Wayne Bell v. Bonnie Bell, 2023 SKCA 128

Court of Appeal for Saskatchewan Docket: CACV4156 Citation: Bell v Insulation Applicators Ltd. , 2023 SKCA 128 Date: 2023-11-24 Between: Wayne Bell and Bonnie Bell Appellants (Applicants/Plaintiffs/Defendants by Counterclaim) And Insulation Applicators Ltd., Garth Bell, Grant Bell and Donald Bell Respondents (Respondents/Defendants/Plaintiffs by Counterclaim) Before: Caldwell, Kalmakoff and McCreary JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr. Justice Kalmakoff In concurrence: The Honourable Mr.

Justice Caldwell The Honourable Madam Justice McCreary On appeal from: QBG-RG-00631-2021 (Sask KB), Regina Appeal heard: September 13, 2023 Counsel: Virgil Thomson and Elaine Selensky for the Appellants Calen Nixon for the Respondents Kalmakoff J.A. I.

Introduction [ 1 ] Wayne Bell and Bonnie Bell appeal against a decision in which a Court of King’s Bench judge, sitting in Chambers, dismissed their application for production of documents in an ongoing civil action ( Wayne Bell and Bonnie Bell v Insulation Applicators Ltd., Garth Bell, Grant Bell and Donald Bell (13 February 2023) Regina, QBG-RG-00631-2021 (Sask KB) [ Decision ]).

The appellants say that the Chambers judge erred in assessing the relevance or non-relevance of the documents for which they sought orders of production, and that she failed to engage in a proper proportionality analysis to determine whether production should be ordered where it was uncertain whether the documents in question were relevant. [ 2 ] For the reasons that follow, I would dismiss the appeal. II. Background [ 3 ] Wayne Bell, Garth Bell, Grant Bell, and Donald Bell are brothers. Bonnie Bell is Wayne Bell’s spouse.

Insulation Applicators Ltd. [IAL] is a corporation that did insulation and scaffolding work in the building construction industry. IAL was started by the Bell brothers’ parents in the 1950s and continued to operate as a family-owned business for nearly 65 years. [ 4 ] As is apparent, five of the parties in this case have the surname “Bell”. Accordingly, for the sake of clarity and ease of reference, from this point on, whenever I refer to one of them individually, I will use only their first name.

Also, because Garth, Grant, Donald and IAL are all respondents in this appeal, when I refer to those four parties collectively, I will refer to them as “the Respondents”. [ 5 ] Wayne, Garth, Grant and Donald were equal shareholders in IAL and, beginning in the 1970s, they all worked for the corporation as salaried employees. For most of his career, Wayne was IAL’s president and managed its business office; Garth, Grant and Donald worked in the field as foremen. Bonnie was also employed for more than 40 years as IAL’s bookkeeper.

In more recent times, Wayne and Bonnie’s son, Derek Bell, came to be employed by the company as well. [ 6 ] In late 2017 or early 2018, differences of opinion arose between the Bell brothers about IAL’s future. This was due to a variety of factors that included the company’s fortunes, the Bell brothers’ advancing age, and some individual health concerns. Garth, Grant and Donald also formed the view that Wayne and Bonnie had inappropriately used corporate funds to cover personal expenses and to otherwise benefit themselves, and that they had made improper payments to Derek and other IAL employees.

All of this led to a shareholder meeting on April 16, 2020, at which Garth, Grant and Donald voted to remove Wayne as IAL’s president.

Then, on August 5, 2020, Wayne and Bonnie were terminated from their employment with IAL. [ 7 ] Prior to the termination of Wayne and Bonnie’s employment, Garth, Grant and Donald had hired Virtus Group Chartered Professional Accountants & Business Advisors LLP [Virtus Group] to “review specific transactions undertaken by [IAL] as identified by the Directors” during a certain period, as they related to “charges on the corporate visa card, vacation paid, pension top up amounts, certain vehicle expenses and specific invoices”.

Virtus Group accepted that engagement, reviewed the transactions within that mandate, and issued a report in July of 2020, with an update in April of 2021 [Report]. [ 8 ] The Report concluded that, in the period between May of 2013 and December of 2018, Wayne and Bonnie had used IAL’s corporate credit card to pay for more than $200,000 worth of personal expenses for which they had not reimbursed the corporation. It also

concluded that they had spent the loyalty points accumulated by IAL’s corporate credit card to pay for their personal vacations and to buy themselves airline gift cards. In addition, the Report identified significant discrepancies in relation to Derek’s vacation pay and pension contributions, as well as the vacation pay and bonuses of another employee, Lannette Hanson.

The Report was an important factor in the decision by Garth, Grant and Donald to remove Wayne as president of IAL and in the decision to terminate Wayne and Bonnie’s employment. [ 9 ] After Wayne and Bonnie were dismissed as employees, most of IAL’s assets were sold to RBS Realty Ventures Inc. [RBS Realty]. The agreement for sale was executed on November 27, 2020, and the sale closed in early 2021. [ 10 ] On March 17, 2021, Wayne and Bonnie commenced a civil action against the Respondents by filing a statement of claim.

In it, Wayne and Bonnie asserted that they had been wrongfully dismissed. [ 11 ] Wayne also advanced claims of shareholder oppression under The Business Corporations Act , RSS 1978, c B-10 . Among other things, those claims alleged that Garth, Grant and Donald had: (

i) failed to provide Wayne with disclosure concerning IAL’s business operations and the sale of its assets; (ii) failed to hold regular shareholders meetings; (iii) paid themselves bonuses and other benefits without accounting to Wayne; and (iv) denied Wayne the opportunity to remove personal information from a company computer. Wayne also claimed that Garth, Grant and Donald had breached their respective duties of good faith as directors, by preferring their own interests over those of IAL. [ 12 ] In their statement of defence, the Respondents asserted that IAL had just cause to dismiss Wayne and Bonnie as employees because, among other things, they had: (

i) used company funds and corporate credit cards for personal expenses and purchases, and to accumulate and use travel benefits without accounting to the company; (ii) charged labour and materials to the company for a home renovation project; (iii) falsified timecards for Derek’s benefit and intentionally overpaid him; and (iv) paid vacation pay to themselves and Derek without justification or a proper accounting. [ 13 ] As for the claim of shareholder oppression, the Respondents denied Wayne’s allegations and asserted that he was at all times aware of the direction IAL was taking, including with respect to the sale of its assets, and that any relevant discussion about corporate matters had occurred at properly constituted shareholder meetings which he had either refused to attend or, if he chose to attend, had walked out on.

The Respondents also asserted that Wayne had breached his fiduciary duty as president of IAL, which was the reason for the termination of his employment. [ 14 ] The Respondents also counter-claimed against Wayne and Bonnie in the tort of conversion. They based that claim on the same allegations they had asserted as just cause for the termination of Wayne and Bonnie’s employment. [ 15 ] As the litigation progressed, initial document disclosure took place and dates were scheduled for questioning.

Prior to questioning occurring, however, Wayne and Bonnie formed the view that the Respondents had not disclosed or produced all relevant documents in their possession. Through counsel, they requested that additional documentation be produced, including: all correspondence and text messages between Garth, Grant and Donald and the persons with Virtus Group who had been responsible for preparing the Report; any notes or documents created by Virtus Group during the preparation of the Report; and additional expense receipts, invoices and credit card statements.

The Respondents responded by saying that they would attempt to locate the requested correspondence but refused to disclose Virtus Group’s working papers because they took the view that those documents were irrelevant. They stated that they had otherwise completed disclosure, implying that no further relevant expense receipts, invoices or credit card statements existed. Further correspondence was exchanged between the parties’ lawyers to attempt to sort this disagreement out, but they were unable to resolve the disclosure issues.

Questioning was postponed as a result. [ 16 ] Ultimately, in late October of 2022, Wayne and Bonnie served the Respondents with an application seeking an order, pursuant to Rule 5-12 of what are now The King’s Bench Rules [ Rules ] , for disclosure of the following: 1. … any documentation that would record correspondence between any of Garth Bell, Grant Bell and/or Donald Bell and/or any additional parties, including but not limited to emails, text exchanges, voice mails, videos, written letters, notes or memos that are relevant to the matters raised in these proceedings and that have not yet been disclosed in these proceedings. 2. … any documentation that is relevant to the issue of whether certain expenses referenced within the [Report] were personal expenses or business expenses, including but not limited to summaries prepared by the book keeper of Insulation Applicators Ltd. which indicate what expenses were business expenses, and any documents which are referenced within documents titled “Account

Summary of Transactions” … and/or within documents which purport to be titled: ▪ Insulation Applicators Ltd. RBC Visa Card (*5175) Transaction

Summary Prepared by Virtus Group LLP for Bonnie Bell … and, ▪ Insulation Applicators Ltd. RBC Visa Card (*5290) Transaction

Summary Prepared by Virtus Group LLP for Wayne Bell…. 3. …. any undisclosed monthly paper Visa statements with notations of Bonnie Bell or Lannette indicating the cheque number and dollar figure for personal expenses repaid. 4. … any undisclosed receipts for Visa purchases with the notations of Wayne Bell. 5. … any undisclosed documentation or correspondence as it relates to the creation of the [Report], including any draft reports, undisclosed correspondence with Virtus Group LLP, undisclosed correspondence between the Respondents as it relates to the creation of the [Report] and any documentation provided to Virtus Group LLP which has not been disclosed in these proceedings. 6. … any documentation or correspondence as it concerns the sale of assets by Insulation Applicators Ltd. to RBS Realty Ventures Inc. that have not been disclosed, including documents evidencing what assets were not included in the asset sale to RBS Realty Ventures Inc. and documents evidencing what occurred to these assets. 7. … copies of bank statements for all bank accounts held by Insulation Applicators Ltd. from May 1, 2013 to the present.

8. … copies of the general ledger for Insulation Applicators Ltd. for 2020 - 2021 as well as financial statements for Insulation Applicators Ltd. for 2013, 2020 and 2021. 9. … all documentation as it concerns or relates to all payments made by Insulation Applicators Ltd. to Donald Bell, Grant Bell, and Garth Bell from August 1, 2020 to present. 10. … all timecards completed by Donald Bell, Grant Bell, and Garth Bell and all weekly payroll registries for Insulation Applicators Ltd. from January 1, 2010 to present. [ 17 ] In their notice of application, Wayne and Bonnie also sought an order, pursuant to Rule 5-15, requiring Virtus Group to: … make disclosure of the entirety of their file which relates to the creation of the [Report] including copies of all emails and correspondence with any of Garth Bell, Grant Bell and Donald Bell as it relates to the creation of this report. [ 18 ] In broad strokes, Wayne and Bonnie took the position that the documents for which they sought orders of production were relevant because they spoke to material issues in the litigation, including what communications had been exchanged amongst the Respondents in the lead-up to the preparation of the Report by the Virtus Group, what instructions had been given to the Virtus Group regarding the scope and analytical parameters of the Report, and what documentation the Virtus Group had relied upon in reaching its conclusions.

Wayne and Bonnie also contended that the documentation they sought was relevant to such matters as the accuracy of the Report’s conclusions and the discoverability of the Respondents’ counterclaim against them. Wayne asserted that the documentation relating to the sale of IAL’s assets was material to his claim of shareholder oppression. [ 19 ] The Chambers judge granted only part of the relief that Wayne and Bonnie had sought.

She began her reasons by referring to Rule 5-6(1)(b), which provides that an affidavit of documents “must disclose all documents relevant to any matter in issue in the action” ( Decision at para 3).

She then quoted a lengthy passage from Canadian National Railway Company v Clarke Transport , 2013 SKQB 394 at paras 18–25 , 432 Sask R 63 [ Clarke Transport ], a decision that has been frequently referred to and applied by judges faced with applications for disclosure and production. [ 20 ] The Chambers judge then observed that many of the documents Wayne and Bonnie were seeking had already been provided and broke the remaining requested material down into eight categories.

Those categories, and the conclusions she reached with respect to whether the disclosure orders that Wayne and Bonnie were seeking should be made, can be summarized as follows: (

a) Correspondence, including notes, emails, memos, text messages and letters, between Garth, Grant, Donald and other parties relevant to matters raised in the proceedings : With respect to the documents in this category, the Chambers judge denied the request for disclosure pertaining to communications with third parties, because Wayne and Bonnie had not satisfied her of the material relevance of those communications. However, she ordered that the Respondents disclose any relevant correspondence between Garth, Grant, and Donald that had not yet been disclosed ( Decision at paras 8–9). (

b) Documentation relevant to the question of how the Virtus Group had classified certain expenses as business expenses or personal expenses for the purposes of the Report : The Chambers judge found that documents falling into this category were relevant, because they “were central to [the Respondents’] claim that [Wayne and Bonnie] misused company money for their personal spending” and ordered the Respondents to disclose any such documents in their possession (at para 12). (

c) Undisclosed monthly paper Visa statements and receipts for Visa purchases bearing notations made by Wayne, Bonnie or Ms. Hanson regarding the repayment of personal expenses : With respect to the documents falling into this category, the Chambers judge accepted, based on the evidence before her, that the Respondents had already disclosed everything in their possession, and that she could not order them to “produce what they do not have” (at para 17). (

d) Documentation or correspondence related to the creation of the Report : The Chambers judge accepted that the Respondents had provided all reports prepared by Virtus, and rejected Wayne and Bonnie’s request for draft reports, saying that she was “not satisfied that draft reports are materially relevant” (at para 18). (

e) Documentation or correspondence relating to the sale of IAL’s assets to RBS Realty : Under this category, the Chambers judge found that the relevant sale agreement had already been disclosed, and rejected Wayne and Bonnie’s assertion that the Respondents must have more documents related to the sale of IAL’s assets in their possession, saying “on the evidence before me, I cannot conclude there were more” (at para 19).

She also addressed Wayne and Bonnie’s request for additional bank statements by noting that they had already received a statement of IAL’s account from RBC Dominion and that delaying questioning to order production of more recent statements would be counterproductive, because “details about what assets were not sold and any value that might be placed on those assets is better explored at questioning” (at para 20). (

f) Company bank statements from May 1, 2013, to the present : Wayne and Bonnie had argued that such documents were necessary to reconcile the amounts they said they had repaid to IAL for the personal expenses they had charged to the company. The Respondents took the position that they had already disclosed any cancelled cheques reflecting such repayment that were in their possession. The Chambers judge dismissed Wayne and Bonnie’s application as it related to these documents, saying that she found this to be an “over-broad request that the plaintiffs have not satisfied me is warranted” (at para 22). (

g) Documentation relating to all payments made by the company to Garth, Grant and Donald, from August l, 2020 to present : The Chambers judge recognized that documents of this sort would be materially relevant to Wayne’s claim of shareholder oppression but noted that he had not requested production of it prior to bringing the application. Given that the Respondents had provided IAL’s 2020 general ledger in their response material and had indicated a willingness to provide the 2021 general ledger, the Chambers judge concluded that an order for disclosure of these items was not necessary (at paras 23–24). (

h) Garth, Grant and Donald’s timecards from January 2010 to present : Under this category, the Chambers judge acknowledged Wayne’s argument that such documents were relevant to the claim of shareholder oppression because he had asserted in the pleadings that Garth, Grant and Donald had depreciated the value of his shares in IAL by submitting false timecards. However, she found that the request

for disclosure was overbroad because Wayne and Bonnie had “not explained why they need records going back ten years” (at para 25). [ 21 ] The Chambers judge concluded by observing that, given what had already been disclosed, and what she had ordered, questioning would “fulfill its mandate, paving the way for the parties to get clarification, request additional documents and move the matter along” (at para 26). [ 22 ] In a fiat dated April 27, 2023, Tholl J.A. granted leave to Wayne and Bonnie to appeal against the Decision ( Bell v Insulation Applicators Ltd. (27 April 2023), CACV4156 (Sask CA)). III.

Issues and standard of review [ 23 ] Decisions about whether to order disclosure or production of documents involve the exercise of a discretionary power ( L.(G.) v Canada (Attorney General) , 2004 SKCA 137 at para 17 , [2005] 3 WWR 445 [ L.(G.) ]; Jorgenson v ASL Paving Ltd. , 2007 SKCA 143 at para 25 , 302 Sask R 281 [ Jorgenson ]; Mamchur v Sun Country Health Region , 2017 SKCA 6 at para 9 ).

Where an appeal is taken from such a decision, the applicable standard of appellate review is dictated by the nature of the error alleged (see: Abrametz v Law Society of Saskatchewan , 2023 SKCA 114 at paras 22–30 ; Stromberg v Olafson , 2023 SKCA 67 at paras 120–121 ; MacInnis v Bayer Inc., 2023 SKCA 37 at paras 38–39 ; Kot v Kot , 2021 SKCA 4 at para 20 , 63 ETR (4th) 161; and Taylor v Moose Jaw Downtown and Soccer/Field House Facilities Inc. (Mosaic Place) , 2021 SKCA 123 at para 14 ).

Questions of law are reviewed on a correctness standard, while questions of fact and questions of mixed law and fact are reviewed on a standard of palpable and overriding error.

In the present circumstances, this means we may only intervene “if we are persuaded that the Chambers judge made a palpable and overriding error in her assessment of the facts (including by misapprehending or failing to consider material evidence), or if she made a legal error by failing to correctly identify the legal criteria which governed the exercise of her discretion or by misapplying those criteria” ( Arkell v Komodowski , 2023 SKCA 79 at para 44 ). [ 24 ] Wayne and Bonnie allege that the Chambers judge made various errors that are sufficient to open the door to appellate intervention in this case.

I would group those allegations of error into four general types: (

a) Failure to apply the correct legal standard to the determination of whether the documents in question were relevant to a matter in issue between the parties; (

b) Misapprehension of evidence bearing on the determination of document relevance; (

c) Failure to order production of documents that she had determined were relevant; and (

d) Failure to consider and apply a proportionality analysis to determine whether disclosure was appropriate where documents were neither clearly relevant nor clearly irrelevant.

I would note that any of these alleged errors, if made out, would provide a basis for appellate intervention, as they all suggest either the misidentification or misapplication of legal criteria governing the exercise of discretion, or palpable and overriding errors in the assessment of the facts. [ 25 ] The Respondents contend that the Decision demonstrates no error that would permit interference with the Chambers judge’s exercise of discretion.

They point out that Wayne and Bonnie bore the onus of identifying with sufficient precision what documents they say the Respondents had improperly failed to disclose, and why those documents were relevant. They submit the Chambers judge’s reasons demonstrate that she correctly understood the legal test she was to apply, and properly concluded that Wayne and Bonnie either had not satisfied her of the relevance of the documents they sought or had not demonstrated that an order was necessary to ensure that proper disclosure took place. IV. Analysis A.

The governing legal principles [ 26 ] The law has long recognized that parties to civil actions have an obligation to disclose to other parties to the litigation all relevant documents in their possession, and to produce those documents, subject to privilege or other recognized exceptions (see: Spencer v Canada (Attorney General) , 2000 SKCA 96 at paras 13–15 , [2001] 7 WWR 476; and Saskatchewan Crop Insurance Corporation v Rick Peterson Farms Ltd. , 2019 SKCA 19 at para 19 , [2019] 3 WWR 602). This obligation is incorporated in

Part 5 of the Rules , which is titled “Disclosure of Information”. [ 27 ] The purpose of

Part 5 is set out in Rule 5-1, which reads as follows: 5-1

(1) Within the context of rule 1-3, the purpose of this

Part is: (

a) to obtain evidence that will be relied on in an action; (

b) to narrow and define the issues between parties; (

c) to encourage early disclosure of facts and documents; (

d) to facilitate evaluation of the parties’ positions and, if possible, resolution of issues in dispute; and (

e) to discourage conduct that unnecessarily or improperly delays proceedings or unnecessarily increases the cost of them.

(2) The Court may give directions or make any orders necessary to achieve the purpose of this Part. [ 28 ] As can be seen, Rule 5-1(1) ties the operation of

Part 5 to the fundamental purpose and intention of the Rules , as set out in Rule 1-3, which is to provide a means by which claims can be justly resolved in a court process in a timely and effective way by, among other things: identifying the real issues in dispute; facilitating the quickest and least expensive means of resolving a claim; encouraging parties to resolve the claim as early as possible in the process; communicating honestly and openly in a timely way; and providing an effective, efficient and credible method of enforcing the Rules and orders and judgments. [ 29 ] The obligation of parties to provide disclosure and production of documents is further specified in Rules 5-5 and 5-6.

Rule 5-5 requires every party to an action to serve an affidavit of documents on each of the other parties in accordance with prescribed time periods. Rule 5-6 speaks to the form and content of an affidavit of documents. Of particular importance in the circumstances at hand, Rule 5-6(1) (

b) provides that an affidavit of documents must “disclose all documents relevant to any matter in issue in the action”. [ 30 ] Rules 5-6(2) and (3) set out the other information that an affidavit of documents must contain. In general terms, those subrules require each party to specify what documents they have in their possession, to specify which documents they object to disclosing, and to provide the basis for any objection. Parties must also specify what documents they once had, but no longer have, in their possession, when they last had them and, if known, the present location of such documents. Rule 5-6(2)(

e) places an obligation on parties to ensure completeness of disclosure, by specifying that they “[do] not have and [have] never had any other document relevant to any matter in issue” in their possession, custody or control, apart from those mentioned in the affidavit of documents. Rule 5-6(3) also requires that parties state in their affidavits of documents if they “[do] not have and [have] never had any documents relevant to any matter in issue” in their possession. [ 31 ] Rule 5-8 sets out the requirements for listing and describing documents.

Rule 5-9 provides that an affidavit of documents must be sworn or affirmed by the party or a suitable representative and, where the party is represented by a lawyer, that the lawyer must certify that they have explained to the person swearing or affirming the affidavit the “necessity of making full disclosure of all documents relevant to any matter in issue in the action” and “what kinds of documents are likely to be relevant to the allegations made in the pleadings” (Rule 5-9(3)). [ 32 ] Rule 5-10 speaks to the ongoing nature of the obligation to disclose.

It requires a party who has already served an affidavit of documents to immediately notify other parties if “the first party finds, creates or obtains possession, custody or control of a document relevant to any matter in issue not previously disclosed”, and to provide a supplementary affidavit of documents to the other parties (Rule 5-10(1)). [ 33 ] Rule 5-11 incorporates the duty of a party to make any document referred to in an affidavit of documents available to other parties for inspection upon request. [ 34 ] Rule 5-12 is engaged when it is alleged that a party has failed to meet their obligations with respect to document disclosure or production.

It reads, in relevant part, as follows: 5-12

(1) A party desiring production of documents may apply to the Court for an order mentioned in subrule (2) if any party: … (

b) has served an affidavit of documents that is not satisfactory to a party entitled to be served with that affidavit; … (

d) having been served with a notice to produce documents pursuant to rule 5-11, has neglected or refused to produce any document mentioned in that notice; (

e) has neglected to give notice to inspect documents or, having given that notice, has neglected or refused: (

i) to produce the documents for inspection; (ii) to permit the lawyer for the other party to make copies of the documents; or (iii) to furnish the lawyer for the other party with copies of those documents on payment of the proper fees; … …

(2) In the circumstances mentioned in subrule (1), the Court may make any of the following orders: (

a) an order requiring the other party to produce documents; (

b) an order for further or better production of documents; (

c) an order for inspection; (

d) an order determining whether documents with respect to which privilege is claimed are in fact privileged.

(3) In an order made pursuant to subrule (2), the Court may make an order for production or inspection of documents in any manner that the Court thinks just. …

(5) On any application pursuant to subrule (1), the Court may permit cross-examination under oath or affirmation of a party on the original

or any supplementary affidavit of documents. … [35] As is apparent from the foregoing, the framework for disclosure and production provided in the Rules reflects the fact that, inmodern litigation, document discovery is one of the most important tools available to parties in the pre-trial process. Prompt and completedocumentary disclosure fosters the goals of narrowing and defining the issues between the parties and encouraging timely and cost-effective resolution of cases.

Moreover, in many civil cases, documents will be the most reliable evidence of what occurred between theparties before, during and after the events that underpin the dispute.

Documents will often be the best indicator of what the parties’intentions were, where intention is in issue, and will frequently be useful at trial in correcting or challenging the memory of witnesses (see:generally, Halsbury’s Laws of Canada, Civil Procedure at HCV-161 “Procedure” (2021 Reissue) [Halsbury’s]). [36] Each party to a civil action has an obligation to examine its own records and to determine what documents are relevant andmaterial for the purpose of disclosure (Attila Dogan Construction and Installation Co.

Inc. v AMEC Americas Limited, 2012 ABCA 379at para 14; Canadian Trade International Inc. v Klein, 2016 SKQB 304 at paras 18-19 [Klein]). [37] The duty to disclose is not without its limits.

In addition to exceptions based in various forms of privilege, which are not at issuehere, a party’s disclosure obligations are circumscribed by the concept of relevance. [38] Under the former version of the Rules, in which Rule 212(1) compelled parties to disclose documents “relating to any matter inquestion”, the test was one of broad relevance, meaning that disclosure was required so long as the document in question could “directlyor indirectly advance one’s case, or destroy that of one’s adversary, or lead to a train of inquiry which may have either of theseconsequences” (Jorgenson at para 29; see also: Steier v University Hospital Board, (SK CA), [1988] 4 WWR 303 (SaskCA) at para 5; and L.(G.) at para 19). [39] As mentioned above, Rule 5-6(1)(

b) now requires that an affidavit of documents “disclose all documents relevant to any matterat issue in an action” (emphasis added). This change in wording from the former Rules means that the present regime for discovery – bothdocumentary and oral – is narrower and more focused than was the case under old Rules (see: Omorogbe v Saskatchewan PowerCorporation, 2022 SKCA 116 at para 49, 473 DLR (4th) 712), and that relevance will generally be determined with reference to theelements of the causes of action and the defences asserted in the pleadings.

This concept was explained by Scherman J. in ClarkeTransport, where he wrote: [18] I am satisfied that when this Court moved from the words of touching and relating to any matter in issue, it intended to moveaway from the broad relevance test that existed under the former Queen’s Bench Rules.

Concerns existed in Saskatchewan, as in otherjurisdictions, that the broad relevance test did not strike a proper balance between the considerations of efficiency, timeliness in theconduct of litigation and cost control on the one hand with the counterbalancing interests of litigants and counsel in ensuring that allpotentially relevant information was known. [19] This conclusion is reinforced by foundational Rule 1-3 which expressly provides that the purpose of the rules is to provide ameans by which claims can be justly resolved in a court process in a timely and cost effective manner and that the rules are intended to beused to identify the real issues in dispute, to facilitate the quickest means of resolving a claim at the least expense and to provide aneffective, efficient and credible system of remedies and sanctions to enforce the rules.

Proportionality and striking an appropriate balanceare now essential considerations in all aspects of the Rules. [20] A commonly stated approach to the concept of relevance asks the question - Does the evidence offered, as a matter of logic andhuman experience, tend to prove or disprove a fact in issue? It needs to be noted that this iteration of relevance melds the distinct conceptsof relevance and materiality into one omnibus concept of relevance that defines relevance by specific reference to a matter in issue. [21] There are two components to this melded concept: i. The component of logical relevance.

Does the proffered evidence tend as a matter of logic and human experience to prove or disprovethe fact or matter for which it is offered; and ii. The component of whether the fact or matter is in issue in the action. This is the distinct realm of materiality. [22] What determines whether a fact or matter is material are the elements of the cause(

s) of action and what the parties have pled asbeing the facts or their positions. Only if the matter is in issue in the action is the matter material, in a jurisprudential sense. If the matterqualifies as being material to the action, the next question is whether the evidence being proffered tends to prove or disprove the matter inissue. If the question does not relate to a matter in issue as particularized by the pleadings, then the matter is not relevant to any matter inissue. (Emphasis in original) See also: R.J. England Consulting Limited v Palantir Property 2001 Inc., 2014 SKQB 65 at paras 13–25, 439 Sask R 255; Knisley vPrairie Machine & Parts Mfg.

(1978) Ltd., 2016 SKQB 198 at paras 10–11; C.B. v J.B., 2017 SKQB 251 at paras 12–15; Klein at paras16–19; Surespan Construction Ltd. v Saskatchewan, 2014 SKQB 298 at paras 14–17, 454 Sask R 205; and Canadian Pacific RailwayCompany v Saskatchewan, 2022 SKQB 28 at paras 140–142, [2022] 3 WWR 495. [40] The other side of this coin, of course, is that parties are not required to disclose irrelevant documents.

Notwithstanding thatRule 5-2 provides that the mere disclosure of a document is not an agreement or an acknowledgment that it is “admissible or relevant toany matter in issue” – which may be read as suggesting that it is prudent to err on the side of more disclosure rather than less – parties are“not obliged to (and should not) disclose or produce a document that is irrelevant to a proceeding” (Halsbury’s at HCV-163). [41] In any civil action - especially in the early stages - the pleadings will be the primary basis for determining relevance. The Rulesencourage parties to take a generous approach to disclosure.

However, even under the former “broad relevance” test, the authorities held

that documents whose “connection to the issues is too far removed, or at least is not yet established” are not relevant (see, for example: RSB Logistic Inc. v Tam International Inc. , 2006 SKQB 317 at para 8 , 283 Sask R 199 [ RSB Logistic ]).

The jurisprudence that has developed under the current Rules suggests that documents must have “some degree of genuine relevance” to be caught within the net of a party’s disclosure obligation ( S.B.R. v L.L.R. , 2018 SKQB 177 at para 31 [ S.B.R. ]; May v Saskatchewan Power Corporation , 2021 SKQB 299 at para 19 ; Tomcala v Input Capital Corp., 2022 SKQB 89 at para 9 [ Tomcala ]). [ 42 ] If a document has not been disclosed or produced, the party seeking to have it disclosed or produced bears the onus of persuading the court of its relevance.

This requires establishing that there is a discernible reason for concluding that the document is relevant to a matter in issue in the action ( RSB Logistic at paras 11–13 ). Once a document is determined to be relevant and is disclosed, the general presumption is that it must be disclosed in its entirety ( Tomcala at para 13 ). [ 43 ] In an application under Rule 5-12, where the relevance of a requested document is clear, and there is no proper basis to withhold it, such as a valid claim of privilege, the court should order disclosure.

Likewise, where a document is clearly irrelevant, the court should not order its disclosure. However, where the relevance of a document is uncertain or marginal, “proportionality considerations such as litigation efficiency and cost control may be the deciding factor” ( S.B.R. at para 31 ). In Clarke Transport , Scherman J., whose reasoning I accept as an apt description of the proper approach, described the contours of the proportionality analysis in this context as follows: [23] Materiality and relevance are concepts that do not have rigid boundaries.

The debate about whether a broad or narrow relevance test should be applied demonstrates that the concept of relevance can be applied narrowly and rigidly or broadly and with some flexibility. While delineating the boundaries of whether or not a matter is material can often be done with greater precision that delineating what is relevant, nonetheless materiality is not always clear cut.

A matter may fall outside the mark of clear materiality but remain debatable. [24] Where materiality or whether a matter is in issue and relevance fall into ranges where the matter is debatable, the decision whether a question or production demand is proper may need to address the proportionality considerations that flow from the principles outlined in the foundational rules. [25] If a matter is of only debatable, potential or marginal materiality or relevance then it is appropriate for the court, in making its decision and exercising its discretion, to do a cost/benefit analysis taking into account the considerations outlined in the foundational rules.

Where the materiality or relevance is uncertain, the cost imposed in time, expense or burden is significant or the benefit limited or unknown then proportionality considerations may well be the deciding factors. [ 44 ] However, this does not mean that a judge faced with an application for disclosure under Rule 5-12 must engage in a proportionality analysis in every case. The proportionality analysis is only required where the party seeking disclosure can establish that a document or documents have some potential relevance but falls short of establishing clear relevance.

If the party has not established any potential relevance, no proportionality analysis is required. [ 45 ] Moreover, disclosure is not a “one and done” proposition. In some cases, the relevance of certain documents may not initially be apparent, or may emerge only as the proceedings unfold, for example, as additional events occur, as circumstances change, or as new details arise from questioning. Nothing prevents a party from advancing or renewing disclosure requests once new information that may assist in assessing relevance comes to light.

And, as the Rules and the jurisprudence provide, the obligation to disclose relevant material continues throughout the life of an action. [ 46 ] At the bottom line, where a party brings an application alleging that another party has failed to make proper disclosure, the onus is on the applying party to identify with sufficient precision the documents they say have not been disclosed and to provide a basis, with reference to issues raised in the pleadings, for why those documents are relevant or potentially relevant. B.

The principles applied [ 47 ] With those principles firmly in mind, I turn now to address the arguments raised by Wayne and Bonnie in this appeal. They submit that the Chambers judge erred by applying a standard that was too onerous when determining whether the documents they were seeking were relevant because she required them to identify with excessive precision the documents they alleged were being improperly withheld.

Wayne and Bonnie also contend that the Chambers judge materially misapprehended the evidence in assessing whether the documents were relevant to matters in issue in the action, and that she failed to properly turn her mind to the question of proportionality where the relevance of the documents was not clear. [ 48 ] I do not accept these arguments. [ 49 ] First, I do not see the Chambers judge as having applied an improper standard to the determination of whether the documents that Wayne and Bonnie were requesting were relevant.

In my view, by drawing on the principles set out in Clarke Transport , the Chambers judge instructed herself appropriately with respect to the law that governed the exercise of her discretion. She recognized that Wayne and Bonnie bore the onus of persuading her that the documents they sought likely existed, and that the documents had some degree of genuine relevance. The Chambers judge’s reasons demonstrate that she understood that this called for more than simply speculation on Wayne and Bonnie’s part.

It required them to establish a discernible basis for concluding that the documents they sought existed, and a legitimate reason for why they were relevant. [ 50 ] Second, I do not agree that the Chambers judge materially misapprehended the evidence.

While she could have been clearer in terms of her references to the evidence, I see nothing in the Decision that suggests she misunderstood the nature of the disclosure that Wayne and Bonnie were seeking or the nature of the evidence that spoke to its relevance or lack of relevance. [ 51 ] Third, I reject the notion that the Chambers judge was required to default to a proportionality analysis in each instance where she had concluded that Wayne and Bonnie had not succeeded in demonstrating clear relevance.

As I read the Decision , where the Chambers judge found that the relevance of certain documents had not been established, she declined to conduct a proportionality analysis because she concluded that Wayne and Bonnie had not met the burden of demonstrating even the potential relevance of the documents

they were seeking. As I have explained, a proportionality analysis is not required in those circumstances. [ 52 ] Let me put some meat on the bones of those conclusions. [ 53 ] I begin with the observation that the Chambers judge concluded that Wayne and Bonnie had failed to satisfy her that four particular groups of documents had any degree of relevance, namely: (

i) the correspondence between Grant, Garth and Donald and third parties; (ii) the draft reports prepared by Virtus Group; (iii) IAL’s bank statements from 2013 to the present; and (iv) Grant, Garth and Donald’s timecards dating back to 2010.

Those conclusions about the absence of relevance are findings of mixed law and fact, and I am unable to see any palpable and overriding error in them. [ 54 ] With respect to the Virtus Group draft reports and third-party correspondence in particular, Wayne and Bonnie asserted that what they were seeking was any communication between the Respondents and Virtus Group that related to the instructions Virtus Group was given respecting the preparation of the Report, and any communication between the Respondents and RBS Realty in relation to the sale of IAL’s assets.

Wayne and Bonnie contend that either electronic or written documentation of such communication must exist, and that communication of this sort, and the draft reports, would clearly be relevant to understanding how Virtus Group had reached the conclusions it expressed in the Report. They also contend that communication of this nature would be relevant to determining how IAL and its assets were valued in the sale to RBS Realty.

Wayne and Bonnie say the Chambers judge erred by finding that they had failed to satisfy her of the material relevance of the documents falling into this category, because they had identified a clear issue to which they were obviously relevant, and it would “strain credulity” to conclude that no such documents or communications existed. [ 55 ] I cannot accept Wayne and Bonnie’s arguments on this point.

As it relates to the documents falling into this category, there was evidence before the Chambers judge, in the form of Grant’s affidavit, that any documentation of the Respondents’ communications with Virtus Group had already been disclosed and that any draft reports that might have been prepared were Virtus Group’s work product only and had not been exchanged with the Respondents. As for any communications with RBS Realty respecting the sale of IAL’s assets, I would note that the sales agreement between those two parties was disclosed.

There is no suggestion that the sale to RBS Realty was anything other than an arm’s length sale, and Wayne and Bonnie had not pointed to any evidence which could support a conclusion that negotiations respecting the sale were documented or, if they were, how such negotiations would be relevant to a matter in issue in the action.

In short, there was a clear basis, supported by the evidence, for the Chambers judge to have concluded that Wayne and Bonnie had not established the probable existence of any relevant undisclosed documents of this sort. [ 56 ] With respect to IAL’s bank statements dating back to 2013, and the timecards filed by Garth, Grant and Donald dating back to 2010, while it might have been possible for the Chambers judge to have concluded that documents of that nature had relevance in light of the pleadings, a fair reading of the Decision is that she determined that Wayne and Bonnie had failed to identify with any precision how those documents would be materially relevant to a particular matter in issue.

In short, the Chambers judge properly understood that an application for disclosure under Rule 5-12 calls for the party seeking undisclosed documents to identify those documents with sufficient particularity to permit the judge to critically assess their relevance.

As I read the Chambers judge’s reasons, she understood that onus and found that Wayne and Bonnie had failed to meet it with respect to these documents. [ 57 ] I am also not persuaded that the Chambers judge erred by declining to engage in the proportionality analysis set out in Clarke Transport with respect to the documents mentioned in the preceding paragraphs.

Given her conclusion that no degree of relevance had been established with respect to these documents, there was no need to consider proportionality, which comes into play only where the documents have “potential”, but not “clear” relevance. [ 58 ] As to the request for credit card statements and receipts, the Chambers judge declined to order disclosure because Wayne and Bonnie had not established to her satisfaction that any documents existed beyond those already disclosed.

This finding is factual in nature and there is no basis in the record to interfere with it. [ 59 ] With respect to the additional documentation that Wayne and Bonnie sought concerning the sale of IAL’s assets, the Chambers judge similarly found that there was no evidence before her upon which she could conclude that any relevant undisclosed documents in that category existed. This is again a factual finding that is entitled to deference in the absence of palpable and overriding error, and I see no error of that sort given the evidence that was before the Chambers judge.

Moreover, even if such documents existed and were potentially relevant, I would not interfere with the Chambers judge’s conclusion that the matter of the existence and relevance of such documents could be more fully explored during questioning.

Viewed from a proportionality perspective, I cannot say that deferring to questioning was an inappropriate exercise of her discretion. [ 60 ] Finally, with respect to IAL’s general ledger, I would note that, as the Respondents pointed out, this was a document that Wayne and Bonnie had not requested prior to making their application, so it could not be said that the Respondents had refused to disclose it. In addition, at the hearing before the Chambers judge, the Respondents indicated that they had no objection to disclosing up-to-date information and records pertaining to IAL’s finances.

Considering that and bearing in mind that making a disclosure order under Rule 5-12 is a discretionary decision, I see no error in the way the Chambers judge dealt with this document.

Furthermore, even if it was an error for the Chambers judge to have not ordered disclosure of something that she agreed was relevant, it did not affect the bottom-line result, because everything pointed to a conclusion that the Respondents would voluntarily disclose this document and, if they failed to do so in a timely way, Wayne and Bonnie could pursue the matter through questioning or by bringing a new application under Rule 5-12. [ 61 ] In short, the onus was on Wayne and Bonnie to demonstrate that the documents they were seeking existed and were relevant or potentially relevant.

A failure on their part to meet the onus of establishing relevance did not mean that the requested documents, by default, fell into the category of “potentially relevant”. It was up to Wayne and Bonnie to establish potential relevance as well. Given that they failed to do so, there was no need for the Chambers judge to engage in a proportionality analysis. [ 62 ] Accordingly, I find no basis to interfere with the Decision . V. Conclusion

[ 63 ] For the foregoing reasons, I would dismiss the appeal. The Respondents are entitled to one set of shared costs for the appeal, and one set of shared costs for the leave application, each calculated in the usual way. “Kalmakoff J.A.” Kalmakoff J.A. I concur. “Caldwell J.A.” Caldwell J.A. I concur. “McCreary J.A.” McCreary J.A.