Noland v. Organo Gold Enterprises Inc.

2012 BCSC 493 Noland v. Organo Gold Enterprises Inc.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Noland v. Organo Gold Enterprises Inc., 2012 BCSC 493 Date: 20120403 Docket: S123785 Registry: New Westminster Between: James Noland Jr. Plaintiff And Organo Gold Enterprises Inc., Bernardo Chua, Shane Morand and Jamie Foo Defendants - and - Docket: S106359 Registry: Vancouver Between: Organo Gold Enterprises Inc., and Organo Gold International Inc. Plaintiffs And Serenigy Global Inc. Defendant Before: The Honourable Mr. Justice N. Brown Reasons for Judgment Counsel for James Noland Jr. and Serenigy Global Inc.: P. C.M. Freeman, Q.C. J.A. Dutton Counsel for Organo Gold Enterprises Inc., Organo Gold International Inc., Bernardo Chua, Shane Morand and Jamie Foo: E. L. Montague S.O. May Place and Date of Hearing: New Westminster, B.C. February 7 and 8, 2012 Place and Date of Judgment: New Westminster, B.C. April 3, 2012 Table of Contents I. Applications and history of the actions. 5 II. Factual background.. 6 A. Documents requested by Noland. 7 III. Law -- Mareva Injunctions. 8 A. Does Mooney support Noland's application to list assets?. 11 IV. Application -- Mareva Injunction.. 12 A. Has Noland established a prima facie case?. 12 1. How strong is Noland's claim of an unwritten partnership?. 12 a) Are any markers of a partnership present?. 13 2. Organo Gold's position on the existence of a partnership. 15 3. Findings on whether

Noland has established a prima facie case. 16 a) Assuming the existence of a partnership, does the exit of a partner end their entitlement to fees and commissions?. 18 B. Irreparable harm -- is there a risk Organo Gold will dissipate assets or remove them from the jurisdiction?. 20 1. Noland's position. 20 2. Organo Gold's position. 23 C. Does the balance of convenience favour the granting of an injunction?. 24 D. Conclusion - Mareva injunction. 26 V. Preservation order Rule 10-1 of the Supreme Court Civil Rules. 26 VI. Production of non-commercially sensitive documentation.. 27 A. Legal principles - disclosure of documents under the Supreme Court Civil Rules. 28 B. Documents requested by Organo Gold from Noland. 32 C. Documents requested by Organo Gold from Serenigy. 34 D. Documents requested by Noland/Serenigy from Organo Gold. 35 VII. Production of commercially sensitive documentation.. 37 A. Positions of the parties. 38 1. Noland/Serenigy. 38 2. Organo Gold. 40 B. Commercially sensitive documentation in Noland's possession. 40 1. Communications in 2009 between Noland and Organo Gold's distributors, consultants, suppliers and employees. 40 2. Communications between Noland and ganoderma suppliers for Organo Gold or Serenigy. 41 C. Commercially sensitive documentation in Serenigy's possession. 47 D. Commercially sensitive documentation in Organo Gold's possession. 49 VIII.

Examination for discovery costs thrown away. 51 IX. Costs on these applications. 51 X. Conclusion.. 51 I. Applications and history of the actions [1] The plaintiff, Mr. James Noland Jr. ("Noland"), seeks the following: (a) a Mareva Injunction; or (b) in the alternative, an order for preservation of assets pursuant to Rule 10-1(2) of the Supreme Court Civil Rules, B.C. Reg. 168/2009 [Supreme Court Civil Rules]; and (c) an order requiring the defendants, whom I will denominate shortly, to deliver certain documents within 14 days, and, in the event of their non-compliance, an order striking their defence pursuant to Rule 22-7(5) of the Supreme Court Civil Rules. [2] Noland filed his writ of summons November 24, 2009 to start action S123785. He filed a statement of claim March 5, 2010, and amended it October 26, 2010. The defendants Organo Gold Enterprises Inc. ("OGE"), Bernardo Chua ("Chua"), Shane Morand ("Morand"), and Jamie Foo ("Foo") filed their statement of defence and counterclaim March 30, 2010. I will refer to Noland's claim and the counterclaim made by OGE, Chu, Morand and Foo as the "Noland Action". [3] OGE and Organo Gold International Inc. ("OGI") jointly commenced action S106359 against Serenigy Global Inc. ("Serenigy"), a company owned by Noland, on September 24, 2010 by filing a notice of civil claim. OGE operates Organo Gold's business in Canada. OGI operates

Organo Gold's business in the United States. [4] Serenigy filed its response to civil claim on April 19, 2011. I will refer to this action, which shares elements of the defence and counterclaim in the Noland Action, as the "Serenigy Action". [5] Unless the context calls for specific reference to one or more of OGE, OGI, Morand, Chua, and Foo, I will refer to these parties collectively as "Organo Gold" for ease of reading. I note my use of the term "Organo Gold" may, at times, simply refer to the business operations conducted through OGI and OGE. [6] All of the parties seek production of certain documents from other parties. In the considerable time that has passed since the parties first filed their applications for document production, they have made considerable progress in closing the production gap. But some document demands remain unanswered. [7] Both actions involve the same subject matter and are based on the same background facts. Because many facts relevant to the Mareva injunction application link to document production issues, I will first discuss Noland's application for a Mareva injunction and then consider the parties' applications for document production. II. Factual background [8] Organo Gold is a multilevel worldwide business that specializes in the marketing of coffee and other food products infused with a substance extracted from the ganoderma mushroom. [9]

Chua, Morand, Foo and Noland each hold 25% of OGE's shares. [10] Noland states that before the parties had a falling out, he held the status of what he called a "master distributor," which placed him, along with Chua, Morand and Foo, at the top of Organo Gold's distribution hierarchy. He alleges that, in April 2008, he, Chua and Morand formed an unwritten partnership. Under its unwritten terms, Noland claims he was entitled to a 32.5% share of Organo Gold's worldwide earnings, which were to be funnelled from regional company accounts into a master distributorship account (the "Master Distributor Account"). Noland referred to profits from the Master Distributor Account as "Business Center" profits, but he says Business Center profits and Master Distributor Account profits are interchangeable terms. [11] In December 2009, OGE, Chua, Morand and Foo purported to terminate Noland's employment as an Organo Gold consultant and distributor of its products. Chua, Morand and Foo deny any partnership existed between themselves and Noland. [12] Within a few days of Noland receiving notice of his termination on December 2, 2009, he started a new company, Serenigy, which sells the same product as Organo Gold and employs many of its former personnel. Apart from its denial of the existence of a partnership, Organo Gold answers Noland's claims by asserting that he breached its "Policies and

Procedures" and "Consulting Agreement" by his alleged misuse of confidential information belonging to Organo Gold; by his illegitimate solicitation of distributors, suppliers and employees of Organo Gold; and, under the guise of Serenigy, by his improper competition with Organo Gold. [13] The counterclaiming OGE, Morand, Chua and Foo in Noland's Action and the plaintiffs OGE and OGI in the Serenigy Action claim an accounting from Serenigy and damages from Noland and Serenigy for Serenigy's participation in profits accrued from Noland's alleged breaches. Organo Gold also claims, in the alternative, that Noland repudiated the "Consulting Agreement" by commencing these proceedings and by ceasing to provide consulting services to Organo Gold. A. Documents requested by Noland [14] Nolan seeks full disclosure of Organo Gold's financial records, particularly documents that record the financial history of the Master Distributor Account. He says the history of disbursements on the Master Distributor Account, both before and after Organo Gold's termination of its relationship with him, will enable him to prove both the alleged partnership agreement between the parties and the source and flow of partnership funds through the Master Distributor Account. Although Organo Gold has recently produced documents that detail some of the flow of funds into the Master Distributor Account, Noland

still complains that what they have produced falls short of what he requires, and he asserts the documents should be readily producible. He complains the financial information Organo Gold recently produced is not presented in a form that will enable him to truly see how Organo Gold funds have flowed in and through the Master Distributor Account. What he seeks is information akin to a printout of a computer screen shot taken of the Master Distributor Account as of July 2010 that was referenced at the hearing. This is the only Master Distributor Account record in that form that he has in his possession. [15] Noland seeks other documents as well, but documents showing the flow of income through the Master Distributor Account are the ones that interest him most. Its production is relevant to his Mareva injunction application, as well as the main action because, to protect his alleged right to a 32.5% share of all profit that flows through the Master Distributor Account pending judgment, Noland wants the Court to restrict Organo Gold's use of the funds in the Master Distributor Account. III. Law -- Mareva Injunctions [16] Broadly speaking, the test for granting an interlocutory injunction generally is the same one that applies to granting a Mareva injunction or a preservation order, as explained in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, [1994] S.C.J.

No. 17, at para. 43: 1. There is a fair question to be tried; 2. The applicant will suffer irreparable harm if the court does not grant the injunction; and 3. The balance of convenience lies with the applicant. [17] Under the first step of the above test, an applicant seeking a Mareva injunction must also show a "good arguable" or "strong prima facie" case: Tracy v. Instaloans Financial Solutions Centres (B.C.) Ltd., 2007 BCCA 481, at para.

17. The Mareva injunction derives its name from the decision in Mareva Compania Naviera S.A. v. International Bulkcarriers S.A., [1980] 1 All E.R. 213 (C.A.). [18] In Aetna Financial Services v. Feigelman, [1985] 1 S.C.R. 2 [Aetna], at para. 26, the Supreme Court of Canada stated that before the injunction will issue, there must be "a genuine risk of disappearance of assets, either inside or outside the jurisdiction". [19] Mareva injunctions are available not just to prevent the removal of assets from the jurisdiction, but also to prevent their disposal within the jurisdiction: Aetna, at para. 25. [20] Noland, referring to Silver Standard Resources Inc. v. Joint Stock Co. (1998), 59 B.C.L.R. (3d) 196 (C.A.) [Silver Standard Resources], submitted that I should adopt the more flexible approach to the issuance of Mareva injunctions as outlined by the Court at paras. 18-20 of that decision. [21] In Silver Standard Resources, Newbury J.A. points out at para.18 that many judges in British Columbia have followed the lead of the Supreme Court of Canada in Aetna and thus have required that, as a condition of the court's granting a Mareva injunction, the applicant must show the party against whom the injunction is sought intends either to remove its assets from the jurisdiction or to dissipate them. [22] But, in referring to the words of Spencer J. in Nor. Sales Co. v. Govt. Trading

Corp. of Iran (1989), 37 B.C.L.R. (2d) 73 (S.C.), at 77, Newbury J.A. also noted at para. 18 of Silver Standard Resrouces that not all cases have insisted on the condition "that the plaintiff prove an intention on the part of the defendant to defeat judgment." [23] Newbury J.A. also refers at para.19 to the words of Huddart J. (as she then was) in Mooney v. Orr (1994), 100 B.C.L.R. (2d) 335 (S.C.) [Mooney], at 350-351, wherein the Court dealt with a "different issue from that of active and imminent dissipation of assets". Within that context, Huddart J. suggested a "relaxed approach" to applications for Mareva injunctions, "under which provincial superior courts could develop their own policies for the exercise of the discretion and avoid becoming 'prisoners of a formula'": Silver Standard Resources, at para.

19. Newbury J.A. noted Huddart J.'s comment at 349 in Mooney that a flexible approach would allow the court to take account of a wide variety of circumstances, including "the relative strength of the parties' cases, evidence of irreparable harm one way or the other, potential effects on third parties, [and] factors affecting the public interest." Huddart J. also stated at 350 in Mooney that such an approach: ... prevents the judge from becoming a prisoner of a fixed formula and places the emphasis where it belongs, on the justice and fairness of the order inter partes. It is fair to both sides, because, while maintaining the burden on the plaintiff to establish grounds for the application, it justifies calling upon the defendant to meet the case brought by the plaintiff, by putting forth evidence to support his position. By this approach, the ultimate question becomes, is it fair and just that the applicant should have the right to monitor the movement or expenditure of capital assets by the respondent during the course of the proceedings between them? Along the route to an answer, the court must consider whether and to what extent the justification put forth in a particular case permits that right. This question directs attention to the value underlying the court's examination of whether there is real risk of dissipation of domestic assets and/or foreign assets ... [24] At

para. 20 of Silver Standard Resources, Newbury J.A. expressed her agreement with the approach set out by Huddart J. in Mooney, and stated: Thus I would be reluctant to adopt a hard and fast rule, as counsel for the defendants urged upon us, that a Mareva injunction may never be made or continued unless there is a fraudulent intent on the part of the debtor; or where the payment in question is one proposed to be made in the ordinary course of business; or where it would materially and adversely affect an innocent third party. ... The overarching consideration in each case is the balance of justice and convenience between the parties, and those concepts can embrace many factors that do not fit easily into the "rules" or "conditions" advanced by the defendants. [25] Organo Gold points out, however, that Newbury J.A. went on to clarify at para. 21 of Silver Star Resources that ... in most cases, it will not be just or convenient to tie up a defendant's assets or funds simply to give the plaintiff security for a judgment he may never obtain. Courts will be reluctant to interfere with the parties' normal business arrangements, and affect the rights of other creditors, merely on the speculation that the plaintiff will ultimately succeed in its claim and have difficulty collecting on its judgment if the injunction is not granted. [26] Noland submits that he has met the burden to

establish the grounds for a Mareva injunction, which thereby justifies his calling on Organo Gold to meet his case by presenting evidence to support their position. Noland emphasised that Organo Gold had not dispelled his assertion that the Master Distributor Account is controlled within the jurisdiction of the Court by Organo Gold. Noland submits the affidavit evidence placed before the Court by Organo Gold clearly shows that money is flowing internationally and involves worldwide banking. A. Does Mooney support Noland's application to list assets? [27] Counsel for Noland submitted that statements at 352 in Mooney support his position that Organo Gold should be required to list assets and transfer assets to a receiver. But for now, Noland seeks only an order requiring Organo Gold to list assets. I note, however, that although Huddart J. concluded at 354 of Mooney that without the granting of an injunction and a listing order, it was "highly unlikely that the [the defendants] will be able to recover on any judgment they may receive", she did not require the plaintiff to transfer his property to a receiver. Huddart J. also ordered that once the assets had been listed, the defendants could re-apply for the appointment of a receiver. [28] Organo Gold emphasized the finding by Huddart J. at 355 in Mooney ... that the veil of secrecy must be lifted to permit the defendants to see

whether there is any substance to their view and the court's tentative conclusion that Mr. Mooney has stowed assets out of the jurisdiction in an effort to avoid attack on them ... [Emphasis added] [29] Organo Gold submits Noland has failed to offer any evidence to show it is stowing assets out of the jurisdiction in an effort to avoid attack on them, thus negativing grounds for a Mareva injunction or a listing order. Counsel for Noland points out, however, that until Organo Gold lists its assets, this cannot be properly determined. [30] In summary, Noland asks the Court to adopt the more flexible approach approved in Silver Standard Resources, and to consider the "relative strength of the parties' cases, evidence of irreparable harm one way or the other, potential effects on third parties, [and] factors affecting the public interest": Mooney, at 349. [31] Organo Gold also emphasizes the extraordinary nature of the remedy and the admonitions in the authorities for a cautious approach, the fact that the parties are fierce competitors, and the strong potential for irreparable harm that a Mareva injunction and listing order would cause Organo Gold. Organo Gold also emphasizes the absence of evidence that it is dissipating assets or fraudulently dealing with them to frustrate a potential judgment. IV. Application -- Mareva Injunction A. Has Noland established a prima facie case?

1. How strong is Noland's claim of an unwritten partnership? [32] Noland says that on April 22, 2008, he entered into an unwritten partnership agreement with Chua and Morand. He submits that where people sharing the goal of earning a profit carry on a business in common, a partnership exists: Partnership Act, R.S.B.C. 1996, c. 348, s. 2 [Partnership Act]. Citing Backman v. Canada, 2001 SCC 10, [2001] 1 S.C.R. 367, at paras. 18-19 and 21, a "business in common" may exist where the evidence shows: (a) the parties have held themselves out as partners to third parties; (b) the parties each contribute skill, knowledge or assets to a common undertaking; and (c) the parties share the profits and losses of the business. [33] A valid partnership must have a contractual foundation: Blue Line Hockey Acquisition Co., Inc. v. Orca Bay Hockey Limited Partnership, 2008 BCSC 27, aff'd 2009 BCCA 34, leave to appeal refused [2009] S.C.C.A. No. 176 [Blue Line Hockey], at para.

38. The essential terms of a partnership are the identity of the partners, the fact that there is to be a partnership, the business of the partnership and usually a description of some of the essential financial terms: Blue Line Hockey, at para. 43, citing Milroy v. Klapstein, 2003 ABQB 871, at para. 24. [34] Noland submits persuasive evidence establishes each of these partnership markers is present in the dealings between him, Morand and Chua, and he has thus established a prima facie case. [35] After Foo loaned funds to OGE, she became a shareholder in that company. Through their respective holding companies, each of Noland, Chua, Morand and Foo held 25% of the shares in OGE. Noland submits, however, that this fact does not detract from the essential nature of the partnership agreement between him, Morand and Chua. Under it, Noland states he, Morand and Chua were each entitled to receive two monthly draws against Organo Gold profits from the Master Distributor Account, a.k.a. the Business Center. One of the two monthly draws was called a consulting fee; the other draw was equivalent to an equal share of profits held in the Master Distributor Account (or Business Center). [36] Financial statements and other documents confirm the international scope of Organo Gold's operations, which so far encompass the U.S.A., Peru, Jamaica, the Philippines and Europe. a) Are any markers of a

partnership present? [37] I turn now to the partnership markers stated earlier. Between them, the parties have attached about 900 pages of exhibits to their affidavits. Several documents amply support a finding that, at times, Noland, Morand and Chua referred to one another and to third parties as partners and described themselves as co-founders of OGE. [38] The documents also amply show Noland, Chua and Morand individually contributed skill, knowledge and assets to a common undertaking. From reviewing the materials, it appears that Noland's affidavit might have even understated the nature and extent of his contributions to the establishment, international expansion, staffing, business development and joint decision-making on a wide variety of matters for Organo Gold. In any case, Noland's portrayal of the responsibilities that Chua and Noland assumed in the company confirm each of them individually contributed skill, knowledge and assets to what was clearly a common undertaking. [39] At paras. 54-63 of his October 25, 2011 affidavit, Noland further details his understanding of how Organo Gold profits were to be distributed: 54. It was a term of the partnership that each of us would receive a draw against profit, paid as consulting fees, and then all other profits would be shared equally.

55. From time to time, Morand, Chua and I would meet to discuss the size of the draw against profit we each received and how the profit share would be allocated.

56. At first it was proposed that each of Morand, Chua and I would share 25% each. Attached hereto and marked as Exhibit "52" to this my affidavit is an email from Chua to Morand and I proposing that the split be 25%. It was then decided that we would each received 30% of and the last 10% would be paid at Chua's discretion. See Exhibit "7" to this my affidavit 57. In September 2009, this profit division had increased to 32.5% per partner. Attached hereto and marked as Exhibit "9" to this my affidavit. The remaining 2.5% of the profits were to be paid at Chua's discretion, and I understand were paid to Foo in recognition of her company's initial investment.

58. OrganoGold's profits are reflected in 15 "Business Centers" or "Back Offices" where activity from all levels of business throughout the world is recoded.

59. Screen shots of the Business Center for the Master Distributor Account ... show activity from around the world. The country codes are as follows: CA- Canada, USA - United States of America, JA - Jamaica, PH - Philippines, PE - Peru. Attached hereto and marked as Exhibit "53" to this my affidavit are the screen shots described above.

60. Unlike regular Distributors, who are only allowed to have one Business Centre with one account, the partnership had 15 Business Centers with 15 accounts (collectively the Master Distributor Accounts). At this time I only have user names an[d] identification for the following Master Distributor Accounts: ....

61. Each partner would invoice the corporate defendant for their expenses, their draw against the profits, and their share of the global profits as reflected in the Master Distributor Accounts. Attached hereto and marked as Exhibit "54" to this my affidavit are the invoices prepared by 3Vine Consulting Inc.

62. Chua oversaw the payment of expenses, the base profit share and the profit share from the Master Distributor Accounts as set out in paragraph 52 above.

63. I also received profits which I shared with Morand and Chu[a] from the Seminars put on by OrganoGold. I created the entire Seminar platform along with help from my wife Carrie Noland and Jamie Lynn Marquez. This included developing the training materials (hand-outs, power point presentations), designing the programs, organizing logistics, audio-visual support, staging and speaking. [40] Exhibit 53, referred to in para. 59 of Noland's October 25, 2011 affidavit, features the screen shot of the Master Distributor Account from July 2010 mentioned earlier. [41] The documents exhibited appear to reveal an intention that Noland, Chua and Morand would share profits from the Master Distributor Account, as Noland deposes. Further, pgs. 9 to 11 of the exhibits attached to Noland's October 25, 2011 affidavit contain an email from Morand to Noland plus an attachment to the email. The attachment, entitled "OG Partner Payout Proposal (Organo Gold)", sets out a proposed distribution of $1.465 million dollars. For further example, pg. 17 of the exhibits features an email from Stuart Moir, Organo Gold's corporate solicitor, written in response to a request from Morand and courtesy copied to Chu and Noland. Moir confirms in the e-mail that he could draft simple distribution agreements for the "OrGano Gold Master Distributorship(s)", OrGano Gold Power Card Revenues" and the OrGano Gold Master Distributorship". Another email, at pg. 272 of the exhibits, features Noland requesting from a distribution of $8,831 from Chua, an amount that encompassed his portion of the Business Center weekly pay plus $2,000 for travel expenses.

2. Organo Gold's position on the existence of a partnership [42] Organo Gold denies the existence of a partnership. It submits Noland has failed to produce persuasive evidence of the partnership he alleges exists. Counsel characterizes the material he has produced, the details of which I have not fully recounted, as supportive only of his own self-serving interpretation of a few "colloquial references" made by Chua and Morand in relation to being "partners." [43] Organo Gold emphasizes that various emails allude to corporate structures and shareholdings and the need of director's resolutions to approve the operating agreement, which it says belies the presence of a partnership. [44] Organo Gold also criticizes Noland's claims that consulting fees constitute a draw against profits. In her affidavit, Foo deposes that consulting fees were simply compensation for work performed by herself, Noland, Chua, and Morand, and did not represent a draw against profits. [45] Organo Gold also criticizes what it calls Noland's lack of clarity regarding his description of Foo's status within Organo Gold. It points to the inconsistency between: (a) Noland's pleading in his Amended Statement of Claim that Foo was brought into the business at the instigation of Chua; and (b) Noland's statement in his affidavit that the only partners throughout were him, Chua and Morand. Given the latter statement,

Organo Gold takes issue with Foo's inclusion as a party in the Noland Action. [46] Organo Gold questions other alleged anomalies as well, such as how Noland is able to claim the partnership entitled him to 32.5% of Organo Gold's profits while holding only 25% of OGE's voting shares. [47] Organo Gold also criticizes Noland's silence on what counsel called the "peculiar" arrangement of how the individual parties held shares in OGE through their own holding companies, and nature of the relationship between the individual parties and those holding companies. [48] Organo Gold also submits Noland's case for a partnership is bound to fail because it does not meet the prerequisites for certainty of contract: Blue Line Hockey, at paras 37-41. In sum, Organo Gold submits its existing corporate structure reflects the true nature of the business and the parties' business relationship than does the partnership alleged by Noland. [49] Organo Gold further submits that, even if Noland shows a strong prima facie case for a partnership, the general rule is that the exit of a partner dissolves the partnership.

3. Findings on whether Noland has established a prima facie case [50] Some of Noland's difficulties in establishing a prima facie case stem from the fact that document production in these proceedings remains far from complete. He reasonably contends and expects that documents he has requested will assist and strengthen his case. He points out that as of November 12, 2009, Organo Gold denied him access to its "back office" or "Business Center" (i.e. a secure website that tracks, displays and summarizes the financial information of the company). He thus now finds himself in a position where he is unable to trace the flow of Organo Gold's funds. He urged the Court "to follow the money" and argued that doing so will confirm the existence of the alleged partnership or, at least, a profit sharing agreement. [51] I do not agree with counsel for Organo Gold that the existence of a shareholder agreement obviates all possibility of the existence of a partnership agreement. Nothing stands in the way of a person becoming, at the same time, a partner entitled to a share of profits, a party entitled to profits under a profit sharing agreement, and a shareholder entitled to a share of company profits. Parties can devise their business affairs through a variety of ways they find personally advantageous or convenient. I do not see how discussions the parties had about their roles as

shareholders and the nature of their corporate arrangements necessitates a conclusion that there was, therefore, no partnership agreement - at least not based on the materials presently before the Court. [52] Perfection is not required of Noland now, especially where the discovery process remains in its earlier stages. [53] Further, I see no convincing reason to find that when Noland, Chua and Morand referred to one another and, in some instances to third parties, as partners, they intended this moniker as only a casual colloquialism (i.e. one that was not intended to connote the presence of an actual partnership). Further exploration of this issue is best left to examination for discovery and further document discovery. [54] I also do not find it anomalous that the percentage of OGE shares owned by the individual parties does not correspond to the percentage of Organo Gold profits they were each entitled to share in. I note in passing that the individual parties appeared to be working in June 2008 towards the creation of some clarifying documents. This does not defeat a potential finding of a partnership at this stage either, absent discovery and cross-examination. [55] As for possible contradictions regarding the role of Foo, counsel will undoubtedly explore this further, but this does not negative a finding in favour of a prima facie case with respect to the existence of a

partnership at this stage either. [56] Neither do I see, at this stage of the proceedings, how the fact all the individual parties chose to structure their affairs through their own holding companies shows they thus never intended to pursue a common enterprise with the ultimate intention of sharing profits, i.e. a partnership. Noland's contends the following at para. 15 of his affidavit dated October 25, 2011: "OrganoGold" is not an incorporated entity, it is the partnership formed between myself, Morand and Chua. It is the overarching organization which has beneath it corporations in each jurisdiction where the partnership carries on business. [57] The co-existence of a corporate structure and shareholders is not inconsistent with Noland's theory of the partnership agreement between himself, Morand and Chua. a) Assuming the existence of a partnership, does the exit of a partner end their entitlement to fees and commissions? [58] Should Noland succeed in showing a strong prima facie case for a partnership, Organo Gold submits his case is ultimately bound to fail anyway because the exit of a partner from a partnership dissolves it. Organo Gold submits that, as of his departure in December 2009, Noland was no longer entitled to fees and commissions and so he cannot say he suffered any loss since that point in time: Blue Line Hockey, at paras. 80, 90. [59] While the law clearly

states that a partnership does not exist apart from its partners and that the departure of any partner dissolves the partnership, Organo Gold has equated partnership dissolution with dissolution of former partners' rights. Section 45(1)(a) of the Partnership Act states that the court may find profits made since the departure of a partner and the subsequent dissolution of the partnership are "attributable to the use of his or her share of the partnership assets". The circumstances of a partner's withdrawal or dismissal, as the case may be, and the conduct of former partners, may occasion a variety of claims for damages or entitlement to profits earned from property owned by the partnership. But dissolution does not, in and of itself, defeat a former partner's claim for profits derived from the partnership's assets. [60] In Blue Line Hockey, Wedge J. referred to the Ontario Court of Appeal's decision in Diefenbacher v. Young (1995), 22 O.R. (3d) 641, [1995] O.J. No. 939 (C.A.) [Diefenbacher]. In Diefenbacher, Carthy J.A. considered s. 42 of the Ontario Partnerships Act, which is effectively identical to s. 45(1) of the Partnership Act. At para. 93 of Blue Line Hockey, Wedge J. summarized the finding of Carthy J.A. in Diefenbacher that section 42 of the Ontario legislation reinforces the common law position that "[a] partnership does not survive a change in its composition". In

Diefenbacher, Carthy J.A. states: A partnership is dissolved when a partner leaves in the absence of an agreement to the contrary. Another partnership then takes its place. Section 42 gives a clear entitlement to the outgoing partner to the profits made on that partner's share after dissolution. [61] OGE, Morand, Chua and Foo (in their counterclaim against Noland) and OGE and OGI (in their claim for damages against Serenigy) allege that Noland's actions before and after he left Organo Gold constitute a breach of the standards of conduct he alleges the partnership agreement imposed on all the parties. These alleged breaches include making demeaning and disparaging comments about Organo Gold, Chua, Morand and Foo and recruiting Organo Gold representatives for Serenigy. Organo Gold further contends that since his departure in December 2009, Noland has not only done nothing to earn distributorship commissions or consulting fees, he has specifically acted in various ways to harm Organo Gold, including setting up a competing business. I agree Morand, Chua, Foo, OGE and OGI may be entitled to damages if they can establish a breach of the agreements the parties entered into or of a fiduciary obligation. But that does not bear on: (a) whether Noland, Chua and Morand were partners; (b) whether Noland, Chua and Morand had a profit sharing agreement; or (c) whether Noland is entitled to,

should he prove the existence of a partnership, an accounting of income derived from partnership assets since his departure in December 2009. [62] Naturally, nothing stated in these reasons represents any finding of fact on the triable issues in either action. Counsel will test the strength of all the parties' assertions on the anvils of examination for discovery, cross-examination and further document production. [63] At this stage, the materials before the Court must establish a strong prima facie case for the existence of an unwritten partnership agreement that provided for the formulaic sharing of profits earned through Organo Gold's international operations. Although counsel for Organo Gold ably raises noteworthy counterpoints, they do not unsettle the rather strong impression formed around the materials that Noland has established a strong prima facie case for the existence of an unwritten partnership agreement between himself, Morand and Chua. B. Irreparable harm -- is there a risk Organo Gold will dissipate assets or remove them from the jurisdiction?

1. Noland's position [64] Noland relies principally on what he characterizes as Chua's deceitful behaviour as a director and his conduct as an alleged partner, his total control over all worldwide partnership accounts and the ease with which globalized banking systems can facilitate the transfer of funds out of the jurisdiction, hide them in other jurisdictions, and thus place them outside of the Court's reach. Noland points out that Organo Gold operates in multiple jurisdictions and earns profits in multiple regions that are all outside the Court's jurisdiction, although I note Morand, Chua and Foo are within the Court's jurisdiction. [65] In paras. 64-78 of his October 25, 2011 affidavit, Noland sets out the events that led to what he saw as Chua's ouster of him from the alleged partnership. These assertions also serve as the basis for his alternative claim for relief against oppression under s. 227(2) of the Business Corporations Act, S.B.C. 2002, c. 57.

64. In the fall of 2009 there was some tension between Morand, Chua and I about how the partnership was functioning and how business was being run. The mutual trust which had been the foundation of our successful day to day operations was undermined as Chua inserted himself into areas which were previously my sole responsibility. ...

65. In late September 2009, I was becoming concerned about the operation of the partnership. I learned that Chua was speaking with a Distributor Holton Buggs, whom I recruited and was responsible to me. I was so concerned that I called Morand and set up a meeting with him. I flew from Tulsa to Toronto for that meeting. At that meeting, Morand claimed to know nothing about Chua's dealings with Buggs and together we called Chua. It was determined that the three of us needed to have a face to face partnership meeting; Chua asked if we could have it in about a week. We agreed to meet on October 1, 2009 in Vancouver.

66. Morand and I began develop an outline of things to discuss at the partners meeting in Vancouver. Attached hereto as Exhibit "57" is a true copy of an email dated September 27, 2009 from Morand to me attaching an outline of topics to discuss.

67. On September 19, 2009, I emailed Moir to inquire about the share structure and operating agreement. This e-mail is attached as Exhibit 9. On September 30, 2009 I arranged to meet with Moir at 9:45 a.m. the following morning to discuss my concerns about the partnership and make some amendments to the operating agreement.

68. While I was on my way to Vancouver I received an email from Chua stating that the meeting would be a shareholder's meeting and so Foo was going to attend. I had received no formal written notice, as I am advised is required under the BC Business Corporations Act that this was to be a shareholder's meeting. Attached here to as Exhibit "58" is a true copy of the email dated September 30, 2009 from Chua stating it is a shareholder's meeting.

69. I replied that the main purpose of the meeting was to discuss issues between the three partners and that while I wouldn't mind having a shareholder's meeting that we should set up a separate time during the visit for that meeting. Morand replied that there are several topics that he and I would like to discuss, one of which is a "proper corporate structure for OG as we move forward." Attached hereto collectively as Exhibit "59" are the email responses dated October 1, 2009 from Morand and I to Chua.

70. On October 1, 2009 at 4 p.m. Morand, Chua, Foo and I met in Vancouver. It was a very tense meeting. I had difficulty focusing on the issues being presented and was generally in a state of disbelief at the state of the partnership. There was general discussion about operational issues, but no one took notes contemporaneously at the October 1, 2009, portion of the meeting. At 9:45 p.m., the meeting was adjourned. It continued the following morning at 11:30 a.m.

71. On October 2, 2009, I was presented with some typed notes purporting to be the minutes of the meeting and a recording of resolutions that had been passed. There had been no discussion of the language of these proposed resolutions, nor had there been any vote on any of the proposed resolution. I was uncomfortable signing it, but did so under duress and after considerable pressure from Morand, Chua and Foo who kept insisting that I sign so the business could move forward. Attached hereto and marked as Exhibit "60" to this my affidavit are the minutes of that shareholder's meeting.

72. The purported resolutions attempted to change how decisions were going to be made with respect to the business. For example, it was resolved that "Mr. Bernardo Chua be given the authority to have the Final Decision on all corporate matters" and that the Financial Manager (Foo), the Operations Manager (Shella Marie Chua), the Distributions Manager (Ang), and the Global IT Manager (Seevers) report solely to Chua.

73. The resolutions sought to consolidate power within the corporation and away from the partnership. For example, when I introduced Michelle Lynn Solutions Inc. I understood that it would have exclusive world wide rights to printing and that it would retain ownership of the original designs it created. Two of the resolutions sought to curtail or alter that agreement.

74. The purported resolutions were also factually incorrect, for example, the resolution that purported to transfer the domain names to Organo Gold Enterprises Inc. from Mark Seever should have read transferred from myself, Jay Noland. I purchased those domain names through a company I control, Hillside Equity LLC which was registered to my then home address. Attached hereto collectively as Exhibit "61" are true copies of the invoices associated with those original purchases.

75. After a few tense meetings and email exchanges through October and November, in late November 2009 I was unable to access the daily teleconference with Distributors and was unable to log into the Business Center to view the Master Distributor Accounts from which a substantial portion of my profit share was recorded. I was no longer able to perform my role within the partnership and was no longer able to access any information regarding the business or its management.

76. I caused a Writ of Summons to be filed on November 24, 2009. The original Statement of Claim was filed March 5, 2010 and amended October 26, 2010. Copies of those documents and the Statement of Defense, Counterclaim and Defense to Counterclaim are attached as Exhibit A to the Affidavit #1 of Patricia Russell sworn May 26, 2011 and filed herein.

77. On December 2, 2009, I received a letter from the corporate defendant's attorney stating that my "status as an Organo Gold Independent Representative through a 32.5 percent participation in OrGano distributorship ID number ... is terminated, effective immediately." and that "termination is effective for pay purposes on December 31, 2009." Attached hereto and marked as Exhibit "62" to this my affidavit is the letter I received December 2, 2009.

78. I have never signed an Independent Representative Application and Agreement which, along with the Policies and Procedures and Compensation Plan, form the Agreement each Independent Representatives has with OrGano Gold. I believe the letter is an attempt to minimize the partnership's obligations to me by trying to identify me simply as an ordinary Distributor.

2. Organo Gold's position [66] Organo Gold submits that Noland's assertions about the danger of dissipated assets rest on his own speculations, and that he has failed to demonstrate Organo Gold will be unable to pay a potential judgment. Further, Organo Gold submits that although the presence of fraudulent intent may give the Court reason to infer a risk of fraudulent dissipation of assets, Noland has alleged conduct that, even if proven, only could be characterized as deceitful and oppressive and not as fraudulent. [67] Organo Gold submits that this case is similar to Eichhorst v. Eichhorst, 2010 BCSC 1555, where the applicant satisfied the Court he had a strong prima facie case for a partnership but had no evidence to support his contention that the defendants would dissipate assets. [68] As discussed earlier, more recent decisions of this court have encouraged judges hearing applications for Mareva injunctions to adopt a more flexible approach and consider a wide variety of circumstances; and that fraudulent intent is not an essential prerequisite to the court's granting of a Mareva injunction. [69] Noland reminded the Court how, in November 2009, Chua allegedly blocked him from viewing the Master Distributor Account; and how he had been given improper notice of a shareholder's meeting. He argues, as well, that Chua has failed to disclose relevant financial documents and, as

such, he contends that profits accruing to the Master Distributor Account are perpetually at risk of being diverted to foreign jurisdictions. [70] Even so, the characterization of a Mareva injunction as an extraordinary remedy continues to apply, as does Newbury J.A.'s caution in Silver Standard Resources that, in most cases, it will not be just or convenient to tie up a defendant's assets or funds simply to give the plaintiff security for a judgment they may never obtain. [71] I note also that Organo Gold appears to be highly profitable and remains a going concern. In addition, although I am not suggesting a direct link between individual earnings of Organo Gold distributors and the Master Distributor Account, I note that six Organo Gold Distributors are listed among the top earners in the Direct Sellers Hall of Fame, included among them Shane Morand, who recently earned $3,720,000. The Hall of Fame lists another Organo Gold distributor's earnings at $7,200,000. Such high annual individual earnings reasonably presumes high earnings by Organo Gold, which is the source that sustains the individual distributors; and, with such profitability, a reasonable supposition Organo Gold's owners would be motivated to sustain the company's profitable operations. [72] For the foregoing reasons, I find Noland has not established that he will suffer irreparable harm if the Mareva injunction

is not granted. C. Does the balance of convenience favour the granting of an injunction? [73] If I am incorrect in my finding that Noland has not established that he will suffer irreparable harm, I turn to consider whether the balance of convenience favours the granting of an injunction. [74] Noland points out that Organo Gold has not offered direct evidence to show how it would be inconvenienced by a Mareva injunction. [75] Organo Gold contends Noland comes to court without clean hands and that his conduct leading up to his leaving the company, and afterwards, is such that it should disqualify him from the equitable relief of an injunction. [76] Organo Gold also contends that Serenigy's feat of selling product by January 18, 2010, less than a month after Noland's termination from Organo Gold, and other evidence, suggests Noland was planning to leave Organo Gold and had begun working against its interests before he left in December 2009. They submit Noland's actions conflict with his assertion that Chua and the other alleged partners had treated him in a dishonest and oppressive way. Organo Gold also alleges Noland's possession of a Master Distributor Account screen shot from the "back office" or "Business Center" as recently as July 2010 undermines his suggestion Organo Gold had locked him out by November 2009. [77] In this regard, I am not persuaded by Foo's hearsay statement

in para. 22(c) of her first affidavit that in or about September 2009, Organo Gold's IT manager refused a request from Noland to provide him with a full list of all Organo Gold distributors. The IT manager's refusal was ostensibly based on his belief such information was not necessary for Noland to perform his role in the business. Regardless of the hearsay nature of this and other statements, I find they lack logical consistency. I understand the IT manager was hired by and reported, at least in part, to Noland. Given the unchallenged description Noland gave of his role and responsibilities in Organo Gold, why would he not have legitimate occasion to see a list of the company's distributors? Why would the IT manager assume something was awry for what appears to be, at least based on the materials before the Court, an ordinary managerial request by someone with authority over him? At least as it now stands, this paragraph in Foo's affidavit has an air of unreality about it, though of course that could change over the course of the litigation. [78] Regardless, I do not find the misconduct Foo alleges against Noland or the misconduct Noland alleges against Chua weighs much into deciding which way the balance of convenience scales should tip. [79] In my view, the most important factor weighing into the assessment of the balance of convenience stems from the fact the parties are

competitors; not just in the general sense of both being retailers of their touted health products, but as competitors who sell identical products with identical claimed health benefits, and who operate under the same business model and operational structures. Both aspire to enter into international markets and both require the same kind of personnel. Prejudice obviously becomes a key consideration where a Mareva injunction would open up the doors of a business's inner sanctum to a fierce competitor and effectively tie up its capital, plausibly reveal closely held trade secrets, and potentially wreak havoc and harm, while yielding an intelligence bonanza for the competitor. [80] In making this observation, I do not mean to propose that the fact of parties being business competitors, standing alone, defeats any prospect of obtaining a Mareva injunction. But it is a circumstance that strongly attracts the attention of the principle that a Mareva injunction remains an extraordinary remedy. In the case at bar, it is a circumstance that, at least at this stage of the case, militates against the Court's granting of a Mareva injunction and, I find, places the balance of convenience on the side of Organo Gold. D. Conclusion - Mareva injunction [81] As such, and for the foregoing reasons, I dismiss Noland's application for a Mareva injunction in the case at bar. Orders for production of

further specific documentation, especially financial records, will give Noland opportunity to assess whether he might then have a strong prima facie case, not only for the presence of a partnership, but also for the risk of dissipation or diversion of assets by Organo Gold; and warrant an application for a Mareva injunction at a later time. V. Preservation order Rule 10-1 of the Supreme Court Civil Rules [82] I will not order an interim preservation order pursuant to Rule 10-1 of the Supreme Court Civil Rules. Such an order presumably would have included terms for preservation, on an ongoing basis, of 32.5% of Organo Gold's profits; and also a term for the appointment of a receiver based upon a finding that it would be "just and convenient to do so". Halfyard J. considered just such an appointment of a receiver to take in partnership assets, including income, in McKnight v. Hutchison, 2011 BCSC 36 [McKnight], at paras. 145-147, but ultimately decided against it. [83] Whatever the merits of the case for a receiver might theoretically be in the case at bar, Organo Gold argues against any form of preservation order on the technical ground that Noland's statement of claim seeks "[g]eneral damages for breach of the partnership/shareholders agreements", which is relief that runs afoul, they say, of Kongrecki v. Rafael (1993), 81 B.C.L.R. (2d) 378 (C.A.) [Kongrecki]. In Kongrecki,

Southin J. A. held that the former Rule regarding preservation orders, the wording of which is the practical equivalent of the present Rule 10-1, was not available to a plaintiff seeking only damages. [84] Organo Gold relies also on Ethiopian Orthodox Church of Canada v. Hohite Semay St. Mary Ethiopian Tewahido Church, 2008 BCSC 797. In that case, Butler J. stated at para. 15 that "[a]s I read the plaintiff's Amended Statement of Claim all that is advanced is a claim in damages. As there is no specific fund in dispute the plaintiff is not entitled to relief pursuant to Rule 46(2) [now Rule 10-1(2)]." [85] While Noland framed his pleadings in similar terms, he effectively seeks, at least partly, the equivalent of a tracing order or return of a specific fund, i.e. the Master Distributor Account. And in my view, with leave to amend his pleadings accordingly, Noland could conceivably be granted a preservation order under Rule 10-1, should he apply to do so: I am not, however, making that order now. [86] For now however, bearing in mind that the core elements of the test for granting an interim preservation of property order closely track those for granting a Mareva injunction (i.e. a claim for a proprietary interest, a threat of disposition of the plaintiff's property, a substantial question to be tried, and the determination of on whose side the balance of convenience lies), as

was outlined in McKnight at paras. 145-146, I do not see how, having refused a Mareva injunction, I could then justify the granting of a preservation order at this juncture. [87] I turn next to the parties applications for orders for production of certain classes of documents. VI. Production of non-commercially sensitive documentation [88] Each side seeks production of documents possessed by the other side and resists production of certain documents that they state will reveal trade secrets and damage their respective businesses. [89] As an initial safeguard against prejudicial dissemination of documents, all further documentation produced by either side shall be subject to the confidentiality obligations imposed in the Consent Order approved by Master Baker on December 22, 2010 (the "Confidentiality Order"), except where I expressly modify the parties' obligations thereunder. For ease of reference, I reproduce para. 5 of the Confidentiality Order: 5. Counsel for a Party, upon receiving a Confidential Document, shall treat it in the following manner: (a) he/she shall ensure that only counsel, including his/her staff, the Plaintiff, his advisors, and any expert retained by the Plaintiff for the purpose of providing opinion evidence in this proceeding shall have access to the Confidential Documents, any copy thereof, or the information contained in the Confidential Documents; (b)

he/she shall not release the Confidential Documents, or any copy thereof, from his/her office other than for the purpose of obtaining instructions, expert advice or opinion evidence or for the use of counsel or the Party in giving instructions, in court or at examination for discovery in this proceeding; (c) no representative of a Party, its advisors, counsel or an expert, shall be entitled to have or make, electronically or manually, a copy of a Confidential Document; (d) counsel shall maintain a list of the persons to whom Confidential Documents or copies thereof are released during the course of this proceeding; (e) upon completion of the litigation, counsel for the Plaintiff shall recover all Confidential Documents and copies thereof (whether complete or partial) which he/she (including his/her staff) may have made in the course of the litigation and shall return the Confidential Documents to the party which produced the Confidential Documents; (f) counsel shall keep the Confidential Documents in a safe and secure place; and (g) Confidential Documents, if filed with the Court, shall be sealed and not form part of the public records. A. Legal principles - disclosure of documents under the Supreme Court Civil Rules [90] Noland complains Organo Gold has continually refused or neglected to fulfill its document disclosure obligations under Rule 7-1(1) of the Supreme Court Civil

Rules. He submits they have failed to produce classes of documents under their control that could be used "at trial to prove or disprove a material fact," and have failed to properly respond to its demands under Rule 7-1(10) for further document production. In Sarvarian v. Sok, 2011 BCSC 585, at para. 108, this Court held that the Supreme Court Civil Rules require the parties in an action to produce, "at a minimum, documents which can assist either party in proving or disproving the facts put in issue in the pleadings". [91] The parties also rely on Rule 7-1(11), (13) and (14) of the Supreme Court Civil Rules in advancing their document disclosure applications. [92] In Kaladjian v. Jose, 2012 BCSC 357 [Kaladjian], Davies J. gives a concise overview of the document disclosure obligations of a party under the Supreme Court Civil Rules. Comparing Rule 7-1 of the Supreme Court Civil Rules to Rule 26(1) of the former Rules of Court, B.C. Reg. 221/90 [Rules of Court], he states: [36] There is ... a significant difference between the document production regimes established under former Rule 26 and present Rule 7-1. [37] Under former Rule 26(1), a party was required to list: documents which are or have been in the party's possession or control relating to any matter in question in the action, [38] Under Rule 7-1(1)(a), a party is now (at least initially) obligated to list only: (i) all

documents that are or have been in the party's possession or control and that could, if available, be used by any party of record at trial to prove or disprove a material fact, and (ii) all other documents to which the party intends to refer at trial, [39] That change has altered the test in British Columbia for determining whether any document or class of documents must now (at least at first instance) be disclosed. [40] As stated by Edwards J. in Creed, the former broad test of relevance for disclosure purposes, emanated from the decision in Cie Financière du Pacifique v. Peruvian Guano Ltd (1882), 11 Q.B.D. 55 (Eng. Q.B.) [Peruvian Guano], which required disclosure of documents that "may fairly lead to a line of inquiry which may "either directly or indirectly enable the party...to advance his own case or damage the case of his adversary" [41] Rule 7-1(1) changed that test for documentary relevance at first instance by requiring listing only of documents that could be used at trial to prove or disprove a material fact and documents the disclosing party intends to rely upon at trial. [42] I say that the test of documentary relevance is changed "at first instance" because Rule 7-1 also provides processes by which broader disclosure can be demanded of a party under Rules 7-1(11) through (14) under which the court can decide whether, and if so, to what extent, broader disclosure

should be made. [93] Other recent decisions of this Court that comment on the scope of document disclosure and production under the Supreme Court Civil Rules include: § Biehl v. Strang, 2010 BCSC 1391; § Przybysz v. Crowe, 2011 BCSC 731; § Global Pacific Concepts Inc. v. Owners of Strata Plan NW 141, 2011 BCSC 1752 [Global Pacific]; § Balderston v. Aspin, 2011 BCSC 730; § Zecher v. Josh, 2011 BCSC 311; and § Burgess v. Buell Distribution Corporation, 2011 BCSC 1740. [94] In Edwards v. Ganzer, 2012 BCSC 138 [Edwards], Master Bouck considered these decisions and summarized the principles arising from them at para. 41: a. The initial production obligation under Rule 7-1 (1)(a)(i) is limited to what is required to prove or disprove a material fact: Biehl v. Strang at para. 14; b. Rule 7-1(10) allows the opposing party to issue a written demand requiring the listing party to amend the original list and produce documents that should have been disclosed under Rule 7-1(1)(a)(i); c. In addition, Rule 7-1(11) allows the opposing party to issue a written demand requiring the listing party to amend the list and produce documents which ought to be disclosed under a test "close to" that set out in Compagnie Financiere et Commerciale du Pacifique v. Peruvian Guano Company (1882), 11 Q.B.D. 55 at 63, (the "Guano test"): Global Pacific at para. 9; d. The distinction between the two types of

disclosure provided for under Rule 7-1 is stated [at para. 9] in Global Pacific as follows: The question is whether a document can properly be said to contain information which may enable the party requiring the document either to advance his own case or damage the case of his adversary, if it is a document which may fairly lead him to a train of inquiry, or if it may have either of those two consequences. Therefore, it is acknowledged that the initial disclosure under Rule 7-1(1) relates to a materiality requirement, but that a party can apply to the court, as the defendant did here, for broader disclosure pursuant to Rule 7-1(14). [Emphasis added in Edwards.] ... e. Both the demand by the requesting party and the response of the opposing party should be set out in writing addressing the terms and criteria used in Rule 7-1. Whether the demand and response provide sufficient particularity is a matter of the court's discretion; f. If an application is brought under Rule 7-1(13) for the listing or production of documents, the court may either order compliance with the demand, excuse full compliance, or order partial compliance: Rule 7-1(14); g. The objectives of the [Supreme Court Civil Rules], including proportionality, may be taken into account by the court when exercising its discretion under Rule 7-1(14). The proportionality rule can be applied to either expand or restrict

the required production of documents: Global Pacific citing Whitcombe v. Avec Insurance Managers Inc., 2011 BCSC 204. [95] It does not appear from the materials filed in the case at bar that the parties followed the expanded disclosure procedure set out in Rule 7-1(10) and (11). In any event, the parties have made one another well aware of their respective positions; and a failure to track the procedures under Rule 7 of the Supreme Court Civil Rules is not an issue in this case. [96] In June and July of 2011, the parties reached agreement to produce and exchange certain documentation as detailed by correspondence between counsel in and around that time. The parties have therefore already agreed to produce most of the documents the other side has been seeking from them. But the parties now complain either that production of some documents falls short of what is required or that the other side refuses to produce some material documents. Concerns about confidentiality and trade secrets lie at the heart of most of these document demands. [97] In this section of the reasons, I address any outstanding demands for document disclosure that do not fall under the category of what the parties have effectively classified as "commercially sensitive documentation", a category of documents I consider later in these reasons. [98] For ease of reference, I will, from time to time, refer to

Noland and Serenigy from this point onward as "Noland/Serenigy". [99] The documents I will order to be disclosed are ones that I find, pursuant to Rule 7-1(1)(a), to be in the relevant party's "possession or control and that could, if available, be used by any party of record at trial to prove or disprove a material fact" or, at the very least, ones that I find satisfy a standard of the Peruvian Guano type. The Supreme Court Civil Rules have been interpreted to preserve something in the vicinity of the Peruvian Guano standard for document production where an application is brought under Rule 7-1(13): Global Pacific, at para. 9, 15-16 B. Documents requested by Organo Gold from Noland [100] Organo Gold demands that Noland produce: (a) his personal tax returns for 2008 to present. (Noland submits that if ordered to do so, he should be allowed to redact those portions of his returns that have no relevance to the proceedings, and that this could possibly be achieved by having the judge review the documents before disclosure to Organo Gold.) § Order: Noland shall produce his personal income tax returns from 2008 to the present. He may redact those portions that are of a purely personal nature and that could not be used by Organo Gold to prove or disprove a material fact at trial. He shall state the nature of the redacted information with sufficient detail to allow the other parties

to discern whether they wish to challenge the redaction. If Organo Gold is dissatisfied with the redacted information, it may apply for a review and ruling on whether redacted portions of the returns should be included. (b) Any contract, including but not limited to a confidentiality agreement, between Noland and any person formerly an employee, consultant, distributor or supplier of Organo Gold, including but not limited to those persons listed as a part of the "Executive Team" on the "serenigy.com" website. § Order: any such documents are to be listed and produced. (c) All records in Noland's possession relating to the "Business Center" or the Master Distributor Account. § Order: any such documents are to be listed and produced. (d) Supporting documentation for any expenses claimed by Noland in this litigation. § Order: any such documents are to be listed and produced. (e) All documentation in Noland's possession relating to his proceedings before the United States Federal Trade Commission. (Noland submits any such documentation is entirely irrelevant and if their production is ordered, such documentation should be reviewed by the judge first to determine relevance.) § Order: the evidence does not indicate whether these records are matters of public record that Organo Gold can obtain itself. If they are not matters of public record, Noland should list and produce them. His

counsel may redact those portions he sees as irrelevant, detailing reasons for redaction that are sufficient to allow the other parties to discern whether they wish to challenge the redaction. If necessary, the parties may apply for a ruling on the relevance of the redacted portions.) (f) All documents in Noland's possession relating to the incorporation of Serenigy or the creation of Serenigy. (Organo Gold noted that the documentation relating to the incorporation of Serenigy had been satisfied, but documentation relating to its creation had not, as of the hearing date, been produced.) § Order: any such documents are to be listed and produced. (g) All presentation materials prepared by Noland for Organo Gold or Serenigy summits or conventions. (Organo Gold noted that the documentation relating to Organo Gold had been somewhat satisfied, whereas the documentation relating to Serenigy had not, as of the hearing date, been produced.) § Order: any such documents are to be listed and produced. (h) Any communication between Noland and any party in relation to the preparation of branding materials for Serenigy, in particular but not limited to all correspondence and notes in Noland's possession relating to Michelle Lynn Solutions Inc. (Noland stated that this item will be complied with, so no order is required.) (i) Records of all payments from Serenigy to Noland, or of payments by

Serenigy to any party in respect of services provided by Noland. (Noland stated that this item will be complied with, so no order is required.) (j) Records of all monies received by Noland or by any party associated with Noland in relation to Noland's role with Serenigy. (Noland stated that this item will be complied with, so no order is required.) (k) All records relating to the domain names "ogheat.com" and "sgheat.com" and relating to the ogheat.com and sgheat.com websites. (Organo Gold noted that the documentation relating to ogheat.com had been produced, whereas the documentation relating to sgheat.com had not, as of the hearing date, been produced.) § Order: any such documents are to be listed and produced. (l) All communications between Noland and the persons described on the serenigy.com website as members of the "Executive Team". (Noland stated that this item will be complied with, so no order is required.) (m) Records of all payments made to Noland from the Master Distributor Account or the "Business Center". (Noland stated documents related to this item should be in the hands of Organo Gold.) § Order: any such documents are to be listed and produced. C. Documents requested by Organo Gold from Serenigy [101] Organo Gold has requested the following documents from Serenigy: (a) Financial statements and tax returns for Serenigy and its corporate shareholders related to

or owned by Noland, in trust or otherwise. (Serenigy stated that it will comply with this item, and noted that some of the documentation is covered by the Confidentiality Order, so no order is required.) (b) Up to date corporate records. (Serenigy stated that it will comply with this item, and noted that some of the documentation is covered by the Confidentiality Order, so no order is required.) (c) All documents relating to the incorporation of Serenigy and the founding of Serenigy's business. § Order: any such documents are to be listed and produced. (d) The compensation plan for Serenigy's distributors or representatives. (Serenigy says Organo Gold already has this documentation in its hands.) § Order: any such documents, assuming they are not yet in the hands of Organo Gold, are to be listed and produced. (e) All documents relating to the creation of Serenigy's compensation plan and adoption or modification of Serenigy's information technology. § Order: any such documents are to be listed and produced. (f) All communications between Serenigy and any person in relation to the preparation of branding materials for Serenigy, in particular but not limited to all correspondence and notes in Serenigy's possession relating to Michelle Lynn Solutions Inc. (Serenigy stated that it will comply with this item to the extent it is able, so no order is required.) (g) Policies and

procedures manuals or guides, or comparable documents, for Serenigy distributors or representatives. (Serenigy stated it will list and produce these documents to the extent it is able, so no order is required.) (h) All correspondence and notes of conversations between Noland and the "Executive Team" (as set out on the serenigy.com website). § Order: any such documents are to be listed and produced. (i) All statements of account for any account held by Serenigy. (Serenigy expressed confusion as to the nature of this request, in response to which counsel for Organo Gold noted counsel for Serenigy had used the phrase "statements of account" in previous correspondence between the parties. In a letter from counsel for Noland/Serenigy sent to the Court after the hearing, this phrase was clarified in the context of a document sought from Organo Gold as "statements of account for any [bank] account held by Organo Gold Enterprises Inc. and its related entities". Here, then, I assume this document request refers to "statements of account for any bank account held by Serenigy and its related entities".) § Order: any such documents are to be listed and produced. (j) All documents in Serenigy's possession evidencing Noland's allegations regarding the quality and source of the ganoderma used in Organo Gold's products. (Organo Gold stated at the hearing that it was its understanding that

Noland/Serenigy had no documentation of this kind in his possession, but did not make it explicit as to whether he wanted this item struck.) § Order: any such documents, assuming they are in the possession of Noland/Serenigy, are to be listed and produced. D. Documents requested by Noland/Serenigy from Organo Gold [102] On June 22, 2011, counsel for Noland/Serenigy wrote counsel for Organo Gold to confirm the documents listed in Noland's Amended Notice of Application, dated May 27, 2011, that Organo Gold had agreed to list and produce. These items are also reflected in a draft order prepared by counsel for Noland/Serenigy dated November 14, 2011 (the "Draft Order"). These items are as follows: (a) Any agreement among shareholders. (b) Materials prepared for, relied on, or used at any and all shareholders' meetings. (c) Materials prepared for, relied on, or used at any and all summits, conventions or presentations of OGE. (d) The Distribution Agreement allegedly signed by Noland. (The Draft Order appears to refer to this as the "Independent Representative Application and Agreement allegedly signed by" Noland.) (e) Original purchase orders and contracts and all subsequent re-ordering documents for the supply and delivery of ganoderma extract and for herb formulations from Zianzhilou, Coffee Lee Malaysia and/or Nores Marketing together with documentation evidencing payment for the

said orders. (f) All organic ganoderma certificates of quality issued by any certification agency. § Order: all of the above documents are to be listed and produced to Noland/Serenigy, except any that have already been listed and produced. [103] The June 22, 2011 letter also details the agreement of Chua, Morand and Foo, who are referred to as the "individual Defendants", to produce the following documentation to Noland/Serenigy: (a) Any notes or other material relating to the structure of OGE, including the complete file of the solicitor Stuart Moir who accepted instructions to incorporate OGE. (b) Any notes or other material related to the structure of the partnership. (The Draft Order is phrased as "Any notes of any of the individual Defendants or material possessed by the individual Defendants related to the structure of the partnership".) (c) Any notes or other material from any phone calls between Noland and any of the individual Defendants. (The Draft Order is phrased as "Any notes of any of the individual Defendants or material possessed by the individual Defendants from any phone calls between [Noland] and the individual Defendants".) (d) Any notes or other material from any phone calls between the individual Defendants. (The Draft Order is phrased as "Any notes of any of the individual Defendants or material possessed by the individual Defendants from any phone calls

between the individual Defendants".) (e) Any notes or other material from any meetings between Noland and the individual Defendants. (The Draft Order is phrased as "Any notes of any of the individual Defendants or material possessed by the individual Defendants from any meetings between [Noland] and the individual Defendants".) (f) Any notes or other material from any meetings between the individual Defendants. (The Draft Order is phrased as "Any notes of any of the individual Defendants or material possessed by the individual Defendants from any meetings between the individual Defendants".) (g) Any agreement among or between any of the parties to this action. (The Draft Order is phrased as "Any agreement among or between any of the Defendants to this action - including but not limited to shareholder agreements, trust agreements, partnership agreements, employment agreements, or loan agreements".) (h) Any emails between and amongst any of the individual Defendants. (The Draft Order does not include the word "individual".) (i) Any power point presentations made by any one of the individual Defendants to any other of the individual Defendants or Noland. (j) Any invoices from any of the individual Defendants to OGE for consulting work. (The Draft Order does not include the phrase "for consulting work", but in my view, relevancy encompasses any invoice submitted by the individual

Defendants.) (k) Any invoices from any company in which one of the individual Defendants is a shareholder to OGE for consulting work. (The Draft Order does not include the phrase "for consulting work", but in my view, relevancy encompasses any invoice submitted by any company in which the individual Defendants are shareholders.) § Order: all of the above documents are to be listed and produced to Noland/Serenigy, except any that have already been listed and produced. VII. Production of commercially sensitive documentation [104] The parties' respectively object to the production of certain documentation based on their commercially sensitive nature. It must be borne in mind that Organo Gold and Serenigy are direct business competitors. A. Positions of the parties 1. Noland/Serenigy [105] On February 14, 2012, one week after the hearing of this application, counsel for Noland/Serenigy filed further written submissions. He noted concerns of both sides regarding the potential for prejudice that would occur from the parties' mutual disclosure of commercially sensitive documents. Counsel for Noland/Serenigy suggested these concerns had been addressed by the Confidentiality Order and by Noland's acknowledgement of his obligations under both the common law and the Confidentiality Order. Despite the Confidentiality Order and Noland's acknowledgments, however, counsel for Noland/Serenigy

notes that: ... both parties continue to be skeptical of the other's good faith in dealing with commercially sensitive documents and do not believe there is sufficient protection. Thus far, this skepticism has resulted in limited disclosure of meaningful financial information. [106] Counsel for Noland/Serenigy submits this skepticism rises to "its peak" when it comes to Organo Gold's application for production of documents that would reveal Noland and Serenigy's ganoderma suppliers. From a business perspective, counsel submits "the identification of a supplier or comments regarding another's suppliers can be irrevocably devastating". Counsel further submits that the demand for this documentation is unwarranted as it "presupposes that Serenigy ... is relying on the same supplier of ganoderma as Organo Gold." [107] Counsel for Noland/Serenigy referred to his earlier submission in court that this information is "only relevant if Serenigy ... is using the same supplier of ganoderma as Organo Gold" and that each of the parties should confidentially submit to the Court "an affidavit or statutory declaration naming its supplier of ganoderma and attaching the appropriate supporting documentation" to allow the Court to determine whether the product was obtained from the same source. If the Court then finds the product was obtained from the same source, it "could disclose the affidavit

or statutory declaration and order the production of all related relevant documents." If the Court determined that the product was not obtained from the same source, it could then "seal the affidavits and advise Organo Gold it was not entitled to any of the documents with respect to [Serenigy's] source of ganoderma." [108] Counsel for Noland/Serenigy also noted that the Court could request information in addition to the affidavits or statutory declarations if needed. And if further questions regarding Noland's communication with Organo Gold's suppliers of ganoderma should arise, counsel can deal with them at examination for discovery. [109] Counsel for Noland/Serenigy further notes that the evidence shows Serenigy contacted Organo Gold's suppliers of ganoderma in December 2009. What has not been disclosed, however, is Serenigy's current supplier. But, if Serenigy's current supplier is not the same as Organo Gold's, counsel submits "disclosing these commercially sensitive documents will serve no purpose and not advance the case in any respect." [110] As for Organo Gold's concern that commercial entities related to Organo Gold's suppliers might also be supplying Serenigy, counsel for Noland/Serenigy submits statutory declarations by Serenigy and Organo Gold should alleviate this concern. Counsel for Noland/Serenigy also submits that Organo Gold, by suggesting that "documents

related to all suppliers, including suppliers of goods and services other than ganoderma, would be subject to this court supervised protocol", has miscast its own application. Such a position, counsel for Noland/Serenigy submits, is "contrary to the pleadings and the applications themselves." [111] In response to Organo Gold's submission that the Court's oversight of this aspect of the document production is "unnecessary and unworkable", counsel for Noland/Serenigy maintains that since the only supplier at issue is the one providing ganoderma, which can be determined "in a single affidavit or statutory declaration", there is no basis for Organo Gold's assertion that the Court's oversight would be "unnecessary and unworkable." 2. Organo Gold [112] In response to Noland/Serenigy's submission that the documentation relating to its supplier of ganoderma becomes relevant only if Serenigy is using the same supplier as Organo Gold, counsel for Organo Gold submits that this "misreads the factual and legal matrix of the litigation, and understates the relevance of the documentation sought." In his written reply to the submissions of Noland/Serenigy, counsel for Organo Gold states his client bases its claim against Noland and Serenigy on Noland's alleged misuse of trade secrets relating to Organo Gold's ganoderma suppliers, as well other confidential information. Counsel for Organo Gold

cites "[c]lear evidence", such as email correspondence, that shows Noland attempted to make use of Organo Gold's information and trade secrets, by contacting Organo Gold's suppliers during December 2009 and making inquiries about having these suppliers also supply his "new business" [113] As such, counsel for Organo Gold submits that it must have access to documents that reveal steps Noland and other representatives of Serenigy took "to obtain a supplier of ganoderma, in order to fully canvas the matters at issue in this litigation and in order to establish whether Organo Gold's confidential information or trade secrets were likely misused" by Noland or Serenigy, which, by necessity, would include documentation that identifies Serenigy's supplier(s). [114] I turn now to the nature of the commercially sensitive documentation in the possession of the parties and my findings regarding them. B. Commercially sensitive documentation in Noland's possession 1. Communications in 2009 between Noland and Organo Gold's distributors, consultants, suppliers and employees [115] Organo Gold demands the following documentation from Noland: (a) All communications during 2009 between Noland and any distributor, consultant, supplier or employee of OGE or OGI. (Noland submitted that this item should be put off until after a comparison of the parties' respective distributor lists has

occurred.) [116] In my view, (a) meets the test under Rule 7-1(1)(a)(i) as "documents that are or have been in the party's possession or control and that could, if available, be used by any party at trial to prove or disprove a material fact". In the alternative, I find this documentation meets the broader Peruvian Guano test, which the Court may still apply where, as in the these proceedings, an application is brought under Rule 7-1(13) of the Supreme Court Civil Rules. [117] Organo Gold's fundamental claim against Noland is that he improperly acted against Organo Gold's interests by contacting Organo Gold's distributors, consultants, suppliers and employees in and around the time of his departure from Organo Gold and by making inquiries of such persons about having them work with his new business, Serenigy. In my view, documentation pertaining to communications between Noland and Organo Gold's distributors, consultants, suppliers or employees "could, if available, be used by [Organo Gold] at trial to prove or disprove" whether Noland improperly acted against Organo Gold's interests and, if so, to what extent. [118] Given the depth of his involvement in Organo Gold before leaving, Noland should know the names of distributors, consultants, suppliers or employers of OGE or OGI with whom he had contact in 2009. He may not be aware of them all, but for those he recalls and has had communications with, he should list and produce records of his communications with them during 2009.

2. Communications between Noland and ganoderma suppliers for Organo Gold or Serenigy [119] Organo Gold also demands the following documents from Noland: (a) All communications between Noland and the suppliers of ganoderma and ganoderma-enriched products for Organo Gold or Serenigy. (I note that Organo Gold already has some of these documents. Noland submits that any further documents of this kind should first be given to the judge to determine whether the names of the suppliers are those of interest to Organo Gold and thus relevant to these proceedings.) [120] To determine whether documents under (b) should be disclosed pursuant to the Supreme Court Civil Rules, counsel for Noland/Serenigy suggests the Court first review them to see if any of Serenigy's ganoderma suppliers are in common with suppliers of Organo Gold. [121] Under the Supreme Court Civil Rules, the capacity of the Court to inspect documents to decide relevancy is, at first glance, unclear. Under Rule 7-1(20), when a party objects to production of a document "on the grounds of privilege", the Court "may inspect the document for the purpose of deciding the validity of the objection." The Rule does not go so far, however, as to allow the Court to inspect a document to determine relevancy. [122] It is also notable that Rule 7-1(20) contains different language than its predecessor Rule 26(12) under the former Rules of

Court. Rule 26(12) did not limit the Court's ability to review documents based solely on privilege; the former Rule allowed the Court to inspect any document to which production was objected, regardless of the grounds of the objection. That said, judicial interpretation of Rule 26(12) has held that a judge hearing an interlocutory application will not review specific documents to determine their relevancy, as the trial judge is best positioned to make this assessment: Langlois v. Ordorfer (1978), 6 B.C.L.R. 260 at 262 (S.C.). This principle is in accordance with the general observation that, before trial, the duty of identifying which documents a party should produce rests with solicitors and their clients. [123] Of course, circumstances might come about that justify a judge hearing an interlocutory application or conducting a case management conference to exercise their discretion in favour of reviewing documents for relevancy prior to disclosure of the documents to one of the parties, but that is not the general rule. I am somewhat fortified in making this statement by Rule 7-1(17), which appears to allow the Court to order production of a document to itself for the purposes of inspection and copying. The Rule states the following: The court may order the production of a document for inspection and copying by any party or by the court at a time and place and in the manner it

considers appropriate. [Emphasis added.] [124] Rule 7-1(17) was considered by Williams J. in Nikolic v. Olson, 2011 BCSC 125 [Nikolic], at paras. 23-25: [23] I begin by highlighting that the object of the Rules of Court is "to secure the just, speedy and inexpensive determination of every proceeding on its merits": R. 1(5) of the former Rules; R. 1-3(1) of the current Rules. R. 1-3(2) of the current Rules adds the principle of proportionality: proceedings ought to be conducted in ways that are proportionate to "the amount involved", "importance of the issues in dispute" and "complexity of the proceeding". [24] Rule 26 of the former Rules and R. 7-1 of the current Rules grant the court broad jurisdiction over the discovery of documents; specifically, the court has the power to order production in any manner it deems just or appropriate. Rule 26(10) of the former Rules stipulates that "The court may order the production of a document for inspection and copying by any party or by the court at a time and place and in the manner it thinks just"; and, R. 7-1(17) of the current Rules stipulates that "The court may order the production of a document for inspection and copying by any party or by the court at a time and place and in the manner it considers appropriate" [emphasis added]. [25] More generally, R. 1(12) of the former Rules provides that "When making an order under these

rules the court may impose terms and conditions and give directions as it thinks just"; and, R. 13-1(19) of the current Rules provides that "When making an order under these Supreme Court Civil Rules, the court may impose terms and conditions and give directions it considers will further the object of these Supreme Court Civil Rules" [emphasis added]. These two general powers may be exercised over any orders made under the Rules of Court, including those pertaining to document discovery. [125] The wording of Rule 7-1(17) allows the Court to order production of a document to a party or to the Court for inspection and copying. Practically, however, the Court uses this Rule almost invariably to order production of a document from one party to another party. I cannot name a decision in which Rule 7-1(17) or former Rule 26(10) was used by the Court to order production of a document to itself. Nonetheless, the Rule appears to permit this. [126] The above statements of Williams J. in Nikolic confirm the Court has a broad discretion under Rule 7-1(17) to order the production of documents in any way it sees fit. I have decided in the circumstances not to exercise this discretion in the manner suggested by counsel for Noland/Serenigy, whereby the Court would review documents for relevancy prior to their disclosure to the parties. This applies to all document requests that counsel

suggested could be handled in such a manner. [127] Where judges of this Court so far have considered use of Rule 7-1(17), they have exercised discretion to deny ordering the production of documents in situations such as where: (a) thousands of documents of only possible relevance were in question; and (b) the documents sought did not have significant probative value; and the value of their production was outweighed by competing interests, such as confidentiality and the time and expense required for the party to produce the documents. See Park v. Mullin, 2005 BCSC 1813 [Park], at para. 15. [128] Counsel for Noland/Serenigy has withheld disclosure of its ganoderma supplier information on the basis that its production may be "irrevocably devastating" to Serenigy's business position. In his submissions, for Noland/Serenigy says the following in this regard: Both Organo Gold and [Serenigy] are in the healthy beverage and supplements industry, selling via multi-level marketing networks. This is a highly competitive and lucrative market based on personal relationships and credibility. The source and quality of the products being sold is an essential element of a successful business. Where mass mails and internet posts are the norm for communication, the identification of a supplier or comments regarding another's suppliers can be irrevocably devastating. [129] These assertions

however, while inherently plausible, fall somewhat short of giving the Court a clear sense of how Noland/Serenigy's disclosure of its suppliers to Organo Gold will cause irrevocable devastation to its business. [130] In my view, consideration (a) under Park does not apply in the case at bar. As for (b), I find the documents sought have significant probative value; and although the confidentiality interests are by no means insignificant, I find that any prejudice the parties may suffer through disclosing the documents sought is largely redressed by the terms of the Confidentiality Order and the general obligation of the parties to maintain their confidentiality: Laxton v. Coglon et al, 2006 BCSC 1458, at para. 21. [131] Moreover, I find the prejudice Organo Gold will suffer from an inability to advance its case outweighs the confidentiality and privacy interests of Noland and Serenigy. In North American Trust Co. v. Mercer International Inc. (1999), 71 B.C.L.R. (3d) 72 (S.C.) [Mercer International] at para. 11, Lowry J. held: [11] In the cases to which I have been referred, litigants have been relieved from disclosing the whole of a document related to a matter in question where, but only where, the part withheld has been clearly not relevant to the issues and, because of its nature, there has been good reason why that part should not be disclosed. With reference to the

decisions of this court specifically, good reason is apparent in the private nature of the affairs of a company recorded in the minutes of its directors' meetings, or the personal sensitivity of a person's medical records, diary notations, or familial communications, and much the same can be said where expurgated disclosure of a document has been upheld in the cases cited from other jurisdictions. ... [132] When the judges in both Park and Mercer International were deciding whether to allow applications for production of documents, they based the exercise of their discretion on a conjunctive test. (a) In Park: the documents sought must not have significant probative value and the value of their production must be outweighed by competing interests (e.g. confidentiality). (b) In Mercer International: the documents sought must be clearly not relevant to the issues and there must be good reason for their non-disclosure (e.g. confidentiality). [133] In my view, stated positively, the ganoderma supplier information is of significant probative value (Park) and is clearly relevant to the issues (Mercer International). As such, the documents are to be produced, subject to certain limitations and instructions to which I will turn next. [134] Organo Gold alleges Noland has breached confidential information about the identity of its ganoderma suppliers, which, I find, thereby renders

documentation he controls relating to Serenigy's ganoderma suppliers usable to "prove or disprove" whether such wrongdoing occurred; but only within a limited time frame and only for those ganoderma suppliers who are currently supplying both Organo Gold and Serenigy or those ganoderma suppliers who have supplied both companies at some point in time since Serenigy's incorporation. [135] Given the nature and extent of Organo Gold's claims against Noland, Organo Gold has cast the document production net too wide. All documents relating to suppliers used by both Organo Gold and Serenigy are relevant, but not beyond a reasonable date; and documents relating to suppliers used by Serenigy alone are relevant only insofar as they might tend to show when Noland began working against the interests of Organo Gold. For such suppliers, it is the fact orders were placed, the date of the orders and their quantities that are relevant, not the identities of the suppliers. The document net can be drawn in somewhat to encompass a narrower timeline without prejudicing the positions of the parties. Although Noland/Serenigy have not fleshed out a very tangible basis for their claims of irrevocable damage to Serenigy's commercial interests, a likelihood of some commercial disadvantage is a reasonable supposition; and to the extent this can be minimized without prejudicing Organo Gold's ability to

prove its case, the order for production should attempt to accommodate it. [136] I therefore order the parties to proceed this way, pursuant to Rule 7-1(17) of the Supreme Court Civil Rules: 1. Noland shall list all suppliers of ganoderma products he has communicated with since his departure from Organo Gold until April 1, 2010. He shall produce this list, together with copies of all relevant communications, to his counsel.

2. Noland shall also compile a list of all of Serenigy's suppliers up to June 1, 2010, together with documents relating to the identity of Serenigy's suppliers of ganoderma, including, but not limited to, original purchase orders and contracts and all subsequent re-ordering documents for the supply and delivery of ganoderma extract and for herb formulations for all suppliers. He shall produce this list and documentation to his counsel.

3. Organo Gold shall list all its suppliers of ganoderma products between January 1, 2009 and January1 2010, together with documents relating to the identity of Organo Gold's suppliers of ganoderma, including, but not limited to, original purchase orders and contracts and all subsequent re-ordering documents for the supply and delivery of ganoderma extract and for herb formulations for all suppliers. Organo Gold shall provide this list and documentation to its counsel.

4. Counsel for the parties shall meet on an agreed date and time. They shall exchange the lists of suppliers their clients have produced to them.

5. Counsel shall then compare the lists and identify the names of any suppliers contained in Organo Gold's list that are also contained in Noland's lists, including the date they first began supplying product to Serenigy. From the lists, they shall jointly compile a list of any names in common between the two lists, and each initial it.

6. Counsel shall then prepare an agreed statement of facts confirming the names of any suppliers both parties included in their respective lists provided to counsel. If there are no suppliers listed in common, they shall state that as a fact.

7. The lists provided by counsel and the list of common names, if there are any, shall then be placed in an envelope sealed and initialed by both counsel. The envelope shall be filed accompanied by an explanatory affidavit, sworn/affirmed by both counsel. The envelope shall remain under seal until further order of the Court.

8. For any supplier of Organo Gold that Noland has communicated with, Noland shall provide to Organo Gold copies of all related communication with that supplier in his possession or within his control.

9. For those suppliers with which Noland has communicated but are not in the list of suppliers also used by Organo Gold, he shall provide counsel with related documents, including, but not limited to, original purchase orders and contracts and all subsequent re-ordering documents for the supply and delivery of ganoderma extract and for herb formulations for all such suppliers up until April 1, 2010. He shall provide counsel with copies of all documents in his possession or control relating to orders placed by him or Serenigy, showing quantities ordered, amounts delivered and relevant order and delivery dates. Counsel may redact any information that may tend reveal the identity of the supplier before listing and delivering the documents to Organo Gold. C. Commercially sensitive documentation in Serenigy's possession [137] Organo Gold demands the following documentation in Serenigy's possession: (a) Lists of distributors or representatives. (Counsel for Noland/Serenigy submitted this demand be put off for now, subject to a comparison of the distributor lists.) (b) All documentation relating to the identity of Serenigy's suppliers of ganoderma, including but not limited to original purchase orders and contracts and all subsequent re-ordering documents for the supply and delivery of ganoderma extract and for herb formulations for all suppliers. (Serenigy submits that if production

of this documentation is ordered, such documentation should first be reviewed by the judge to determine relevance.) (c) All contracts between Serenigy and any person previously or currently a supplier, consultant, employee, or distributor of Organo Gold. (d) All correspondence from Serenigy, or on Serenigy's behalf, to any person who was previously or currently is an Organo Gold distributor or representative. (Organo Gold submitted that production of this item be put off for now, subject to a comparison of the distributor lists.) (e) All correspondence from Serenigy to its distributors from the time of its incorporation to present (Organo Gold submitted that production of this item be put off for now, subject to a comparison of the distributor lists.) [138] Item (b) is covered by the order at para.

136. Item (c) is also covered by the order at para. 136, but only with respect to suppliers. As for (a), (d), (e) and the remaining requests under (c), I find these items are subject to production, because the documentation could be used by Organo Gold at trial "to prove or disprove" whether Noland, and by extension Serenigy, worked against Organo Gold's interests by soliciting and/or recruiting its distributors, representatives, consultants or employees in an improper manner and, if so, to what extent. As for how the documentation listed above is to be produced, I order the parties to proceed this way, pursuant to Rule 7-1(17) of the Supreme Court Civil Rules: 1. Serenigy shall gather lists of its distributors, representatives, employees and consultants to March 1, 2010, and produce them to its counsel. Organo Gold shall do likewise, but only to January 1, 2010.

2. Counsel for the parties shall meet on an agreed date and time. They shall exchange the lists of distributors, representatives, employees and consultants their clients have produced to them.

3. Counsel shall then compare the lists and identify the names of any distributors, representatives, employees and consultants contained in Organo Gold's list that are also listed on Serenigy's list, including the date they first began distributing product for, consulting for representing, or working for the companies. They shall compile a list of any names in common between the two lists, and each initial it.

4. They shall then prepare an agreed statement of facts confirming the names of any common person or entity included by the parties in the lists they provided to counsel. If there are none, they shall state that as a fact.

5. The lists provided by counsel and the list of common names, if there are any, shall then be placed in an envelope sealed and initialed by both counsel. The envelope shall be filed accompanied by an explanatory affidavit, sworn/affirmed by both counsel. The envelope shall remain under seal until further order of the Court. D. Commercially sensitive documentation in Organo Gold's possession [139] The following documentation in the possession of Organo Gold is demanded by Noland/Serenigy: (a) Profit sharing declarations, distributions, dividends from OGE, and the Business Center. (The Draft Order does not include "the Business Center"; instead, it concludes with the phrase "or its related partnership".) (b) Master Distributor Account statements; and (c) Any and all payments to the individual Defendants regardless of classification from any Organo Gold entity. [140] In the June 22, 2011 letter from counsel for Noland/Serenigy to counsel for Organo Gold, Noland/Serenigy notes that Organo Gold "agreed to determine whether the [Business Center account statements] can be produced with the names of certain distributors redacted." [141] I note that in the letter dated July 6, 2011, written by counsel for Organo Gold to counsel for Noland/Serenigy, Organo Gold states its agreement "to production of our clients' respective distributor lists to a third party for comparison, although the

details of this arrangement have not been worked out." [142] Counsel for Organo Gold referred to its fourth amended list of documents, which is attached to the affidavit of Lauren Carey, sworn January 17, 2012. This list reveals that Organo Gold has thus far provided Noland with weekly and monthly earnings reports from the Master Distributor Account from January 2010 to July 2011. Counsel for Organo Gold also noted that the form of these reports differ somewhat from the computer screen shots of the Master Distributor Account, mentioned earlier, but submitted that the information contained in the reports was the same. [143] Organo Gold's most recent document disclosure occurred on January 10, 2012. Noland/Serenigy submit this disclosure is incomplete, because it ... still does not contain any information about the [Organo Gold] in the United States, any account details and financial information for the Partnership or any of the corporate entities, through which it conducts business, any invoices from each of the [individual] Defendant's respective companies to the corporate Defendant, or any agreements between the individual Defendants or companies in which they hold an interest. [144] I find that the documentation listed under (a), (b) and (c) satisfies the test for production under Rule 7-1(1)(a) and, at the very least, the Peruvian Guano standard. Noland's fundamental claim

in these proceedings is that he was in a partnership with Chua and Morand and, as such, is entitled to an ongoing share of the partnership's profits. I agree with Noland that documentation setting out the corporate finances and accounting of Organo Gold "could be used by [Noland] at trial to prove or disprove" the nature of the business association between the parties and, if Noland is successful in establishing that the parties were in a partnership, the share of profits to which he is entitled. [145] For items (a) and (b), Organo Gold shall provide all documents relating to these items. [146] As for (b), Organo Gold shall provide documentation for the periods commencing from the date the parties first engaged in a joint enterprise through Organo Gold forward. As for financial information relating to the Master Distributor Account, Organo Gold shall provide financial reports and related documentation in form and content that substantially reflects what is contained in the computer print screen marked as exhibit 53 to Noland's October 25, 2011 affidavit. If the print screen shots are available or are recoverable from Organo Gold's computer systems, Organo Gold shall provide these to Noland. [147] As for item (c), Organo Gold shall provide all documents relating to this item. I note that this item did not appear to be very contentious at the hearing. VIII. Examination for

discovery costs thrown away [148] The plaintiff, Noland, is entitled to travel costs at scale B for attendance at one day of examinations for discovery, but not for preparation. IX. Costs on these applications [149] Success on the document production issue was divided. The personal defendants, OGE and OGI were substantially successful on the Mareva injunction application. I award them one-half of the costs of the hearing and for preparation. X. Conclusion [150] The parties are at liberty to refine the production orders I have made relating to the commercially sensitive documentation if they are able to do so by consent. [151] In my view, proper document production will give both parties what they require to conduct their cases effectively. "N. Brown J."