Executive Summary: Key Legal and Evidentiary Issues

• Relevance of the unanimous shareholders agreement to determining whether Allen controlled Pillar during the alleged breach period.

• Materiality of Pillar’s submission to SaskTel in relation to the alleged solicitation in breach of the non-solicitation agreement.

• Justification and permissibility of redacting confidential information from documents required for disclosure.

• The extent to which confidentiality and proprietary concerns can limit document production in civil litigation.

• Application of The King’s Bench Rules regarding disclosure, relevance, and the implied undertaking for confidential information.

• Entitlement of the plaintiffs to test the defendants’ evidence through full production of relevant documents.

Facts of the case

The plaintiffs, Grohner Holdings Ltd. and Comtech (Communication Technologies) Ltd., initiated proceedings against the defendants, Kevin Allen and Pillar Telecom Ltd., alleging breach and inducement of breach of a non-solicitation agreement. The dispute arose after Grohner purchased Allen’s former interest in Comtech and other entities, with Allen agreeing not to solicit business from SaskTel for himself or any entity under his control during a specified term. The plaintiffs claimed that Allen, directly or through Pillar, solicited SaskTel’s business during the restricted period, either breaching the agreement himself or causing Pillar to do so. Pillar and Allen denied these allegations, asserting that Allen was only a minority shareholder and did not control Pillar or participate in any solicitation of SaskTel business.

Discussion of policy terms and clauses at issue

Central to the dispute was the interpretation and application of the non-solicitation agreement, particularly clause 2.1(c), which prohibited Allen and any entity under his control from soliciting, bidding for, or inducing SaskTel to enter into contracts with them during the term of the agreement. The plaintiffs argued that Allen’s actions, including submitting a sales offer to SaskTel as Chief Financial Officer of Pillar and accepting a contract as a preferred supplier, constituted breaches of this clause. The question of whether Allen controlled Pillar at the relevant time was pivotal, as the agreement’s restrictions extended to entities under his control.

The undertakings and document production

During pre-trial proceedings, the plaintiffs requested two key documents from Pillar: an unredacted copy of the unanimous shareholders agreement and a copy of Pillar’s submission to SaskTel for preferred vendor status. Pillar initially provided a redacted version of the shareholders agreement and refused to produce the SaskTel submission, citing confidentiality, proprietary concerns, and irrelevance. The court examined whether these objections were valid under The King’s Bench Rules, which require disclosure of all documents relevant to matters in issue. The court emphasized that relevance is determined by the pleadings and that confidentiality alone does not override the obligation to produce relevant documents, especially when adequate protections exist for confidential information disclosed in litigation.

Analysis and findings

The court found that the unanimous shareholders agreement was logically relevant to the issue of Allen’s control over Pillar, as this would inform whether the non-solicitation agreement had been breached. The court also determined that the submission to SaskTel was material to the central allegations and necessary for the plaintiffs to test the defendants’ evidence regarding the alleged solicitation. The court held that Pillar’s redactions to the shareholders agreement were not justified, as there was insufficient evidence that only irrelevant information had been withheld. Similarly, the court rejected Pillar’s confidentiality objections to producing the SaskTel submission, noting that the implied undertaking and procedural safeguards in the rules provided adequate protection for sensitive information.

Ruling and outcome

The court ordered Pillar to produce an unredacted copy of its unanimous shareholders agreement and the submission made to SaskTel (excluding the health and safety manual) within fourteen days. The court also awarded costs of the application to the plaintiffs, to be assessed according to the prescribed tariff for contested applications. The outcome favored the plaintiffs, granting them access to the documents necessary to pursue their claims and test the defendants’ assertions. The exact monetary amount for costs was not specified in the decision and is to be determined in accordance with the applicable tariff.