Scott Pineo Plaintiff v. Sona Nanotech Inc., a body corporate, David Regan v. Daniel Whittaker, 2022 NSSC 85

SUPREME COURT OF Nova Scotia Citation: Pineo v. Sona Nanotech Inc. , 2022 NSSC 85 Date: 20220323 Docket: Hfx No. 502894 Registry: Halifax Between: Scott Pineo Plaintiff v. Sona Nanotech Inc., a body corporate, David Regan and Daniel Whittaker Defendants Decision Judge: The Honourable Justice John A. Keith Heard: March 3, 2022, in Halifax, Nova Scotia Oral Decision: March 7, 2022 Counsel: Eli Karp and Sage Nematollahi, for the Plaintiff Roderick Rogers, Q.C. and Jason W.J.

Woycheshyn, for the Defendants By the Court: [ 1 ] By notice of motion filed February 22, 2022 the Plaintiff requested an Order under Civil Procedure Rule 25 for disclosure of 12 categories of records. The Plaintiff says that the Affidavit of the defendant David Regan sworn January 31, 2022 refers to certain background documents that should have been attached to the affidavit as exhibits but were withheld. The omission, according to the Plaintiff is improper and prejudicial. If the patent deficiencies in Mr.

Regan’s Affidavit and the related disclosure problems are left unresolved, the Plaintiff says that the integrity of the evidence and cross-examinations scheduled to occur later this month will be unfairly compromised. [ 2 ] The motion is opposed. The Defendants argue that the Plaintiff’s request is premature and is contrary to certain well- established disclosure restrictions which apply specifically to securities class actions. The Defendants also maintain that certain disclosure requests are irrelevant in any event. [ 3 ] The disclosure motion was heard on March 3, 2022.

I rendered a “bottom line” decision on March 7, 2022 with reasons to follow. These are my reasons. Procedural Background [ 4 ] By Notice of Action filed December 18, 2020, the representative Plaintiff Scott Pineo initiated a class action under Nova Scotia’s Class Proceedings Act , S.N.S. 2007, c. 28 , as amended (the “ Class Proceedings Act ”). Mr. Pineo seeks a remedy on behalf of

himself and all investors who acquired common shares in Sona Nanotech Inc. (“ Sona Nanotech ”). [ 5 ] The named defendants are Sona Nanotech, its Chief Executive Officer David Regan and the Chairman of Sona Nanotech’s Board of Directors, Daniel Whittaker. [ 6 ] Mr. Pineo alleges that in 2020 Sona Nanotech was developing a new COVID-19 antigen test for regulatory approval by Health Canada and the United States Food and Drug Administration (“ FDA ”).

In turn, Health Canada and FDA approval was dependent upon validation testing – including independent clinical evaluation studies confirming the effectiveness of the developmental antigen test. Mr. Pineo alleges that Sona Nanotech’s disclosures for the third quarter of fiscal 2020 misrepresented the actual quality and legitimacy of its clinical evaluation studies (and, by extension, the likelihood of FDA and Health Canada approval) because the following information was omitted: 1.

The clinical evaluation studies were not independent because they were being carried out by an entity (SaudiVax) which was Sona Nanotech’s commercial partner and otherwise had a financial interest in the validation, commercialization and approval of the COVID-19 test; 2. The clinical evaluation studies could never result in FDA approval because the underlying methodology failed to conform with applicable FDA’s guidelines; and 3. The data generated by the clinical studies was otherwise inappropriate, inaccurate and/or unreliable. [ 7 ] For emphasis, these are the Plaintiff’s allegations only.

They are not proven facts. However, Mr. Pineo states that the allegations are sufficient to ground the following two statutory causes of action: 1. Oppression contrary to

section 241 of the

Canada Business Corporations Act , R.S.C. 1985, c. C-44 , as amended; and 2. Secondary market misrepresentation contrary to

section 146C(1) of Nova Scotia’s Securities Act, R.S.N.S. 1989, c. 418 , as amended (the “ Securities Act ”). [ 8 ] Securities class actions are subject to two important, preliminary hurdles: 1. The Court must grant leave to proceed under

section 146H(1) of the Securities Act ; and 2. The action proceeding must be certified under section 4(3) of the Class Proceedings Act . [ 9 ] I refer to these two preliminary motions as the Leave/Certification Motions. [ 10 ] The Plaintiff filed his materials for the Leave/Certification Motions on November 1, 2021. The pandemic disrupted scheduling but on January 31, 2022, the Defendants filed their responding materials including the Affidavit of David Regan sworn January 31, 2022.

The Leave/Certification Motions are scheduled to be heard on June 27 – 30, 2022. [ 11 ] By letter dated January 31, 2022 and in my capacity as Case Management Judge, I confirmed certain pre-hearing deadlines leading up to the Leave/Certification Motions. These deadlines were discussed with, and agreed upon by, counsel and they included: • March 1, 2022 – Plaintiff to file any rebuttal affidavits; • March 25, 2022 – Deadline for parties to complete any cross-examinations of those persons who filed affidavits.

The parties agreed and the Court approved out of court cross-examinations before a qualified court reporter.

Pausing here I note that the parties advised on March 3, 2022 that they subsequently agreed between themselves (i.e. without the Court’s involvement) to conduct cross- examinations of the Plaintiff’s affiants on March 21, 2022 and to conduct cross-examination of the Defendants’ affiants on March 28, 2022 – 3 days after the original deadline set by the Court; • March 29, 2022 – The Plaintiff shall file motion materials, if required, to address any production issues or issues arising out of the cross-examinations.

While not previously mentioned, the same deadline should apply to the Defendants if it intends to pursue any issues arising out of its upcoming cross-examination of the Plaintiff affiants; • April 4, 2022 – Deadline for the parties to file any responding materials for the production motion; • April 7, 2022 – Deadline for the parties to file any rebuttal materials for the production motion • April 11, 2022 – Hearing of the production motion. [ 12 ] After establishing this schedule, the parties were unable to find a convenient date prior to the March 25, 2022 deadline to conduct the cross-examination of David Regan.

They agreed to conduct Mr. Regan’s cross-examination on March 28, 2022 and they adjusted remaining dates as follows: • April 1, 2022 – adjusted deadline for the Plaintiff to file motion materials, if required, to address any outstanding production issues or issues arising out of the cross-examinations. • April 6, 2022 – adjusted deadline for the Defendant to file any responding materials for the production motion; • April 8, 2022 – adjusted deadlines for the Plaintiff to file any rebuttal materials for the production motion; • April 11, 2022 – hearing of the production motion (unchanged).

Brief

Summary of the Plaintiff’s Position [ 13 ] The Plaintiff insists that his disclosure requests are relevant and founded squarely within the four corners of Mr. Regan’s own affidavit. He argues that the Defendants elected to file reply evidence in the form of Mr. Regan’s affidavit and must therefore accept the corresponding procedural and evidentiary obligations. They say that certain documents should have been attached as exhibits to Mr.

Regan’s affidavit as support for the underlying testimony because the testimony is otherwise inadmissible hearsay. [ 14 ] Furthermore, the Plaintiff contends that he will make the same disclosure requests at the upcoming cross-examination of Mr. Regan. At that point, the Defendants will be unable to reasonably refuse the requested disclosure because the documents are clearly referenced and relied upon in his affidavit. In other words, disclosure is inevitable or, alternatively, the evidence must be struck. To that extent, the Plaintiff argues that the Defendants are simply being “coy”.

On the one hand, the Defendants seek to rely on certain documentation referenced in Mr. Regan’s affidavit. Yet, on the other hand, they want to wait until cross-examination to confirm whether they will disclose the documentation in question. The Plaintiff contends that this sort of incremental and staged presentation of the Defendants’ own affidavit evidence promotes inefficiency, waste, and other serious prejudice; and that the Court should denounce this conduct - not ignore and/or implicitly condone it. Brief

Summary of the Defendant’s Position [ 15 ] The Defendants say that the Plaintiff’s requests are premature because these issues are more properly pursued after upcoming cross-examinations when the disclosure requests can be placed in their proper context. They point out that the parties turned their minds to this issue and agreed upon a

schedule which actually reserved a day for potential motions after cross-examinations were completed. To that extent, the Defendants say, there is no risk of waste because the process already includes an appropriate mechanism for resolving any such disclosure disputes arising out of cross-examination. [ 16 ] The Defendants also stress that class actions or Securities Act claims are governed by unique procedures which limit the Plaintiffs’ entitlement to disclosure.

In a typical claim (i.e. not a securities class action), defendants are obliged to file a formal Statement of Defence within a specified period of time after receiving notice of the claim. However, defendants to a securities class action are not required to file a statement of defence until the Court first certifies it as a class action under the Class Proceedings Act and grants leave under the Securities Act . Importantly for the purposes of this motion, disclosure is similarly delayed.

Defendants in securities class actions are not compelled to make full disclosure of all relevant and non-privileged documentation until after certification under the Class Proceedings Act and leave is granted under the Securities Act . [ 17 ] These unusual procedures reflect important policy imperatives designed to avoid abuse including exploiting the disclosure process to troll for confidential documents and hopefully find something that might sustain a claim that the Plaintiff cannot otherwise substantiate.

The Defendants say that these policy imperatives apply here and that, as a result, the Plaintiff’s disclosure requests are more properly addressed after (not before) cross-examination. [ 18 ] In the alternative, the Defendants argue that the disclosure sought by the Plaintiff is irrelevant. Analysis (

a) Legal Test and Policy Concerns Surrounding Disclosure in a Securities Class Action [ 19 ] The issue may be distilled to: Under what circumstances may a plaintiff in a securities class action insist upon disclosure prior to certification under the Class Proceedings Act and prior to leave being granted under the Securities Act ? [ 20 ] Unlike a more conventional action, the plaintiff in a securities class action is clearly not entitled to full, voluntary disclosure of all relevant, non-privileged documentation and electronic information early in the proceeding.

Before the obligation to make full disclosure arises, the plaintiff must first be granted leave under the Securities Act and the action must be certified under the Class Proceedings Act . This is because the statutory leave and certification process interact with the Rules of Civil Procedure in two unique ways: 1. Delayed Close of Pleadings : Pleadings close when “…each party claimed against has filed a notice of defence, has filed a demand of notice, or has become disentitled to further notice, unless the parties agree or a judge orders otherwise” (CPR 38.11).

However, unlike a more conventional action, a defendant’s obligation to file a statement of defence in a securities class action (or otherwise waive the entitlement to further notice) [1] does not arise upon receiving notice of the claim. Rather, the preliminary leave and certification process must be completed. [2] This necessarily means that pleadings do not close until much later in the process (i.e. after the Leave/Certification Motion); and 2.

Delayed Disclosure and Discovery Rights : A party’s disclosure rights and obligations are triggered by the close of pleadings. [3] Similarly, a party’s discovery rights and obligations do not arise until after the disclosure process is completed. [4] Because pleadings do not close in a securities class action until after the certification and leave stage is completed, mandatory disclosure and discovery is similarly delayed. [ 21 ] The policy reasons which impel this delay in the more conventional pleading and mandatory disclosure process are important.

Public companies in securities class actions were seen as particularly vulnerable to abusive litigation or “strike suits”. In Epstein v First Marathon Inc. , 2000 CarswellOnt 346 (“ Epstein ”) , Cumming, J. defined the term “strike suit” as: “…the commencement and pursuit of a class proceeding where the merits of the claim are not apparent but the nature of the claim and targeted transaction is such that a sizeable settlement can be achieved with some degree of probability. The term suggests a class proceeding that is properly regarded as an abuse of process” (at paragraph 41).

Cumming, J. went on to describe the uniquely harmful and highly prejudicial effects of “strike suits” in the context of securities class actions ( Epstein at paragraphs 42 – 46). In Amaya Inc. v Derome , 2018 QCCA 120 , the Quebec Court of Appeal similarly warned of “frivolous claims made by opportunistic plaintiff-shareholders seeking to obtain quick settlements” (“ Amaya ”, at paragraph 89). [5]

[ 22 ] Basically, the point of “strike suit” litigation is the litigation itself. The rules of civil procedure no longer serve as tools designed to meet the ends of justice. Instead, they are transformed into weapons which dominate and pervert the process they were intended to serve. In this scenario, the strength of the underlying cause of action is of peripheral concern.

Rather, the risks, burden and costs associated with meeting procedural demands become the main levers which drive the settlement calculus. [ 23 ] In the specific context of securities class actions, the threat is that plaintiff-shareholders will abuse the litigation process before passing the minimal screening criteria associated with the leave and certification process.

And that, for example, companies (which are otherwise already exposed to significant statutory public reporting obligations) will be coerced into making significant settlements solely to avoid plaintiff-shareholders trying to manufacture claims by exploiting the rules of civil procedure to pry open non-public information. [ 24 ] In response to this concern, the legislature enacted provisions within the Securities Act which, as indicated, had the effect of significantly limiting a plaintiff’s entitlement to disclosure prior to leave being granted leave being granted under the Securities Act and the action is certified under the Class Proceedings Act be limited.

The jurisprudence has repeatedly confirmed this legislative intent. [ 25 ] To understand the extent of those disclosure limits, it is appropriate to begin with the fact that a plaintiff seeking to pursue a securities class action must bring the Leave/Certification Motions. However, a defendant is not obliged to file affidavits in response to that motion. A defendant may, instead, accept the risks associated with not filing responding affidavits and defend on the basis of other evidence such as cross-examination on affidavits filed by the plaintiff.

In Ainslie v CV Technologies Inc. , 2008 CarswellOnt 7227 (“ Ainslie ”) , the plaintiff brought an action for misrepresentation in the secondary market against CV Technologies Inc. and three of its former or present officers and directors and against CV's former auditors, Grant Thornton LLP.

Grant Thornton filed no affidavit material in response to the plaintiffs' leave motion and intended to rely on the facts disclosed in the plaintiffs' motion materials upon which they propose to cross-examine. [ 26 ] The plaintiff Ainslie insisted that the defendant Grant Thornton file a responding affidavit on the basis that the language of

section 138.8(2) of Ontario’s Securities Act is mandatory. It states that, on a motion for leave: “…the plaintiff and each defendant shall serve and file one or more affidavits setting forth the material facts upon which each intends to rely” (emphasis added). The plaintiff focussed on the word “shall” as meaning that that every defendant was statutorily obliged to file a responding affidavit, regardless of the circumstances. [ 27 ] I pause here to note that

section 138.8(2) of Ontario’s Securities Act is identical to

section 146 (H)(2) of Nova Scotia’s Securities Act . [ 28 ] Lax, J. carefully examined the statutory language and related policy considerations. She concluded that the plaintiff’s arguments ran contrary to: 1. The same policy considerations described in see paragraphs 21 - 24 above; and 2. The statutory language. Lax, J. pointed out that the word “shall” needed to be put in its proper context, having regard to the qualifying language which followed. Defendants named in a Securities Act secondary market claim are only mandated to file an affidavit “setting forth the material facts upon which each intends to rely”.

The statute neither commanded nor obligated every defendant to file affidavit evidence in every case (and submit to cross-examination) – regardless of how the strength of the plaintiff’s evidence or how the defendant might choose to defend the motions.

To conclude otherwise threatened to upend or reverse the plaintiff’s evidentiary burden and severely weaken the policy concerns described above. [ 29 ] Lax, J. ultimately determined that a defendant “must file an affidavit only where it intends to lead evidence of material facts in response to the motion for leave” (at paragraph 25). [ 30 ] In sum, prior to certification and leave, a plaintiff in a securities class action is not entitled “as-of-right” to either a statement of defence, affidavit evidence or full mandatory disclosure. (See also Amaya , paragraphs 22, 89 and 108) [ 31 ] However, what if a defendant decides to file an affidavit in response to a motion for leave under the Securities Act and certification of a class action?

In making that election, does that defendant then become exposed to potential disclosure obligations based on the content of the affidavit? If so, when do those obligations arise and to what extent might any such disclosure obligations be limited having regard to the same policy concerns described above? [ 32 ]

Section 146H(3) of Nova Scotia’s Securities Act confirms that a person swearing an affidavit in support of either the plaintiff or defendant “may be examined on it in accordance with the Civil Procedure Rules.” [6] The cross-examination process may include requests for further documents, and, to that extent, further disclosure obligations may arise. [ 33 ] In Mask v Silvercorp Metals Inc. , 2014 ONSC 5727 (“ Mask #2 ”), Belobaba, J. confirmed that disclosure may be compelled through cross examination. In that case, the defendant mining company owned several properties in China.

The plaintiff claimed that the defendant released information containing actionable misrepresentations in mineral estimates, mineral production, and the defendant’s ownership interest in one of its customers. Central to the allegations around misrepresented mineral estimates were Technical Reports that provided updated information regarding estimates of the defendant’s mineral resources. [ 34 ] The defendant company filed an affidavit in response to the leave application. The defendant affiant was cross-examined, and numerous questions were refused.

Eventually, most refusals were withdrawn or answered but seven remained. Of those seven, five were refused on the basis that they did not relate to matters raised in the defendant affidavit. The other two questions were refused on the basis of litigation privilege. Belobaba, J. decided that all seven questions must be answered. [ 35 ] As to the five refusals which the defendant alleged went beyond the scope of proper cross-examination, Belobaba, J. noted that they all related to a 2012 Technical Report which, again, lay at the heart of the plaintiff’s allegations.

He concluded that the questions were “all clearly relevant to the merit-based hurdle that has to be cleared on the leave motion” (paragraph 17).

[ 36 ] In reaching this conclusion, Belobaba, J. emphasized that he remained vigilant to the policy concerns described above and he cautioned that the Court: continues to police "discovery-like" requests prior to [ Ontario Securities Act ] leave motions "to preclude the putative plaintiff from 'fishing for facts' that would support ... a speculative lawsuit of the strike-suit type." The concern is that the plaintiff not engage in a discovery-like "rummage" through the defendant's corporate files "in the hope of uncovering something helpful to her case." [7] [ 37 ] It is not necessary to delve further into the process of cross-examination or consider how hypothetical requests for disclosure that might be made during cross-examination in this case might be addressed.

Cross-examinations in this matter are upcoming and this should not be viewed as some sort of advance ruling on potential cross-examination questions. [ 38 ] The point is that a form of disclosure can emerge in a securities class action during the cross-examination process prior to the Leave/Certification Motions; however, it is still somewhat guarded disclosure having regard to the policy concerns described above. [ 39 ] In the circumstances of this case, therefore, the question narrows to: where a defendant in a securities class action files an affidavit in response to the leave and certification motions, might a form of disclosure also be compelled prior to cross-examination? [ 40 ] Mask v.

Silvercorp Metals Inc. , 2014 ONSC 5727 (Ont. S.C.J.), leave to appeal refused, 2014 ONSC 7381 (Div. Ct.) (“ Mask #1 ”) was released prior to Mask #2 referenced above. Where Mask #2 related to questions posed during cross-examination, Mask #1 related to a request for disclosure prior to cross-examination but triggered by documents referenced in a defendant’s affidavit. Belobaba, J. denied all of the requests.

In Kwong v iAnthus Capital Holdings, Inc. , 2022 ONSC 1400 (“ Kwong ”), Albarali, J. reached a similar conclusion. [ 41 ] Having said that, in my view, neither Mask #1 nor Kwong stand for the proposition that a defendant who files an affidavit in respect to a securities class action leave and certification motion can never be compelled to make further disclosure prior to cross- examination. Or, put slightly different, that cross-examinations are the only method by which further disclosure might be obtained. I note the following: 1.

Belobaba, J. denied the requested disclosure based, in part, on a lack of “specificity”. In upholding Belobaba, J’s decision, Perell, J. wrote for the Divisional Court and similarly described the disclosure requests as requests as “preemptive, overbroad and almost indeterminate” (at paragraph 23). In Kwong , Albarali, J. also confirmed that “ general references to non-specific documents does not give rise to a right to inspect” (at paragraph 9).

I agree that prior to cross-examinations in a securities class action, a plaintiff cannot latch onto non-specific language in a defendant’s affidavit and embark upon a wide-ranging exploration of non-public information simply because a particular word might suggest the existence of other background documents or categories of documents. However, in my view, these decisions do not rigidly prohibit disclosure in advance of cross-examination where, for example, a defendant affiant explicitly identifies a specific and clearly relevant document; and 2. As indicated,

section 146H(3) of Nova Scotia’s Securities Act confirms that an affiant “may be examined on it in accordance with the Civil Procedure Rules ” (emphasis added). Of course, this means Nova Scotia’s Civil Procedural Rules which are different from, for example, Ontario’s Rules of Civil Procedure . Procedural distinctions unique to a particular jurisdiction are germane. For example, in Nova Scotia cross-examinations on an affidavit in a motion can occur outside of Court; however, the default position is that cross-examinations occur in Court and on the day of a scheduled hearing.

CPR 23.09(4) states: “The witness who provides an affidavit on which cross-examination is required must be cross-examined and examined in re-direct in chambers, unless the parties agree or a judge orders otherwise ” (emphasis added). By contrast, in Ontario, the practise (and the necessary implication of Ontario’s Rule 39.02) is that cross-examinations on affidavits occur outside of Court and in advance of a scheduled hearing. There are advantages and disadvantages to both practises.

Moreover, in the particular circumstances of this case, the distinctions fade somewhat because the parties previously agreed (and the Court subsequently approved) out-of-Court cross-examinations with a date reserved to deal with any production issues that emerged from those cross-examinations. Nevertheless, assuming the default position in Nova Scotia, if disclosure requests are only made during cross-examinations in Court and at the time of the hearing, certain foreseeable forms of procedural prejudice arise including: i.

A potentially meritorious disclosure request may be denied in order to conclude the hearing more expeditiously; ii. Disclosure is only made at the hearing itself giving the plaintiff very little time to process an otherwise meritorious disclosure request; or iii. The hearing is split to properly resolve the disclosure request. Alternatively, plaintiff may be forced to bring a motion for leave to conduct cross-examinations outside of court simply to avoid these potential problems. None of these outcomes promote the “just, speedy and inexpensive determination” of the proceeding (CPR 1.01).

Moreover, interpreting the Civil Procedure Rules to consistently permit these outcomes could also serve to promote disproportionate proceedings contrary to the Supreme Court of Canada’s call in Hyrniak v Mauldin, 2014 SCC 7 ; 3. On a related procedural front, where affiants offer testimony that specifically refers to documentation (and expressly relies upon on information contained within the identified documentation), the document should be attached as an exhibit.

CPR 39.08 states that: “An exhibit that can be attached conveniently to the affidavit must be attached when it is sworn or affirmed, and an exhibit that cannot be attached conveniently must be filed with the affidavit” (emphasis added). I recognize the opposing party may seek to strike affidavit evidence on the basis that it is, for example, hearsay or critical foundational documents are not attached as exhibits. However,

the fact that inadmissible evidence may be struck does not absolve an affiant of the obligation to properly tender evidence where a prejudicial effect might be that specifically identified documents are being relied upon yet not disclosed and affiants are afforded the opportunity to wait and see if questions are posed during cross-examination; take these questions under advisement and then take additional time to determine what their response might be. Moreover, if the documents are then disclosed, further delay might arise to allow for further cross-examination.

To be clear, I am not attributing any such motive to the defendant in this case. My intention is simply to describe the various problems which may arise if documents which are clearly relevant and specifically identified in an affidavit are not properly tendered. [ 42 ] In my view, and bearing in mind the important policy considerations which influence disclosure demands in a securities class action, documentary disclosure may be compelled prior to cross-examinations in connection with the Leave/Certification Motions if: 1. The defendant elects to file affidavit(

s) in response to the leave and certification motions; 2. The requested document is plainly connected to material allegations contained in the Statement of Claim. Moreover, the allegations must be sufficiently linked to the plaintiff’s cause(

s) of action as to justify disclosure in advance of cross-examination.

A plaintiff may not simply speculate as to potential sources of disclosure and then compel production by simply inserting broad-ranging language into a Statement of Claim. [8] Statements of Claim are to be concise and include those material facts and particulars required to notify an opposing party of the case to be met and to avoid surprise when a party alleging a material fact seeks to prove it. (CPR 38.02 and 38.03) Disclosure request must be related to those material facts in the Statement of Claim which properly ground the causes of action; 3.

The plaintiff does not seek disclosure of background documents or categories of documents that are presumed to exist based on general statements in the affidavit. The Court must be satisfied that the plaintiff is not engaged in a “fishing expedition”. I note that this phrase is typically associated with abusive discovery examinations where a party seeks broad access to private information, hoping to root around and perhaps find some scrap of information that might be helpful to their case. (e.g. Canadian Imperial Bank of Commerce v. Deloitte & Touche , 2013 ONSC 917 at paragraph 65 ).

In a securities class action, the underlying sensitivities to “fishing” become more acute where the threat of “strike suits” looms large. At the same time and in keeping with the “fishing” analogy, if the defendant deliberately baits the hook by filing an affidavit which clearly relies upon specific, discrete documentation, it should not be heard to complain too loudly when the plaintiff bites; 4. The requested disclosure is targeted, focussed, and based upon discrete documentation which is specifically acknowledged and explicitly described in a defendant affidavit.

Again, the Court will carefully compare the disclosure request to the contents of the pleadings and the affidavit, bearing in mind the cautious approach which the policy concerns demand; 5. The party seeking to avoid disclosure may argue that the cost, burden, and delay associated with disclosure is disproportionate to the likely probative value of the document and its importance to the proceeding. In this case, the burden of proof rests with the party alleging that that the disclosure obligations are disproportionate. No such proportionality argument is being made here. (

b) The Plaintiff’s Specific Disclosure Requests [ 43 ] I address each of the Plaintiff’s disclosure requests separately in the below table. Plaintiff Request Decision 1 Current CV of Mr. Regan Denied : The document is not clearly referenced in the affidavit and the disclosure request is based upon the presumption that the document exists. In addition, I agree that the disclosure request is, at this stage (prior to cross-examinations) not yet sufficiently connected to the material facts alleged in the Statement of Claim sufficient to justify disclosure.

Cross- examinations may shed further light on the matter and this decision is not intended to pre-determine any motions arising out of those upcoming cross-examinations. 2 Mr. Regan’s consultancy agreement with Sona made in the spring of 2020 Denied for the same reasons set out in Request 1, above. 3 Mr. Regan’s employment agreement as chief executive officer of Sona made on or about July 8, 2020 Denied for the same reasons set out in Request 1, above.

4 The terms of reference or agreement with MRIGlobal made on or about May 22, 2020 Denied : Paragraph 22 of the Statement of Claim alleges that Sona engaged MRIGlobal on May 22, 2022. The specific nature of the engagement is not clear. The disclosure request is based upon the presumption that the document (terms of reference or an agreement) exists. In addition, I agree that the disclosure request is, at this stage (prior to cross-examinations) not yet sufficiently connected to the material facts alleged in the Statement of Claim sufficient to justify disclosure.

On the issue of MRIGlobal, I also note the plaintiff’s misrepresentations allegations are contained in paragraphs 28 – 33 of the Statement of Claim and are plainly focussed on SaudiVax (not MRIGlobal). In particular, briefly, the plaintiff alleges that Sona engaged with SaudiVax to conduct in-field, independent validation studies of its COVID-19 test. However, Sona subsequently misrepresented the following material facts:

a) SaudiVax was not independent;

b) SaudiVax’s clinical evaluation studies failed to adhere to FDA guidelines released July 29, 2020;

c) SaudiVax’s data was “inappropriate, questionable, inaccurate and/or unreliable”;

d) The failure to submit appropriate data generated by a properly independent clinical evaluation study” resulted in an increased likelihood that the COVID-19 test would not be approved by either FDA or Health Canada. (Statement of Claim, paragraph 42) Cross-examinations may shed further light on this matter and this decision is not intended to pre-determine any motions arising out of those upcoming cross-examinations. 5 Any analytical and/or clinical validation study results received from MRIGlobal on or about July 2, 2020 Denied for the same reasons set out in Request 4, above. 6 Records of the consultation with MRIGlobal and/or FDA, pursuant to which Sona engaged the King Fahd Research Centre Lab at King Abdulaziz University within SaudiVax Denied for the same reasons set out in Request 4, above. 7 The contract between Sona and SaudiVax for clinical trial to be performed in relation to Sono’s COVID- 19 test made on about June 30, 2020 To be disclosed : See Request 6 above, and my comments regarding the allegations in the Statement of Claim around SaudiVax.

In addition, paragraph 44 of Mr. Regan’s affidavit states “On June 30, 2020, Sona and SaudiVax signed a contract for a clinical trial to be conducted on a cost recovery basis and a letter of intent to “pursue discussions on R&D Collaborations”. The request: 1. Is plainly connected to material allegations contained in the Statement of Claim (see my comments regarding SaudiVax; 2. Is sufficiently connected to the plaintiff’s allegations of misrepresentation; 3. Does not amount to a fishing expedition.

Rather, it is targeted, focussed, and based upon a discrete document specifically identified and explicitly described in the affidavit.

8 The letter of intent executed between Sona and SaudiVax that made at or around the same time as the execution of the contract To be disclosed for the same reasons provided in response to Request 7, above. 9 The results of the clinical trial study by SaudiVax received on or about August 25, 2020 To be disclosed : See Request 6 above, and my comments regarding the allegations in the Statement of Claim around SaudiVax. In addition, paragraph 50 of Mr.

Regan’s affidavit states: “By press release dated August 25, 2020, Sona announced that its clinical trial study with SaudiVax achieved a sensitivity of 84.6% and a specificity of 90.0% across 99 clinical patient samples.” Instead of attaching the actual results of the study as an exhibit, Mr. Regan attached a press release which further confirms a commitment to “deliver the results of the study, which is compliment by previously released in-laboratory, analytical results from both the Company [Sona] and MRIGlobal in Kansas City.” However, as indicated, Mr.

Regan only attaches Sona’s press release and not the source, foundational document (i.e., the results of the clinical trial study by SaudiVax). The requested document: 1. Is plainly connected to material allegations contained in the Statement of Claim; 2. Is sufficiently connected to the plaintiff’s allegations of misrepresentation; 3. Does not amount to a fishing expedition.

Rather, it is targeted, focussed, and based upon a discrete document specifically identified and explicitly described in the affidavit. 10 The FDA and any other regulatory guidance used for the evaluation protocol To be disclosed : See Request 6 above, and my comments regarding the allegations in the Statement of Claim around SaudiVax. Paragraph 47 of Mr. Regan’s affidavit states: “Attached as Exhibit “22” is a copy of Sona’s August 6 press release.

As indicated in the August 6 press release, Sona’s evaluation protocol for its clinical studies incorporated the most recent guidance released by regulators such as the FDA. The press release further stated that Sona was committed to a robust evaluation of its Covid 19 test and submitting a comprehensive dataset to the FDA and Health Canada that adheres to its recommended guidance.” However, Mr. Regan only attaches the press release and not the source, foundational document (i.e. guidance from FDA and other regulators which Mr. Regan says were “incorporated” past tense” into Sona’s evaluation protocol).

The requested document: 1. Is plainly connected to material allegations contained in the Statement of Claim; 2. Is sufficiently connected to the plaintiff’s allegation of misrepresentation; 3. Does not amount to a fishing expedition.

Rather, it is targeted, focussed and based upon a discrete document specifically identified and explicitly described in the affidavit. 11 The materials provided to the Board of Directors of Sona in advance of, and the minutes of the meeting of the Board of Directors approving the release of Q3 2020 MD&A and related disclosures Denied : The production request is overly broad and presumes the existence of documents which are not specifically identified in Mr. Regan’s affidavit.

The disclosure request is premature and, at this stage (prior to cross-examinations) is not sufficiently connected to the material facts alleged in the Statement of Claim sufficient to justify disclosure.

12 Records of correspondence from Health Canada advising that the National Microbiology Laboratory had produced discordant results to Sona’s prior analytical and clinical studies conducted by MRIGlobal and SaudiVax To be disclosed : See Request 6 above, and my comments regarding the allegations in the Statement of Claim around SaudiVax. Paragraph 59 of Mr. Regan’s affidavit states that “By press release dated November 30, 2020 and Sona announced that it had received further feedback from health Canada regarding Sona’s application for an interim order authorization.

Health Canada advised that the National Microbiology Laboratory produced discordant results to Sona’s prior analytical and clinical studies content conducted by MRIGlobal and SaudiVax.” As indicated, Mr. Regan only attaches the press release and not the source, foundational documents (i.e. the identified records of correspondence from Health Canada). The requested document: 1. Is plainly connected to material allegations contained in the Statement of Claim; 2. Is sufficiently connected to the plaintiff’s allegation of misrepresentation; 3. Does not amount to a fishing expedition.

Rather, it is targeted, focussed, and based upon a discrete document specifically identified and explicitly described in the affidavit. [ 44 ] Finally, this decision is made solely in response to the Plaintiff’s disclosure request and its scope should be limited to that request. To repeat, it neither pre-determines nor should be taken to decide any future issues which may arise regarding questions posed or requests made at the upcoming cross-examination. Any such issue arising out of cross-examination are obviously better examined when a full record (including transcripts) can be placed before the Court.

Furthermore, this decision neither pre-determines nor should be taken to decide any future motions to either strike affidavit evidence or for leave to introduce new affidavit evidence. Keith, J. [8] In Silver v Imax Corp, 2009 CarswellOnt 7874 , K. van Rensburg, J. observed that: "[t]he statutory leave provision is designed to prevent an abuse of the court's process through the commencement of actions that have no real foundation, actions that are based on speculation or suspicion rather than evidence" (at paragraph 330; leave to appeal refused 2011 ONSC 1035 .)