Executive Summary: Key Legal and Evidentiary Issues

• The defendants' application to withdraw three affidavits filed by a paralegal, Heather McLaughlin, was dismissed.
   
• Cross-examination of Ms. McLaughlin was ordered on the sources of certain "Substantive Evidence" contained in her affidavits.
   
• Disqualification of defendants' counsel, Ian Fleming, was considered but not granted at this stage, pending further evidence.
   
• A subpoena issued to Mr. Fleming was conditionally set aside, subject to what emerges from the Examination.
   
• Waiver of privilege over Mr. Fleming's file was found to be limited to, and dependent on, whether his firm was the source of the Substantive Evidence.
   
• Mr. Fleming was granted an extension of time to provide a responsive statement regarding his involvement in the underlying disputes.
   

Facts of the case

This decision arises from two related actions in the Supreme Court of British Columbia between Ann Elizabeth Nadalini and her personal services corporation, Nadalini Pharmacy Ltd. ("NPL"), and Mayana Adar Pharmacy Limited ("Mayana"), Shema Pharmacy Ltd. ("Shema"), and Dirk and Ingrid De Villiers. Ms. Nadalini began working with Mayana around 2019, and the parties dispute whether she was an employee or providing services through NPL under a contract. In 2020, NPL invested in Mayana, becoming a 10% shareholder through a share purchase agreement ("SPA") under which the defendants sold shares to the plaintiffs for $100,000. The relationship deteriorated, and the plaintiffs allege Ms. Nadalini was dismissed without cause on February 4, 2022, while the defendants say they ended a services contract with NPL on the same date. The plaintiffs further allege oppressive conduct, including failure to repurchase shares and share returns of capital, and commenced action S2830 on May 5, 2022, seeking remedies for wrongful dismissal and oppression.

After the claim was filed, Ms. Nadalini declined to sign an attestation required to renew Mayana's pharmacy licence. Mayana subsequently transferred its assets to Shema on September 30, 2023 [Schedule A dates this disposition October 1, 2023], eliminating the need for the attestation. The plaintiffs allege this transfer, which they were not permitted to vote on, was a fraudulent conveyance. The defendants commenced their own action, S2916, on August 30, 2024, alleging breaches of contract by the plaintiffs; the two actions were later ordered to be tried together. Between October 2023 and November 2025, a paralegal at defendants' counsel's firm, Ms. McLaughlin, filed three affidavits addressing substantive matters in dispute, much of which was unattributed as to source. Concerned about defendants' counsel Mr. Fleming's possible direct involvement in the substantive disputes, the plaintiffs raised conflict of interest concerns in an August 27, 2025 letter, brought an application on September 5, 2025 to disqualify Mr. Fleming, and issued a subpoena to him on January 6, 2026. The defendants, in turn, applied to withdraw Ms. McLaughlin's affidavits, and Mr. Fleming applied to set aside the subpoena. With trial scheduled for September 28, 2026, the applications were heard together on an expedited basis.

Policy and legislative provisions at issue

The plaintiffs' oppression claims engage the Business Corporations Act, under which the Plaintiffs' Application sought relief regarding the affairs of Mayana. The alleged fraudulent transfer of assets from Mayana to Shema was said to engage the Fraudulent Conveyance Act, R.S.B.C. 1996, c. 163. Procedurally, the application to set aside the subpoena engaged both the court's inherent jurisdiction over abuse of process and Rule 12-5(39) of the Supreme Court Civil Rules, which permits a subpoenaed person to apply to set aside a subpoena on the basis that compliance is unnecessary or would work a hardship. The conflict of interest issues were also informed by Rule 7-5, referenced in the plaintiffs' August 27, 2025 letter requesting a responsive statement from Mr. Fleming regarding the Shema asset transfer and dealings with the College of Pharmacy.

Reasoning and analysis

On the withdrawal application, Justice Branch applied the factors set out in P.G. v. L.S.G., 2004 BCSC 518, finding that the affidavits were not filed by mistake, had already been used before the Court, and were relied upon in the plaintiffs' disqualification application. The judge inferred the withdrawal application was a strategic move to avoid the affidavits' negative impact on the defendants' position, and found the plaintiffs would be prejudiced by withdrawal, that policy considerations weighed against it, and that the administration of justice would suffer. On that basis, withdrawal was refused, though a limited cross-examination of Ms. McLaughlin was ordered to probe the source of the unattributed "Substantive Evidence."

On disqualification, the Court applied the cautious approach required for this "extraordinary remedy," citing Gichuru v. Purewal, 2017 BCCA 281 and Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36, and considered the multi-factor test from Axion Ventures Inc. v. Bonner, 2026 BCSC 90. The judge reviewed each of the plaintiffs' five grounds — the McLaughlin affidavits, a September 27, 2023 letter from Mr. Fleming, statements in Mr. Fleming's own affidavit, his role as Mayana's corporate counsel, and his alleged material evidence on several disputed topics — and found none currently sufficient to justify disqualification, though several remained open pending further evidence. The judge was not persuaded that the Letter's language, Mr. Fleming's affidavit statements about the Shema transaction being handled by a separate firm, or his role as corporate counsel supported disqualification, relying in part on Bhatti v. Yellow Cab Company Ltd., 2023 BCSC 2530 for the principle that a corporation is distinct from its shareholders.

On the subpoena, the Court applied the principles from McMahon v. Harper, 2017 BCSC 2328, The Law Society of British Columbia v. Yehia, 2009 BCSC 1759, R. v. 1504413 Ontario Limited, 2008 ONCA 253, and Wexler v. Bhullar, 2006 BCSC 1466, emphasizing the significant onus on a party seeking to subpoena opposing counsel and the risk of interference with the lawyer-client relationship. The judge found the subpoena should be set aside unless the Examination or Mr. Fleming's response reveals he or his firm was the source of the Substantive Evidence. On privilege, applying Graham v. Canada (Minister of Justice), 2021 BCCA 118 and related authorities, the Court found any waiver was similarly conditional on that same source-of-evidence determination, noting Mr. De Villiers' affidavit disclaiming any intention to waive privilege.

Ruling and overall outcome

The Court's orders reflect a mixed outcome for both sides. The defendants' application to withdraw the Affidavits was dismissed, a result favouring the plaintiffs, while the plaintiffs' request to disqualify Mr. Fleming and their broader subpoena were not granted outright, with the subpoena instead set aside unless future evidence shows Mr. Fleming or his firm was the source of the disputed Substantive Evidence. The Court ordered a limited two-hour cross-examination of Ms. McLaughlin, granted Mr. Fleming an extension to provide a responsive statement, and found that any waiver of privilege was contingent on the outcome of that further evidence-gathering. No monetary award, costs, or damages were determined in this decision; the judgment specifies that if the parties cannot agree on costs, the plaintiffs may file submissions at the earliest 30 days after the Examination is completed, with the defendants entitled to the same timeline and 15 days to reply thereafter.