STEWART v TIMBER BEAR DEVELOPMENTS LTD, 2017 ABQB 594
5.1: Purpose of this Part (Disclosure of Information)
5.17: People who may be questioned
5.18: Persons providing services to corporation
5.2: When something is relevant and material
This was an Application to compel further and better records, to compel witnesses to attend Questioning, and to compel answers to Undertakings. The underlying Action was with respect to a share purchase agreement between the Plaintiff, as vendor, and the Plaintiff’s brothers, as purchasers. The dispute chiefly concerned the interpretation of an option clause in the agreement which had been changed during the course of negotiation of the sale.
The Plaintiff sought to compel one of the Defendants to re-attend Questioning for a third time, but provided no authority to do so and very limited arguments why such an Order should be made. Master Wacowich noted that Rule 5.1 dictates that the purpose of Questioning is to narrow the issues in dispute and to discourage conduct which unnecessarily lengthens the proceedings. Given that the issue in dispute was narrow, specifically the interpretation of one clause of the agreement, Master Wacowich held that the Defendant being compelled to attend Questioning for a third time did not achieve the objectives under the Rules and declined to make the requested order.
The Plaintiff also sought to compel an accountant who had provided services to the corporation to attend Questioning pursuant to Rule 5.17 or 5.18, and sought full access to the accountant’s records. The Plaintiff argued that the accountant was an “auditor” under the meaning of Rule 5.17(1)(e). Master Wacowich ruled that, while the accountant may be an auditor, ultimately the evidence sought to be gained was not relevant and material pursuant to Rule 5.2, as it would not “significantly help determine one or more of the issues in the pleadings”.
The Master also held that Rule 5.18 was not satisfied in respect of the accountant, as the evidence sought to be obtained was already the subject of Undertakings requested of an officer of the Defendant corporation. Consequently, the Questioning would only cause additional expense and delay. The Master noted that unrestricted access to discovering non-parties to the litigation leads to “discovery abuse, increased costs, delay and unfairness to the non-parties”, and therefore also applied Rule 5.1 to bar the Questioning.
Finally, the Master determined that the Undertakings sought to be compelled by the Plaintiff were either satisfied or were not relevant. Master Wacowich therefore dismissed the Application in its entirety.