Defendant to pay substantial indemnity costs after failing to comply with disclosure obligations

Plaintiff employee worked for defendant employer as insurance agent and signed employment agreement that provided him with right to purchase his book of business. Employee resigned and wanted to purchase book of business but claimed that employer, employer and its sole shareholder, actively frustrated his ability to do so. Employee brought action for damages. On advice of counsel, employer refused to answer questions posed on examination for discovery related to their production of documents based on purported waiver of solicitor and client privilege. Employee successfully brought motion to compel employer to answer questions. Employer was ordered to reimburse employee for amounts he paid to consultant for forensic review of email communications and for costs of motion on substantial indemnity basis. Employer appealed. Appeal dismissed. Evidence that employer relied on did not support assertion that they complied with their documentary discovery obligations under prior court order. Employee was not conceding that employer complied with their production obligations and relied on review to argue opposite. It was clear that if employee had known that employer was not complying with their production obligations and had not reviewed email backup tapes, their position with respect to initial costs of forensic review would have been very different. Motion judge’s order did not finally determine issue of who was to pay for costs of forensic review as order made it clear that those costs could be readjusted at trial. Employer’s procedural fairness point had no merit as motion judge did not decide motion on basis that parties had no notice.
Verge Insurance Brokers Ltd. v. Sherk (2017), 2017 CarswellOnt 3839, 2017 ONSC 1597, H. Sachs J., Stewart J., and Spies J. (Ont. Div. Ct.); affirmed (2016), 2016 CarswellOnt 10212, 2016 ONSC 4007, Turnbull J. (Ont. S.C.J.).