman v. J. Stollar Construction Limited BEFORE: MASTER R.A. MUIR COUNSEL: Stephen Schwartz for the plaintiff and the non-parties, Andon Fine Homes Ltd., 1246840 Ontario Inc., 1312562 Ontario Inc., 976372 Ontario Ltd., and 1836744 Ontario Inc. Chris Foulon and Rich Appiah for the defendant REASONS FOR DECISION 1 .

The plaintiff brings a motion for an order establishing a discovery plan to govern this action including an order compelling a representative of the defendant to attend at an examination for discovery and mediation. 2 . The defendant brings a cross-motion for an order requiring the plaintiff to serve a further and better affidavit of documents and, if necessary, for production from the non-parties, Andon Fine Homes Ltd., 1246840 Ontario Inc., 1312562 Ontario Inc., 976372 Ontario Ltd., and 1836744 Ontario Inc. (the “Non-Parties”). 3 . This is a wrongful dismissal action.

Pursuant to an Executive Employment Agreement dated January 15, 2009 (the “Employment Agreement”), the plaintiff was hired by the defendant to be its president. The defendant carries on business as a land developer, commercial and industrial landlord, mortgage lender and investor in publicly traded securities. 4 . The plaintiff’s employment with the defendant commenced on February 17, 2009. Of particular importance to the issues on this motion is

Article 2.2 of the Employment Agreement, which provides, in part, as follows: 2.2 Full Time and Attention. The Executive [the plaintiff] shall devote 100% of the Executive’s business time to the Executive’s duties hereunder… 5 . Prior to entering into the Employment Agreement, the plaintiff had been involved with a business known as Andon Fine Homes Ltd. (“Andon”) and its related corporate entities. It appears that Andon was a small, closely held private corporation controlled by the plaintiff and his business partner, Alan Newton (“Newton”). Andon was in the business of constructing custom homes.

The plaintiff’s role at Andon was to oversee the construction of the homes, retain trades and negotiate contracts. 6 . Negotiations between the plaintiff and the defendant began in early 2008 but were not concluded until January, 2009. The plaintiff takes the position that during these negotiations he informed the defendant that he would have “residual ongoing obligations” to Andon which would require a certain amount of his attention after the commencement of his employment with the defendant. The plaintiff describes these obligations as “minor” and “sporadic and minimal”.

7 . The plaintiff was terminated by the defendant on August 20, 2009. The defendant takes the position that the plaintiff was dismissed for cause, citing a long list of alleged misconduct and breaches of the Employment Agreement. In its statement of defence and counterclaim dated November 27, 2009, the defendant takes the position that the plaintiff’s ongoing involvement with Andon during the period of his employment with the defendant was one of the bases for his dismissal.

As set out above, the plaintiff admits that he continued to have some involvement with certain Andon projects after his employment with the defendant began but states that those obligations were well known to the defendant and did not interfere with his duties to the defendant. 8 . It appears that pleadings closed in late 2009. Beginning in March, 2010, the plaintiff began making requests of the defendant to agree to an appropriate discovery plan as required by Rule 29.1.03 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194 (the “Rules”).

In response to these requests, the defendant demanded that the plaintiff produce various documents. The plaintiff has produced some, but not all, of the requested documents. The defendant has taken the position that it will not agree to a discovery plan until such time as the issues regarding the requested productions have been determined. 9 . At the outset of the argument of this motion it was agreed that the issues on the plaintiff’s motion would largely be determined by the outcome of the defendant’s cross-motion.

It appears that once the production issues have been determined, the parties will be able to agree on a discovery plan and timetable. 10 . The additional production being requested by the defendant is set out in its Fresh as Amended Notice of Motion as follows: 1.

An Order compelling Goodman to serve a further and better Affidavit of Documents disclosing all documents within his possession, control or power relating to Goodman’s interest in and involvement with any or all of the companies presently or formerly operating under or associated with the “Andon Fine Homes” umbrella (collectively hereinafter referred to as “the Andon-related companies”), including, inter alia , Andon Fine Homes Ltd., 1246840 Ontario Inc., 1312562 Ontario Inc., 976372 Ontario Ltd., and 18386744 Ontario Inc., that pertain to the time period beginning on February 17, 2009 (being the date on which he commenced employment with JSCL) and ending on August 20, 2009 (being the date on which such employment was terminated), unless another period is noted, including (but not limited to) the following documents (the “Omitted Documents”): (

a) copies of activity detail statements corresponding to the cellular phone bills for which Goodman received reimbursement from JSCL, as well as copies of any directories of work-related phone numbers maintained by Goodman; (

b) copies of the monthly VISA statements corresponding to Account #4500030103383372 (except those already produced), including any versions on which notation had been made as to the allocation of individual charges; (c) [RELIEF NO LONGER BEING SOUGHT:] copies of the statements for any other credit card(

s) used by Goodman with which he incurred charges on behalf of the Andon-related companies during the course of his employment with JSCL; (

d) copies of phone and e-mail records of communications between David Cooper (“Cooper”) and Goodman, as well as copies of e-mail records sent from Cooper at Goodman’s direction; (

e) copies of all work orders or instructions issued, as well as invoices and/or quotations received and/or processed, by Goodman on behalf of the Andon-related companies (except those already produced), including any construction-cost estimates prepared or reviewed by Goodman in relation to the Andon-related projects located at 188 Strathallan Blvd., 273 St. Germain Ave., and 437 Douglas Ave. , as well as such properties for which Goodman performed warranty or service work; (

f) copies of all written communications, instructions or commitments Goodman gave or received, either on his own behalf for Andon-related purposes or on behalf of any of the Andon-related companies, to or from any customers, potential customers, suppliers, tradespeople, consultants, agents, contracted professionals, lenders and/or financial institutions, municipal officials, or potential suppliers of building-lots, who had dealings with the Andon-related projects located at 188 Strathallan Blvd., 273 St. Germain Ave., and 437 Douglas Ave. , as well as such properties for which Goodman performed warranty or service work ; (

g) copies of all written communications between Goodman and

Alan Newton (“Newton”) relating to Andon-related business matters, as well as any agreements executed between them or by Goodman on behalf of Newton or on behalf any of the Andon-related companies relating to such business matters, between February 17, 2009 and October 15, 2011. (

h) all commitments made by or to Goodman to, or by, or on behalf of, any of the Andon-related companies and/or any of their shareholders, officers, directors or employees, including any agreements which he may have executed either on behalf of the Andon- related companies or on his own behalf for Andon-related purposes; (i) [RELIEF NO LONGER BEING SOUGHT:] copies of any Agreements of Purchase and Sale into which the Andon- related companies may have entered or attempted to enter, whether as vendor or purchaser, as well as documentation of any negotiations connected thereto, that were either generated by Goodman or contain references to Goodman or bear his signature; (

j) documents pertaining to any activities in which Goodman engaged or responsibilities he may have exercised on behalf of the Andon-related companies or as Newton’s agent for Andon-related purposes; (

k) all written communications or commitments Goodman gave or received on behalf of JSCL to any of the Andon-related companies or any of their principals, employees, consultants, suppliers, tradespeople, or contracted professionals ; (

l) copies of all applications, renewal requests and reports supplied to TARION by or on behalf of the Andon-related companies, including any updating of their lists of shareholders, officers, directors or employees, that contain references to Goodman or that were supplied at Goodman’s direction; (

m) copies of all applications for building permits or planning approvals by or on behalf of the Andon-related companies that relate to the Andon-related project located at 437 Douglas Ave.; (

n) all communications received or sent by Goodman at the e-mail address randy@andon.ca, as well as all communications directed to or sent by Goodman at the e-mail address andonfinehomes@aol.com, as well at any other e-mail address through which Goodman sent or received e-mails having Andon-related purposes or content; and (

o) documents relating the Goodman’s efforts to mitigate his damages and the result of such efforts. 2. In the alternative, in the event that this Honourable Court determines that (

i) none or some of the documents listed in paragraph 1, above, are not or have not been in Goodman’s possession, control, or power; and/or that (ii) Andon is in possession, control or power of such documents but that Andon is not controlled directly or indirectly by Goodman, the Motion is for an Order compelling Goodman and the Andon-related companies to produce for inspection such documents listed above that are in their respective possession, control or power and are not privileged. 11 .

It is clear from the pleadings and the evidence filed on this motion that one of the matters in issue in this action is the question of whether the plaintiff’s “residual” and “sporadic” involvement with Andon projects after the commencement of his employment with the defendant constituted a breach of

Article 2.1 of the Employment Agreement. In my view it is important to know the actual extent of that involvement in order to determine that question. Generally speaking, documents which may shed light on the nature and extent of that involvement are relevant to the matters in issue in this action.

The plaintiff does not take the general position that the documents requested by the defendant are not relevant (indeed, he has already produced some of the requested documents, at least in part), but rather he argues that there is insufficient evidence before the court to conclude that the documents requested actually exist or that relevant documents have been omitted from the plaintiff’s productions. The plaintiff argues that there is no right to rummage through an opponent’s filing cabinets to see if anything interesting can be found. See Rossi v. Vaughan (City) , 2010 ONSC 214 (Master) at paragraphs 9 to 14 .

The plaintiff also argues that complying with the defendant’s requests would be time consuming and costly and not in keeping with the proportionality provisions of Rules 1.04(1.1) and 29.2. 12 . I have carefully reviewed the production requests of the defendant and, for the most part, I am satisfied that the documents requested meet the relevance test in Rule 30.02. Moreover, I am not prepared to give effect to the plaintiff’s proportionality argument. This is a significant action in which the plaintiff is claiming damages of nearly $800,000.00.

There is no evidence before the court, from the plaintiff or the Non-Parties, that supports the proposition that the disclosure requested would be expensive or time consuming and nor does it appear to be self-evident from the nature of the production requested. I assume for the purposes of this motion that the plaintiff and the Non-Parties have appropriate technology and resources available to them in order to assist with this task. In my view, the defendant’s requests are, for the most part, reasonable and appropriately limited to the matters in issue.

In the event that complying with ordered production proves to be unduly onerous, the plaintiff and the Non-Parties shall have leave to return in order to substantiate this assertion. This approach was approved by Justice Perell Ontario v. Rothman’s Inc. , 2011 ONSC 2504 at paragraph 167 . 13 . I have also concluded that the defendant has met the test applicable to production from Non-Parties as set out in Rule 30.10(1). To

the extent that I have ordered production below, I am satisfied that such production is relevant to a material issue and that it would be unfair to the defendant to proceed to trial without such production. The defendant has met the applicable test set out in Raponi v. Doe , 2010 ONSC 3632 (Master) at paragraph 13 . 14 . In my view, the cell phone records and VISA statements requested by the defendant at paragraphs 2(

a) and 2(

b) of its notice of motion should be produced. The evidence before the court on this motion demonstrates that the plaintiff made numerous phone calls from his office phone to Andon employees, suppliers and service providers while he was employed by the defendant. Presumably he also made such calls from his personal cell phone. The details of any such calls are relevant to the issue of the extent of his involvement with Andon during the relevant time period.

Similarly, the evidence shows that while he was employed with the defendant, the plaintiff incurred expenses on behalf of Andon that were charged to his personal VISA account. The details of any such expenses are also relevant to the issue of the extent of his involvement with Andon during the relevant time period. The plaintiff shall produce the cell phone and VISA documents requested in paragraphs 2(

a) and 2(

b) of the defendant’s notice of motion for the time period from February 17, 2009 to August 20, 2009, and shall identify which entries on such documents relate to Andon business. 15 . The documents requested in paragraph 2(

d) are also relevant and shall be produced. The evidence shows numerous communications between the plaintiff and David Cooper, an Andon employee. The full extent of such communications is relevant to the issue of the extent of the plaintiff’s involvement with Andon during the time period between February 17, 2009 and August 20, 2009. 16 . The documents requested in paragraphs 2(

e) and 2(

f) are also relevant and shall be produced. The evidence shows at least limited involvement by the plaintiff during the relevant time period in connection with three Andon projects, Strathallan, St. Germain and Douglas (the “Subject Projects”). Again, the full extent of such activity is relevant to the issue of the extent of the plaintiff’s involvement with Andon during the time period between February 17, 2009 and August 20, 2009. 17 . In my view the request made at paragraph 2(

g) of the defendant’s notice of motion is overly broad. Communications between the plaintiff and Newton are relevant to the issue of the extent of the plaintiff’s involvement with Andon during the time he was employed by the defendant but not after his dismissal. Such production shall only be made for the time period between February 17, 2009 and August 20, 2009 and shall be limited to the three Subject Projects. 18 . The request made in paragraph 2(

h) of the defendant’s notice of motion is also overly broad. There is no evidence that the plaintiff was involved in the affairs of Andon apart from the Subject Properties. These documents shall be provided to the extent that they relate to the Subject Projects and for the time period from February 17, 2009 to August 20, 2009. 19 . In my view, the requests for documents set out in paragraph 2(j), 2(

k) and 2(

l) of the defendant’s notice of motion are far too broad and lack specificity. The pleadings and the evidence do not support such a broad and undefined request for documents. In my view these requests do indeed amount to an undefined “rummaging through an opponent’s filing cabinets”. These documents need not be produced. 20 . The documents requested at paragraph 2(

m) are relevant and shall be produced for the time period between February 17, 2009 and August 20, 2009. The evidence shows at least limited involvement by the plaintiff during the relevant time period in connection with the Douglas Project. Again, the full extent of such activity is relevant to the issue of the extent of the plaintiff’s involvement with Andon during the relevant time period. 21 . The documents requested in paragraph 2(

n) are also relevant and shall be produced. The evidence shows that the plaintiff made use of the email addresses in question while he was employed by the defendant. The full extent of such communication is relevant to the issue of the extent of the plaintiff’s involvement with Andon during the relevant time period. These documents shall be produced for the time period from February 17, 2009 to August 20, 2009. 22 . Paragraph 2(

o) of the defendant’s notice of motion seeks documents relevant to the issue of the plaintiff’s efforts to mitigate his damages. The issue of mitigation has been pleaded by the defendant in paragraphs 55 and 56 of its statement of defence and counterclaim. The plaintiff has answered this request, in part, in paragraph 35 of his affidavit sworn May 16, 2011. The plaintiff indicates that since his termination by the defendant he has gone back into the construction business on his own and through a company he formed in November, 2009, HMJ Homes Inc. (“HMJ”).

He admits to having generated revenue in connection with this work. In my view, this request is relevant to the extent of income earned by the plaintiff, directly or indirectly, for a reasonable period of time following his dismissal. In response to this request, the plaintiff shall produce complete copies of his personal income tax returns, as well as those for HMJ, for 2009 and 2010.

23 . To the extent that the plaintiff is unable to produce the documents ordered to be produced above, the Non-Parties shall use their best efforts to produce the documents, to the extent that they are in their possession, control or power. 24 . The parties shall confer and attempt to agree upon an appropriate discovery plan and timetable for the completion of the remaining steps in this action.

If the parties are able to agree on such a discovery plan and timetable, it shall be incorporated into a formal order, along with the results of the defendant’s cross-motion, and provided to me for approval by no later than June 29, 2011. If the parties are unable to agree, they may contact my registrar to

schedule a case conference. 25 . The parties shall also confer and attempt to agree upon an appropriate costs disposition for both motions. If they are unable to agree, they shall provide the court with costs submissions in writing by no later than June 29, 2011. Master R.A. Muir June 17, 2011