CITATION: Canadian National Railway Company v. Holmes et al., 2022 ONSC 1682  
COURT FILE NO.: CV-08-7670-00CL  
DATE: 2022-03-17  
) Monique J. Jilesen, Rebecca Jones, Brendan  
) F. Morrison, Jennifer Power, for the  
Applicant )  
and –  
LYNN PARISIEN, also known as  
JENNIFER LYNN FLYNN in her personal  
capacity and as the sole proprietor and  
John Kingman Phillips, Marc A. Munro, for  
Scott Holmes, Jennifer Lynn Flynn,  
Complete Excavating Ltd., Efficient  
Construction, 2035113 Ontario Ltd.,  
Monterey Consulting & Construction Ltd.,  
2071442 Ontario Ltd., the Scott Holmes  
Living Trust, and the Jennifer Lynn Flynn  
Living Trust  
his personal capacity and operating as TRAX  
personal capacity and operating as TRAX  
) Eric S. Block, Christine Wadsworth, for  
) certain CN Police individuals  
2071438 ONTARIO LTD., operating as  
HEARD: May 19-21, 25-28, 31; June 1-4,  
7-9, June 14-18, 21-26, August 5-6, 2021  
Page: 2  
In June 2008, Canadian National Railway Company’s (“CN”) Chief Executive Officer  
received an anonymous, undated letter advising CN that Scott Holmes was causing it to  
contract with companies of which he was the beneficial owner. CN investigated and  
interviewed Holmes as part of that investigation. As a result of that interview, CN  
terminated Holmes’ employment on July 9, 2008. It commenced this action shortly  
In this action, CN claims $12,476,703 plus punitive damages of $1,000,000 against  
Holmes, Jennifer Lynn Flynn, Complete Excavating Ltd., Efficient Construction, 2035113  
Ontario Ltd., Monterey Consulting & Construction Ltd., 2071442 Ontario Ltd., the Scott  
Holmes Living Trust, and the Jennifer Lynn Flynn Living Trust (collectively, “the  
defendants”).1 It also seeks judgment against Scott Pole.  
The action is rooted in the conduct of Holmes. Holmes had authority within CN to hire  
contractors and approve invoices. Unbeknownst to CN, Holmes created several  
corporations of which he was the beneficial shareholder and caused CN to hire them. CN  
alleges that: (1) in many cases, the work for which the Holmes Companies billed could  
have been obtained at a lower rate elsewhere; (2) the Holmes Companies billed CN for  
1 Summary judgment was granted against the defendants Greyslone Ltd. and Belview Management Ltd. at an earlier  
stage. The other remaining defendants were released from the action at various times.  
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work that was never done (“phantom billing”); and (3) that Holmes took scrap rail owned  
by CN and sold it for his personal benefit through one of his corporations.  
CN also alleges that Holmes diverted the benefits of the scheme to the Scott Holmes Living  
Trust, Jennifer Flynn (his common law spouse), and the Jennifer Flynn Living Trust.  
CN claims compensation for breach of fiduciary duty, deceit, breach of contract, breach of  
confidence, conspiracy, and conversion. In addition to monetary relief, CN seeks  
accounting and tracing remedies and the imposition of a constructive trust in favour of CN  
over the property of Holmes, Flynn, and their personal trusts.  
Holmes admits that he incorporated several companies, caused CN to hire those companies,  
and approved invoices in their favour. Holmes denies the phantom billing and conversion  
Holmes submits that CN has failed to establish compensable harm because he says his  
companies charged CN less than other companies would have. The absence of damage,  
Holmes submits, must lead to the dismissal of the claims because they require damage as  
a constituent component.  
In addition, Holmes submits that disgorgement is a discretionary remedy which should be  
denied here because CN ran a lengthy, wasteful receivership of his affairs, which cost over  
$7,000,000 and which dissipated essentially all of his and Flynn’s assets. Holmes argues  
that whether his invoices to CN amounted to a breach of duty entitling CN to disgorgement  
could have been addressed as a simple legal issue that would have avoided what he  
describes as a 13 year war of attrition.  
While I agree with Holmes that the receivership took far more time and money than it  
should have, I attribute that to a pattern of obstruction and deceit by him and Flynn  
throughout the process.  
[10] For the reasons set out below, I find the defendants Holmes, Flynn, Complete Excavating  
Ltd., Efficient Construction, 2035113 Ontario Ltd., Monterey Consulting & Construction  
Ltd., 2071442 Ontario Ltd., the Scott Holmes Living Trust, and the Jennifer Lynn Flynn  
Living Trust liable to disgorge to CN the amount of $10,264,237 (reflecting the profit they  
earned from CN).  
[11] Holmes and his companies are liable to CN for breach of fiduciary duty, breach of contract,  
breach of confidence, and deceit.  
[12] It is no answer for Holmes to say that CN suffered no damage because it would have had  
to pay more elsewhere for the work Holmes and his companies performed. Giving weight  
to that defence would allow any faithless fiduciary to assert that they were giving the  
beneficiary a better deal than they could get elsewhere. This defence misconceives the  
nature of a claim for breach of fiduciary duty. The claim is based on a breach of trust and  
a misrepresentation of the nature of the relationship. Courts have long recognized the need  
for disgorgement as the appropriate remedy for breach of fiduciary duty to deter others  
from similar breaches. Moreover, Holmes introduced no evidence of more expensive bids  
from other parties.  
[13] I find Flynn liable for conspiracy. As part of the conspiracy, Flynn engaged in  
independently actionable conduct, namely, breach of the duty and standards of care she  
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owed as a director of Holmes’ companies and deceit. By way of example, when she  
became a director and officer of Holmes’ companies, she began using her birth name,  
Jennifer Parisien. She signed all corporate documents as Jennifer Parisien. She did not  
use that name in any other aspect of her life. She signed a long string of corporate  
documents without, she says, knowing what she was signing. In those documents, she was  
attesting, among other things, to having attended meetings with various individuals who  
also co-signed the documents. The meetings never occurred, the signatures of her co-  
signatories were forged, and one co-signatory was an entirely fictitious person. Flynn knew  
or ought to have known that she was doing all of this as part of Holmes’ scheme to breach  
his duties to CN.  
[14] I decline to find the defendants liable for phantom billing or conversion. Those decisions  
are based on inadequate disclosure by CN in its pleading and in answer to requests for  
particulars. Although CN was asked for particulars of these allegations during the course  
of the litigation, it failed to provide particulars for several years even though full particulars  
were in its possession. In other cases, CN buried the relatively few relevant particulars by  
referring generally to thousands of documents even though it knew or ought to have known  
that many of the documents referred to as particulars were, in fact, irrelevant to the issue  
in respect of which the particulars were provided.  
[15] In my view, CN’s lack of disclosure impaired the defendants’ ability to defend against  
allegations of phantom billing and conversion. It would, in my view, result in serious  
unfairness in the trial process to allow those claims to continue.  
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[16] I decline to award judgment against Scott Pole. CN seeks both default judgment against  
Pole and judgment based on the evidence at trial. Default judgment is available if the facts  
alleged in the Statement of Claim are sufficient to support a judgment. The Statement of  
Claim does not contain sufficient factual allegations against Pole to warrant default  
judgment. Rather, the claim makes general allegations of legal conclusions against Pole.  
The only facts that could possibly support a judgment against Pole were those that Holmes  
levied at trial. As set out in the reasons below, I find that Holmes lacked credibility and  
am therefore not prepared to award judgment based solely on Holmes’ evidence—  
especially when such testimony was designed to deflect liability from Holmes onto Pole.  
[17] I have structured these reasons to consider each individual cause of action in Part One  
followed by a discussion of remedies in Part Two.  
[18] In the period leading up the trial and during the trial, I heard a number of motions that  
attempted to dispose of the entire claim or certain parts of it. I provided dispositive  
endorsements to those motions at or shortly after the conclusion of argument with reasons  
to follow. The grounds for those dispositions are contained in these reasons as the issues  
to which they relate arise.  
The Key Parties  
[19] CN describes itself on its website as a publicly traded transportation and logistics company  
with approximately 20,000 miles of railway from east to west in Canada and south from  
various points in Canada to the Gulf of Mexico. As of 2018, it had approximately 24,000  
employees. While the number of employees between 1999 and 2008 was not in the record  
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before me, CN was at all material times a significant public company with employees in  
the many thousands.  
[20] Holmes joined CN as a Track Labourer as soon as he completed grade twelve in 1981. He  
worked his way through the ranks, becoming an Assistant Foreman, Foreman, Production  
Supervisor, Program Supervisor, and Track Supervisor. His base salary at CN was never  
greater than $94,000 (plus an annual bonus of approximately $10,000).  
[21] Holmes’ first wife was Janice Holmes. Their marriage ended around 2005.  
[22] In September 2005, Holmes began living with his current common law spouse, Jennifer  
Flynn. Flynn is also referred to in many of the documents introduced at trial as Jennifer  
Lynn Parisien. As noted earlier, Parisien was her birth name. To ensure precision, I will  
refer to her in these reasons by the name she used for the individual point at issue. In all  
cases, however, Flynn and Parisien are the same person.  
[23] The Scott Holmes Living Trust and the Jennifer Lynn Flynn Living Trust are two trusts  
that Holmes and Flynn created to hold assets purchased with funds received from CN.  
[24] Efficient Construction, Complete Excavating Ltd., and Monterey Consulting &  
Construction Ltd. are the three operating companies through which Holmes did business  
with CN (the “Holmes Companies”).2 Holmes is the beneficial owner of all three  
companies. All three billed almost exclusively to CN. They had no other customers that  
2 Together with 2035113 Ontario Ltd. and 2071442 Ontario Ltd.  
Page: 8  
generated any material income. Between 1999 and 2008, the Holmes Companies billed  
CN $20,633,064.  
[25] Scott Pole was an employee of the Holmes Companies. Pole did not defend the action and  
was noted in default.  
[26] Michael and Rick Sousa are brothers who were the beneficial owners of Trax Unlimited  
and Complete Trax. They provided services to CN through these two companies. The  
action was settled against the Sousas and their companies in 2012.  
[27] CN claims relief for breach of fiduciary duty, breach of contract, breach of confidence,  
phantom billing, conversion, and conspiracy. I will address each cause of action in turn.  
I. Fiduciary Duty Claim - The Facts  
[28] CN alleges that Holmes breached his fiduciary duty by causing CN to contract with the  
Holmes Companies.  
[29] Two preliminary issues arose with respect to the fiduciary duty claim. First, CN submitted  
that the claim was res judicata by virtue of an earlier decision of Justice Chiappetta.  
Second, an issue arose about what use, if any, could be made of materials that were prima  
facie privileged. The res judicata motion was heard at the end of the partiesopenings at  
trial. The issue about privilege was argued one week before trial on May 13, 2021. I  
provided dispositive results of both issues on the day they were argued with reasons to  
follow. Those reasons follow here in Sections A and B.  
Page: 9  
A. Is the Breach of Fiduciary Duty Claim Res Judicata?  
[30] The res judicata motion arises out of a decision of Justice Chiappetta: Holmes v. Lerners  
[31] The issue that Chiappetta J. had before her was an appeal from an arbitrator who had  
conducted a costs assessment of Holmes’ former lawyer, Don Jack. Approximately eight  
months after Holmes retained Jack, the two had a falling out. Holmes commenced an  
assessment of Jack’s accounts, which proceeded before an arbitrator.  
[32] The arbitrator reduced Jack’s fees by approximately 10%. Holmes appealed and sought to  
have the accounts reduced to zero.  
[33] During the course of the private arbitration, Jack included in the record a letter that he had  
written to Holmes on September 3, 2008 while he was acting as Holmes’ counsel. The  
letter stated, among other things:  
However, the core of CN’s case is that you caused and permitted  
CN to carry on business with companies in which you had an  
ownership interest, and you did not disclose that ownership interest  
to them. You have confirmed to us that this core complaint of CN’s  
is true, and the truth of that allegation is the reason we are attempting  
to put you, ourselves, CN’s counsel and CN in the position where  
we can frankly discuss potential settlement.4  
[34] Jack put the letter into the record on the costs assessment to demonstrate the complexity of  
his retainer and, in turn, explain the relatively high costs. The letter made its way into a  
3 2014 ONSC 5449.  
4 Exhibit 61.  
Page: 10  
four-volume appeal record before Justice Chiappetta. Holmes never asked for the appeal  
record, or any portion of it, to be sealed.  
[35] Justice Chiappetta’s decision refers to the letter and the acknowledgement of self-dealing.  
CN submits that an acknowledgement of self-dealing is an admission of a breach of  
fiduciary duty which renders either the breach of duty or, at a minimum, the self-dealing,  
res judicata.  
[36] To successfully invoke principles of res judicata, a party must demonstrate that a question  
of law or fact was distinctly put in issue in a prior proceeding and was directly determined  
in a final judgment between the same parties or their privies in interest. In addition, the  
issue cannot have been raised collaterally or incidentally in the prior proceeding.5  
[37] On my view of events, the issue of whether Holmes caused CN to do business with the  
Holmes Companies without CN’s knowledge was not a question that was before Justice  
Chiappetta. As noted, Her Honour was hearing an appeal from an arbitrator’s decision on  
a costs assessment. The issue was solely whether the arbitrator had made a palpable and  
overriding error in settling Jack’s costs. Neither self-dealing nor breach of fiduciary duty  
had anything to do with whether the arbitrator made such an error. At best, the issue of  
self-dealing arose collaterally or incidentally on the appeal from the arbitrator’s decision.  
[38] As a result, no aspect of the breach of fiduciary claim is res judicata.  
5 Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at para. 24.  
Page: 11  
B. Can “Privileged” Materials Be Entered into Evidence?  
[39] The Jack letter was prima facie privileged. The appeal record included other information  
that was prima facie subject to solicitor client privilege. CN submits that Holmes waived  
any privilege over those materials by including them in a public record. Holmes submits  
that waiver of privilege requires a deliberate, conscious intention on the part of the client  
and that he had no such intention. At best, says Holmes, any waiver was inadvertent.  
[40] The first issue on the motion to admit was whether I was permitted to review the Jack letter  
for the purposes of the motion. Holmes submitted that I was not. I ruled that I was. Courts  
have long been permitted to inspect documents over which privilege is claimed in order to  
determine whether privilege attaches.6 It has also been held that it is a reviewable error for  
a judge to rule on the issue of privilege without inspecting the documents at issue.7  
[41] Turning to the main issue on the motion, the legal principles are not in dispute:  
(i) Confidentiality is an essential element of privilege. Without confidentiality,  
privilege is waived.8  
(ii) Privilege cannot attach to information that is already in the public domain  
because it lacks the element of confidentiality.9 When a party introduces  
privileged material into a public record, it effectively waives privilege.10  
6 Solosky v. The Queen, [1980] 1 S.C.R. 821, at p. 837; Foster Wheeler Power Co. v. Societe intermunicipale de  
gestion et d’elimination des dechets Inc., 2004 SCC 18, [2004] 1 S.C.R. 456, at para. 47.  
7 Procter & Gamble Co. v. Nabisco Brands Ltd. (1989), 97 N.R. 379 (Fed. C.A.).  
8 Adam M. Dodek, Solicitor-Client Privilege (Toronto: LexisNexis Canada, 2014), at c. 7; Sidney N. Lederman,  
Alan W. Bryant, & Michelle Fuerst, Sopinka, Lederman & Bryant - The Law of Evidence in Canada, 5th ed.  
(Toronto: LexisNexis Canada, 2018), at c. 14.  
9 Re B.(J.D.), 1996 CarswellOnt 1401 (Gen. Div.), at para. 13.  
10 Great Atlantic Insurance Co. v. Home Assurance Co. and Others, [1981] 2 All E.R. 485 (C.A.).  
Page: 12  
(iii) Once privilege has been waived, it cannot be unwaived.11  
(iv) Inadvertent production of a privileged document does not necessarily waive  
(v) Delay in reasserting privilege does not necessarily preclude privilege either.  
What happens during the delay is material. If, for example, documents have  
been used without objection after inadvertent waiver, a conclusion that privilege  
has been waived is more likely.13  
(vi) Even if the initial disclosure was inadvertent, the privilege holder must act  
promptly to reassert privilege.14 Failure to do so may support an inference that  
the party did not intend to maintain privilege over the documents.15 It is not for  
others to protect the privilege when the privilege holder’s conduct does not  
demonstrate a willingness to protect confidentiality.16  
(vii) The failure to take any steps to reassert privilege allows a court to infer that  
the privilege holder intended to waive privilege.17  
[42] Applying those principles to the facts here, I accept that production of the Jack letter and  
other privileged materials in the appeal record before Chiappetta J. was inadvertent, at least  
[43] There had been preliminary skirmishes in the arbitration that went to the Superior Court  
and the Court of Appeal. In both cases, the court files were sealed. When Holmes appealed  
11 Do Process LP v. Infokey Software Inc., 2015 BCCA 52, 382 D.L.R. (4th) 698, at paras. 30-32; Mayer v. Mayer,  
2012 BCCA 77, 29 B.C.L.R. (5th) 232, at para. 185.  
12 Chapelstone Developments Inc., Action Motors Ltd. and Hamilton v. Her Majesty the Queen in Right of Canada,  
2004 NBCA 96, 277 N.B.R. (2d) 350, at para. 55  
13 Mandeville v. Manufacturers Life Insurance Co., 2004 CarswellOnt 9988 (S.C.), at paras. 14-15.  
14 Eisses v. CPL Systems Canada Inc., 2009 CanLII 45440 (Ont. S.C.), at para. 60; Earth Energy Utility Corp. v.  
Maxwell, 2008 CanLII 35673 (Ont. S.C.), at para. 30.  
15 Federation of Newfoundland Indians Inc. v. Benoit, 2020 NLCA 16, at para. 51.  
16 Dodek, at §7.77.  
17 Benoit, at paras. 34, 36.  
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the decision of the arbitrator, he did not ask that the court file be sealed. Holmes was  
represented by counsel at all times.  
[44] As already noted, Chiappetta J. referred to the letter and its admission of self-dealing in her  
reasons. That decision has been publicly available on CanLII since it was released in 2014.  
The letter has also been used in this action on several previous occasions. In 2014, for  
example, Holmes moved to set aside a Mareva injunction that CN had obtained against  
him. CN put the Jack letter to Holmes during his cross-examination on that motion and  
marked it as an exhibit without objection. The letter was filed as part of the publicly  
available motion materials on the set-aside motion. The letter was quoted in CN’s publicly  
available factum on that motion. The parties subsequently agreed that Holmes’ cross-  
examination on the set-aside motion would be treated as part of Holmes’ discovery  
evidence at trial. Holmes did not object to any of these steps. The letter was put to Holmes  
again during his examination for discovery in 2016. Although questions about the letter  
were refused at that time on the basis of privilege, Holmes took no steps in relation to the  
[45] Holmes says he became alive to the Jack letter when he learned that CN proposed to call  
Jack as a witness at trial and that his anticipated evidence included testimony about the  
letter. Holmes objected shortly after receiving the will say.  
[46] Given the length of time since the first public disclosure of the letter, reference to it on  
CanLII for over 7 years, the repeated use of the letter in this litigation, and Holmes’ failure  
to take any steps until shortly before trial, the letter has become sufficiently public to allow  
me to infer that privilege was waived. It would be anomalous to let the world at large have  
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access to the gist of the letter on CanLII but to single out CN and the court as the only ones  
denied access to it.  
[47] In the circumstances set out above, it was for Holmes to protect the privilege. Having  
consistently failed to do so, he must live by those choices.  
[48] The appeal record, however, falls into a different category. The privileged information  
contained in it, apart from the Jack letter, was not used on subsequent occasions in this  
litigation, nor was it reproduced in other public documents.  
[49] Holmes and his counsel did not become alive to the issue of privileged materials in the  
appeal record until CN disclosed that it proposed to use them at trial. Holmes raised  
objections in relatively short order. In my view, there is no basis on which I can infer that  
Holmes intended to waive privilege over any privileged materials in the appeal record apart  
from the Jack letter.  
[50] Although one might be able to argue in a technical sense that filing the privileged material  
before Justice Chiappetta without a sealing order waived privilege, I do not think that this  
would be an appropriate approach. It was clear that up until the hearing before Justice  
Chiappetta, Holmes treated the information as privileged. It was subject to two sealing  
orders and a private arbitration. Counsel for Holmes says that a sealing order was not  
obtained from Justice Chiappetta through inadvertence. I accept that as being consistent  
with counsel’s prior treatment of the information. Although privilege can be waived, it  
should not be waived by reason of an inadvertent slip that counsel moves to correct as soon  
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as they become aware of it. I can find no basis for inferring that Holmes waived privilege  
over the entire four volume appeal record.  
[51] As a result of the foregoing, I excluded the appeal record but admitted the Jack letter into  
evidence at trial.  
[52] Jack confirmed the contents of the letter during his examination-in-chief. Holmes admits  
that he never disputed the contents of the Jack letter in writing but asserts that he raised  
objections verbally with Jack. That point was not put to Jack during cross-examination. I  
therefore accept Jack’s evidence about Holmes’ admission against interest.  
[53] That said, I have placed no reliance on the admission against interest in these reasons. The  
admission was that Holmes caused CN to do business with the Holmes Companies without  
disclosing his ownership in them to CN. There was more than ample other evidence  
tendered at trial, including Holmes’ evidence, which allows me to draw the same  
conclusion without regard to the Jack letter.  
C. Direction and Management of the Holmes Companies  
[54] I now turn to the Holmes Companies and the manner in which Holmes came to create and  
operate them. I find that Holmes created and operated them in a manner that deliberately  
concealed his involvement from CN, that he caused CN to conduct business with the  
Holmes Companies, and that Holmes did not disclose his ownership interest in the Holmes  
Companies to CN.  
[55] In 1994, Holmes became a Program Supervisor and began reporting to Wayne Dobbie, to  
whom he reported until 2003. As Program Supervisor, he was no longer an hourly,  
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unionized employee, but, instead, became a salaried management employee who oversaw  
14 work gangs totaling up to 400 people. In 2003 or 2004, he was promoted to Track  
Supervisor. By 2007, Holmes was responsible for the CN track in the Greater Toronto  
Area, which comprised approximately 350 miles of track. As Program and Track  
Supervisor, he was responsible for, among other things, enforcing CN’s policies and  
procedures within his team; managing and monitoring the budgets of the work he oversaw;  
hiring third party contractors within his area of responsibility; obtaining three quotes for  
any work he proposed to contract out; ensuring that work was done; and approving invoices  
for work within his area of responsibility.  
[56] Holmes acknowledged that CN had increasing trust and confidence in him as he gained  
more responsibility.  
i. Complete Excavating  
[57] Complete Excavating was the first company to be incorporated. Upon its incorporation in  
December 1998, one share was issued to Holmes’ then wife, Janice Holmes, and another  
to Shelly Dobbie, the wife of Holmes’ supervisor, Wayne Dobbie. Its first director was  
David Hagar, Janice Holmes’ father. Hagar played no role in the company. According to  
Janice Holmes, Holmes asked her to incorporate Complete Excavating and name Hagar as  
a director because Holmes did not want his own name on the incorporation documents.  
[58] The next director and officer was Scott Pole. Holmes describes Pole as the person who ran  
the day-to-day operations of Complete Excavating. He was removed as a director in 2000  
when he went through a divorce.  
Page: 17  
[59] The next director was Murray Fussee. He was initially named as a defendant but was  
released from the action at an early stage. In addition to being listed as a director, Fussee  
was also listed as President and Secretary-Treasurer. Although Fussee testified that he  
became a director at the request of Holmes, he did not know that he was also President and  
Secretary-Treasurer. A long series of corporate documents bear what purports to be  
Fussee’s signature. He denies signing any of the documents. The signatures do not appear  
similar to those that Fussee identified as being his own.  
[60] Holmes admitted during cross-examination that Fussee did not deal with the finances or  
management of Complete Excavating but that he ploughed snow and worked at the three  
coffee shops that Complete Excavating also owned and operated at a loss. When Holmes  
was confronted in cross-examination with the proposition that Fussee did not perform any  
role as President, he responded by asking whether there were things Fussee was supposed  
to have done as President. In a 2016 examination, Holmes admitted that he did not expect  
Fussee to oversee anything.  
[61] At trial, Holmes denied forging Fussee’s signatures on any documents but said that when  
Fussee was unavailable, Pole signed as Fussee. In his 2016 examination, Holmes was  
unable to explain why documents bore false signatures of Fussee, said that he could not  
recall asking anyone else to sign on Fussee’s behalf, and said that he had no information  
about who signed Fussee’s name. Holmes explained the contradiction in his two versions  
by saying that he had now looked into the matter and had found additional information.  
He did not, however, correct his earlier evidence until being confronted with the  
contradiction during cross-examination.  
Page: 18  
[62] Throughout his evidence, Holmes tried to deflect responsibility for various issues onto  
Pole. Holmes did not call Pole as a witness. I draw an adverse inference from that. It was  
clear even on Holmes’ evidence that Pole was subordinate to Holmes. To the extent that  
Pole did sign Fussee’s signature, I infer that he did so at Holmes’ direction.  
[63] Eugene Maurice was named as a director and officer as of July 4, 2008. Maurice testified  
at trial that he was never a director or officer and has no idea why his name was on the  
directors register.  
[64] As of November 1, 2005, Jennifer Parisien became the Secretary of Complete Excavating.  
As already noted, Parisien is the birth name of Jennifer Flynn. Flynn admits that references  
to Parisien are in fact references to Flynn.  
[65] Holmes says he was never an officer or director of Complete Excavating because he already  
earned income at CN and that any additional income from Complete Excavating would put  
him into a higher tax bracket. That explanation makes no sense given that there is no  
obligation to pay compensation to a director or officer.  
[66] There was some debate at trial about whether the idea of incorporating Complete  
Excavating and using it to sell services to CN was that of Holmes or Dobbie. Holmes says  
that it was Dobbie’s idea. To the extent I accept that evidence, it presumably distances  
Holmes from the scheme and allows him to argue that he was acting on the instructions of  
his supervisor at CN.  
[67] I find that it was Holmes’ idea to set up each of the three corporations and to use them to  
sell services to CN. There is no doubt on the evidence before me that Holmes was always  
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the directing mind of the operation, not Dobbie. In addition, having reviewed and assessed  
the viva voce evidence of both Holmes and Dobbie, there is no doubt in my mind that  
Holmes was very much the more forceful, dominant personality of the two. Although  
Dobbie might initially have been Holmes’ supervisor, Holmes was the one in charge.  
[68] At trial, Dobbie testified that it was his idea to incorporate Complete Excavating.  
According to Dobbie, the idea arose because CN had experienced difficulties with other  
contractors who, for example, were unwilling to follow CN around the province or whose  
employees damaged hotel rooms (damage for which CN was ultimately responsible).  
[69] I do not accept Dobbie’s evidence on this point. Dobbie was examined on two earlier  
occasions. Those transcripts were ordered to be kept under seal by earlier court orders. I  
will therefore redact my discussion of that evidence from the public version of these  
[70] Redacted paragraph: [...]  
[71] Redacted paragraph: [...]  
[72] Redacted paragraph: [...]  
[73] Holmes submits that Dobbie’s evidence at trial should be preferred over his earlier  
evidence because his earlier evidence was tainted by the possibility of criminal charges or  
civil proceedings at the behest of CN. At trial, Dobbie testified that the CN police had told  
him that “everything would go away” if he cooperated. Holmes submits that Dobbie’s  
evidence at trial was free of threats and free of any motive to lie.  
Page: 20  
[74] Notwithstanding the possibility that Dobbie’s evidence before trial was tainted by self-  
interest, I prefer Dobbie’s pretrial evidence to his evidence at trial. Dobbie’s claim at trial  
that Complete Excavating was his idea does not coincide with the surrounding facts. By  
way of example, the first director of Complete Excavating was David Hagar, the father of  
Janice Holmes. Dobbie says he had no dealings with Hagar and does not know why he  
was named as the first director. Dobbie says he was not involved in the management of  
Complete Excavating, did not see its books or records, had no access to its bank accounts,  
made no arrangements to acquire equipment, and did not issue any invoices for Complete  
[75] According to Dobbie, he assumed that Complete Excavating was directed by Murray  
Fussee. Although it was supposedly Dobbie’s idea to start Complete Excavating, he never  
met Fussee. Dobbie also knew there was a person in the field, but did not know who was  
responsible for directing that person. Had Complete Excavating been his idea, it is likely  
that he would have had more knowledge of its affairs than he appears to have had.  
ii. Efficient Construction  
[76] Efficient Construction was set up as a division of Complete Excavating. I find that it was  
established to ensure that the income Complete Excavating earned from CN did not become  
so large as to attract undue attention from CN or from the union to which many CN  
employees belonged.  
[77] Efficient Construction did not have any employees or equipment. It did, however, have a  
different registered address, different letterhead, different phone number, and different CN  
vendor number than Complete Excavating.  
Page: 21  
[78] Earlier invoices of Efficient Construction contained a P.O. box number in Simcoe, Ontario  
(where Holmes lives), as did the invoices of Complete Excavating (although the two  
companies had different box numbers). Later invoices of Efficient Construction contained  
a street address belonging to one of the corporations operated by Michael Sousa.18 Sousa  
never consented to having his address used in connection with Efficient Construction.  
[79] According to Holmes, he set up Efficient Construction for tax reasons after his accountant  
suggested that he do so to stay under an income limit of $400,000 per corporation. Holmes  
says he only realized during the course of this litigation that Efficient Construction was not  
a separate corporation and was not getting the tax benefit for which it was supposedly  
incorporated. I find that difficult to accept. Efficient Construction earned income of  
$7,561,936 from CN between 2001 and 2008. Each year its income was well over  
$400,000. During the same period, Complete Excavating billed CN $10,875,826. Again,  
each year its billings to CN were well over $400,000. Each year, Holmes saw financial  
statements and tax returns that consolidated the income of Efficient Construction and  
Complete Excavating. If it was indeed accounting advice that led Holmes to set up  
Efficient Construction, one might have expected the accountants to notice that Complete  
Excavating and Efficient Construction were in fact a single corporation that was not  
enjoying the tax benefits the accountants had intended. Holmes did not call anyone from  
his accounting firm to confirm his version of events or to explain why they did not notice  
that the two were in fact a single corporation.  
18 Sousa was another CN contractor who will be discussed in greater detail during the discussion on conversion.  
Page: 22  
[80] Holmes had other reasons to divide income between corporations besides the purported tax  
advantages. One of Holmes’ business models was to hire CN employees after hours to  
work for his companies. Had the employees carried out that work in their capacity as CN  
employees, they would have been paid overtime or higher rates for shifts at certain hours.  
Holmes avoided that by having his own companies hire CN employees to work during their  
off-hours. If, however, the union became aware that an outside contractor was hiring a  
significant number of CN employees and was not adhering to the collective bargaining  
agreement, it could cause difficulties for the contractor and CN because the union would  
file a grievance. At one point, a grievance was in fact filed but resolved.  
[81] In the foregoing circumstances, I find it more likely that Holmes created Efficient  
Construction to divide income between what looked like separate entities to outsiders than  
for tax purposes that were never achieved.  
iii. Monterey Consulting & Construction  
[82] Monterey was incorporated in 1999. Janice and Scott Holmes were directors of Monterey  
from incorporation to January 13, 2003. They also acted as President and Secretary-  
Treasurer until that time. As of January 13, 2003, Robert Helmer became the sole director,  
President and Secretary-Treasurer. Shortly after Helmer replaced Janice and Scott Holmes  
as officer and director of Monterey, it began doing business with CN. All of the invoices  
that Monterey sent to CN bear Helmer’s name as the contact person.  
[83] I find that Helmer was a fictitious person whose only role was to create distance between  
Monterey and Holmes. Holmes was at all times the de facto officer, director, and directing  
mind of Monterey.  
Page: 23  
[84] In his examination-in-chief, Holmes testified that Helmer was the person from whom  
Holmes had bought Monterey. According to Holmes, Helmer was left on as a director after  
Holmes purchased the company and Helmer’s name was inadvertently left on the invoices.  
[85] That version of events is contradicted by the fact that Holmes and his wife were the first  
officers and directors of Monterey for approximately 4 years before Helmer was listed as  
an officer or director. When asked in cross-examination how it was that Helmer only  
became a director in 2003 if Holmes had bought the company from him, Holmes answered  
“that’s just when he became a director I guess.” Holmes does not know if Helmer was paid  
to be an officer or director and does not know why Helmer would agree to become an  
officer or director for Holmes.  
[86] Although Holmes says he bought the company from Helmer and although Helmer was  
an officer and director from 2003 onward Holmes says he never met Helmer. Rather,  
according to Holmes, Pole knew Helmer and vouched for him.  
[87] The invoices that Monterey issued to CN also bear an address that turns out to be a  
residential address occupied by Flynn’s father. Flynn’s father maintained the house. It  
was also occupied from time-to-time by CN employees, who stayed there instead of a hotel.  
Flynn’s brother also stayed at the Monterey house sometimes.  
[88] During cross-examination, Holmes admitted that Helmer did not live at the Monterey house  
and that Helmer would not have picked up the phone if anyone had called the number on  
the Monterey invoices. During an earlier cross-examination, on February 9, 2016, Holmes  
stated that one would have reached Helmer had one called the Monterey number. When  
Page: 24  
confronted with the contradiction, Holmes replied that he could not say “for 100% sure” if  
one would have reached Helmer at the Monterey house. Even the possibility of reaching  
Helmer at the Monterey house is inconsistent with Holmes’ other explanation to the effect  
that Helmer’s name was inadvertently left on invoices.  
[89] Although Helmer is listed as the accounts receivable representative on an Electronic Funds  
Transfer Registration Form19 that Monterey submitted to CN, Holmes admitted that no one  
named Helmer was involved in dealing with accounts receivable for Monterey. Holmes  
ultimately admitted during cross-examination that he could not provide any evidence that  
Helmer exists.  
[90] As of November 3, 2005, Parisien became the Secretary of Monterey while Helmer  
continued as Treasurer. Although Parisien was an officer of Monterey at the same time as  
Helmer was an officer and director, and although Parisien signed documents that are also  
purported to have been signed by Helmer, she does not know who Helmer is.  
[91] Janice Holmes testified that she had seen Holmes produce a driver’s license bearing the  
name Robert Helmer but with the picture of Holmes’ brother, Robert Holmes. CN notes  
that a fictitious driver’s license of that sort would have required the change of only two  
letters in Robert Holmes’ name. According to Janice Holmes, Holmes produced the  
driver’s license to open an investment account for Monterey. The investment advisor was  
19 Exhibit 150.  
Page: 25  
unable to open the account without meeting Helmer in person. No account ever appears to  
have been opened in Helmer’s or Monterey’s name.  
[92] Holmes takes issue with the evidence of his ex-wife, Janice. He submits that she lacks  
credibility because she refused to admit that their divorce was acrimonious. It does indeed  
appear that the divorce was acrimonious. Whether I accept Janice’s evidence about the  
forged driver’s license matters little. There is ample other evidence from Holmes and  
Flynn which leads me to conclude that Helmer was a fictitious individual whose only  
purpose was to distance Monterey from Holmes.  
iv. 2035113 Ontario Limited  
[93] 2035113 Ontario Limited (“2035113”) is a holding company that owns Complete  
Excavating and Monterey. As of January 1, 2004, Helmer was its President, Secretary, and  
Treasurer. He was also the sole director between January 2004 and April 18, 2006. On  
November 1, 2005, Parisien became Secretary. She became a director in April 2006. She  
did not know that she was a director. She ultimately became President, Secretary, and  
Treasurer, but did not understand what duties were involved in those positions.  
[94] Holmes denies any secrecy about the officers and directors of his corporations. He notes  
that he was listed as the Secretary of Complete Excavating as of August 23, 2005. While  
that is correct, he was replaced by Parisien as Secretary on November 1, 2005. Holmes  
also notes that he and Janice were listed as directors of Monterey between March 10, 1999  
and January 13, 2003. It is, however, in 2003 when Monterey began invoicing CN —  
that both he and Janice were replaced by Helmer as the sole director. These brief  
appearances on publicly searchable records do not change my overall conclusion that  
Page: 26  
Holmes deliberately concealed his presence from searchable public records by listing  
fictitious individuals, or sham directors and officers, who were nothing but fronts for  
D. Invoice Issues  
[95] The manner in which the Holmes Companies invoiced CN strengthens my view that  
Holmes was knowingly breaching his fiduciary duties to CN and taking active steps to hide  
his breach of duty. Not only did Holmes cause CN to contract with his own companies,  
but he also approved those invoices on behalf of CN either directly on his own, through  
others on his instruction, or by approving them himself using the name of another  
employee. Evidence supporting the breach of fiduciary duty of this is found in the invoice  
approval process, the addressees of the invoices, invoice splitting, and other invoice  
i. Invoice Approval Process  
[96] CN paid the Holmes Companies $20,652,122.85 worth of invoices between 1999 and 2008.  
According to CN’s SAP accounting records, Holmes approved $9,096,511.95 worth of  
those invoices and Dobbie approved another $4,792,778.32, for a total of $13,889,290.27  
approved by the two of them.20  
20 Holmes submits that the data about the amount of invoices he and Dobbie approved should be inadmissible because  
it is contained in the reply report of CN’s financial expert, Steve Whitla of Ernst & Young (“EY”) when it should  
have been contained in Whitla’s first report. I do not share that view. Holmes tendered evidence from his own  
financial expert, Errol Soriano. In his responding report of April 16, 2021, Soriano stated that he would take a  
different approach to certain issues than Whitla took. Part of Soriano’s approach would be to isolate invoices from  
the Holmes Companies and determine which were authorized by Holmes. The Whitla reply report carries out that  
analysis and arrives at the numbers indicated above. In my view that is proper reply. I also note that Holmes and  
Soriano had information available to them that enabled them to carry out the same analysis.  
Page: 27  
[97] The true proportion of invoices approved by Holmes and Dobbie is likely higher because  
the SAP data convers only the years between 2001 and 2008. There is no record of who  
approved the invoices in 1999 and 2000 because SAP information for those years is no  
longer available. However, Holmes approved $1.4 million out of $1.7 million in invoices  
in 2001. Given the high proportion of invoices that Holmes approved during the periods  
for which SAP does have records, it can be reasonably inferred that Holmes also approved  
a substantial portion of the invoices in 1999 and 2000.  
[98] Dobbie admits that when he approved invoices from the Holmes Companies, he never  
checked if the work had actually been done. In addition, although Dobbie stopped  
supervising Holmes in 2003, he continued to approve invoices in favour of the Holmes  
Companies for several years after that. Dobbie agreed that Holmes had his own manager  
who would be expected to approve his invoices. Dobbie did not know why he continued  
to receive Holmes’ invoices although he then added that it could be because the work was  
being done for a Track Supervisor in an area for which Dobbie was responsible.  
[99] Although Dobbie denies it, on my view of the evidence, Dobbie continued to approve  
invoices for the Holmes Companies, at least in part, to create the illusion that those invoices  
were being approved by a broader range of CN employees than was actually the case.  
[100] As of 2005, CN adopted a computerized system for inputting and preparing invoices. A  
clerk or subordinate would “prepare” the invoice on the computer and the person who was  
supposed to approve the invoice received an email indicating that an invoice or invoices  
were ready for approval. The approver then entered the accounting system using a personal  
identification number (“PIN”) to approve the invoice.  
Page: 28  
[101] Holmes testified that he provided his PIN number and password to three clerks, Shawn  
Tanner, Wayne Bates, and Doug Campbell. These clerks not only prepared the invoices  
using their own PINs and passwords, but also approved them using Holmes’ PIN and  
password. Tanner, Bates, and Campbell vehemently deny knowing or using Holmes’  
[102] Much time was spent on this issue at trial, particularly the degree to which it was common  
or uncommon at CN to share PINs and passwords. While it is not clear to me why Holmes  
spent so much time on the issue, I presume that, in Holmes’ view, if others approved  
invoices using his PIN, that distances him from the taint of approving invoices in favour  
of his own companies.  
[103] In my view, Holmes is every bit as responsible for invoices that others approved using his  
PIN as he is for invoices he approved himself. Even on Holmes’ evidence, he gave  
subordinates his PIN and password in order to approve invoices on his behalf. If a superior  
like Holmes gives a subordinate invoices to approve in the superior’s name, the subordinate  
understandably assumes that the superior has actually approved the invoice and would  
simply like the subordinate to enter the approval as a clerical task. Holmes remains as  
responsible as he would have been had he done the keyboarding himself because his  
subordinates were acting on his direction.  
[104] Holmes admits that he prepared certain invoices in favour of his own companies by using  
Bates’ PIN and password. When he did that, either he or Dave Roy would become the  
approver. During an interview with CN in July 2008, he described this as occurring over  
a couple of months. At trial, Holmes stated that he only used Bates’ password once for a  
Page: 29  
few days in 2007. According to Bates, Holmes had offered to help him input invoices in  
2004 because Bates was far behind in doing so. Bates says that he gave Holmes his PIN  
and password and that Holmes continued to prepare invoices for Bates until Holmes left  
CN in 2008.  
[105] Holmes defends this by arguing that it was common practice within CN to share PINs and  
passwords to prepare and approve invoices for others. That provides no defence even if it  
was common practice. While perhaps not ideal, it is one thing to ask a colleague to approve  
a legitimate arms length invoice using your own PIN and password because you are too  
busy to do so yourself. It is a different thing entirely to approve an invoice in favour of a  
company you control by using a colleague’s PIN and password, thereby creating the  
illusion of effective internal controls which are aimed in part at preventing the very self-  
dealing in which you are engaging.  
ii. Addressees of Invoices  
[106] Invoices from Holmes’ companies were regularly addressed to unionized foremen.  
[107] A number of witnesses testified that unionized employees could neither hire contractors  
nor approve invoices. The only exception to this was Dobbie, who claimed that a unionized  
employee could hire a contractor but could not approve the invoice. I do not accept that  
evidence. It is out of line with the evidence provided by Nick Nielsen, the Regional Chief  
of Engineering for the Eastern Region (and someone who had also previously acted as a  
Track Supervisor and Program Supervisor); Steve Schamehorn, a union employee to whom  
many Holmes company invoices were addressed; and Michael Sousa, a third-party service  
provider to CN who stated that he never addressed invoices to foremen because they had  
Page: 30  
no approval authority. In addition, foremen like Schamehorn were usually working on  
track projects across the province and would not be in the office to receive the invoices.  
iii. Invoice Splitting  
[108] Holmes agreed that his authority to approve invoices was limited to invoices of $10,000 or  
[109] Nielsen testified that splitting invoices to keep amounts under a supervisor’s approval  
authority was not permitted at CN. Nielsen also testified that both CN and its suppliers  
preferred to send and receive fewer invoices. As a result, suppliers would commonly send  
invoices to CN that covered a specific period of time even though the invoice might cover  
numerous projects and network codes. On receipt of an invoice with multiple project  
codes, the supervisor or preparer would simply allocate various items from the invoice to  
different project codes. I accept that evidence.  
[110] The Holmes Companies did the opposite. They tended to issue invoices of $10,000 or less.  
Even if multiple invoices covered work on a single project on consecutive days, they would  
be broken down into two or more invoices if they collectively exceeded $10,000, so as to  
keep each invoice under $10,000.21  
[111] When confronted with this on cross-examination, Holmes could not explain why his  
companies did not send out a single invoice “because he did not prepare the invoices.”  
21 Examples include the following documents from the Joint Trial Brief: 1068, 1069, 1691-1994, 1869-1871, 1886-  
1888,, 1898-1899, 1907-1918, 1880 and 1875.  
Page: 31  
According to Holmes, Pole prepared the invoices. Holmes denies telling Pole to keep  
invoices under $10,000. When it was put to Holmes that he had no explanation for the  
multiplicity of invoices, he agreed that they could have been billed as one.  
[112] I infer from this that Holmes either issued invoices or caused invoices to be issued so as to  
keep them under $10,000 and within his approval authority.  
iv. Other Invoice Anomalies  
[113] Several invoices introduced at trial showed CN retaining a Holmes Company that, in turn,  
contracted the work out to an arm’s length service provider. In those cases, the Holmes  
Company billed CN for an amount that was higher than what the Holmes’ Company had  
paid the arm’s length service provider.22 In at least one other case, Holmes had JM  
Construction bill CN approximately $24,000, one half of which was paid to Holmes. JM  
Construction was owned by Fussee. Holmes admitted that JM Construction did not do the  
work, but asserted that the invoice from JM Construction was prepared by Pole, not by  
Fussee. Holmes asserts that the work was actually performed by Complete Excavating but  
could not explain why Complete Excavating did not simply issue the invoice and could not  
explain why JM Construction was issuing the invoice. Fussee explained that he had done  
work on Holmes’ farm and that Holmes told him that Fussee would be receiving $24,000  
from CN of which he should retain one half as payment for the work on the farm and pay  
the balance to Holmes.  
22 See for example Exhibit 147, JTB 1824, Exhibit 156.  
23 See for example Exhibits 57 and 58.  
Page: 32  
E. Conflict of Interest Policies  
[114] CN has had two published conflict of interest policies in place since at least 1986 which  
set out the duties of employees to CN. I find that Holmes was aware of those policies at all  
material times and knowingly failed to comply with them.  
[115] The CN Policy Guide dated January 12, 1986 24 provided among other things that:  
b) employees have an obligation to act in a manner that will bear the closest public  
scrutiny such that even apparent conflicts of interest do not arise; such obligation  
is not fully discharged by simply acting within the law;  
c) employees shall not have private interests that would be particularly or  
significantly affected by CN actions in which they participate;  
f) employees shall not step out of their official roles to assist private entities or  
persons to obtain preferential treatment in their dealings with CN;  
g) employees shall not knowingly take advantage of or benefit from information  
that is obtained in the course of their employment duties and responsibilities and  
that is not available to the public[.]  
24 Exhibit 24.  
Page: 33  
[116] At trial, Holmes denied being aware of the Policy Guide. On discovery, Holmes admitted  
that he knew since 1994 that CN had a conflict of interest policy. The only evidence at  
trial of a conflict policy as of 1994 was the Policy Guide.  
[117] Even assuming for the sake of argument that Holmes was not aware of the Policy Guide,  
Holmes agreed during cross-examination that it was reasonable of CN to expect that: (i)  
employees would arrange their affairs to prevent real, potential, or apparent conflicts of  
interest; (ii) if a conflict arose it should be resolved in favour of CN; (iii) employees would  
not step out of their official roles to assist private actors in obtaining preferential treatment  
in their dealings with CN; and (iv) employees would not take advantage of information  
obtained in the course of their duties that was not publicly available.  
[118] In 2004, CN instituted a Code of Conduct which applied to all employees. It was mailed  
to employees’ homes and posted on the employee portal of CN’s website. Holmes admitted  
on discovery that the Code of Conduct had come to him in an email.  
[119] The Code of Conduct25 provided, among other things, that:  
When doing business, employees should always be sure to adhere to  
the spirit as well as letter of the law, rules, regulations and  
commonly accepted standards of business conduct. Ask yourself am  
I doing the right thing?  
CN respects your right to manage your own affairs and investments.  
However, every employee must avoid situations where personal  
25 Exhibit 25.  
Page: 34  
interests could conflict with, or even appear to conflict with, the  
interests of CN.  
While it is not possible to detail every situation where conflicts of  
interest may arise, the following areas have clear potential for  
Outside Interests  
As CN employees, we owe our first business allegiance to CN. You  
must avoid outside interests that may impair or appear to impair the  
effective performance of your responsibilities to CN, either because  
of excess demands on your time or because the outside commitment  
could be inconsistent with your obligations to CN.  
Corporate Opportunities  
While you are employed by CN (and even after termination of your  
employment), you should never take advantage of any corporate  
opportunity that is available through the use of CN property, through  
information that is not generally available to the public or from your  
position at CN and you should never use such corporate property,  
information or position for personal gain. Similarly, you should  
never be in a position where you would compete against the  
company. You are always expected to advance the legitimate  
interests of CN when the opportunity to do so arises.  
[120] Just to the right of the section on Corporate Opportunities in the Code of Conduct is a box  
with a red heading entitled, “Do’s and Don’ts”. In that section, employees are advised to  
disclose the facts and get advice before they act, to ask themselves if they stand to gain  
personally from their actions, if their actions will help or give advantage to a relative or  
friend, and whether they would feel uncomfortable or embarrassed with the situation if it  
were reported to their supervisor or senior management.  
Page: 35  
[121] Although the Code of Conduct applied to all employees, non-unionized employees like  
Holmes were required to confirm their adherence to the Code of Conduct annually.  
Confirmation occurred electronically over CN’s SAP system.  
[122] The covering email accompanying the annual confirmation26 explained the need for an  
annual confirmation as follows:  
One reason we’re asked to sign off annually is to ensure that we  
haven’t entered into new conflict of interest situations or even into  
the appearance of a conflict of interest. For example your spouse  
gets a job with a government agency that has dealings with CN. You  
should be up front with your supervisor about any situation that may  
appear to be suspicious. As well you must indicate the situation in  
the online “All About Me” application when you sign off.  
[123] The confirmation process also included a requirement to declare any conflicts of interest.  
The Code of Conduct acceptance page in SAP27 required employees to state:  
I have read and understood the Code of Conduct and agree to  
comply with the Code and underlying CN policies in my daily  
conduct of company business. If I am in a conflict of interest  
position, I will still comply with the Code and agree to disclose the  
pertinent facts in the “Comments” space below.  
[124] Holmes acknowledges that he received the confirmation notice in 2008 and submitted it  
without declaring any conflict. He says that he did not read the 2008 confirmation notice  
26 Exhibit 9  
27 Exhibit 28.  
Page: 36  
but was advised by his secretarial assistant that it had been received and instructed her to  
send back a confirmation on his behalf.  
[125] Holmes denies that he received any request to acknowledge the Code of Conduct between  
2004 and 2007. I find that Holmes received and signed off on the Code of Conduct for  
those years as well.  
[126] Linda Laliberte was the person at CN who had hands-on responsibility for tracking  
responses to the online process and following up with people who had not complied. She  
testified that Holmes provided an annual electronic signoff to the Code of Conduct in 2004,  
2006, and 2007. No signoff was required in 2005 because the Code of Conduct was  
introduced in only late 2004.  
[127] Laliberte testified that she went into the SAP program and extracted screen shots of  
Holmes’ signoffs, which were introduced at trial as Exhibits 30 and 31. They show Holmes  
accessing the program on given dates and accepting the Code of Conduct on those same  
dates in 2004, 2006, and 2007.  
[128] Holmes tried to raise doubts about the reliability of Laliberte’s evidence by noting that: (1)  
the acknowledgement that the signatory had read and understood the Code of Conduct did  
not appear in the screenshots for earlier years, (2) the screenshots for earlier years showed  
a phone number for Holmes that he did not acquire until later, and (3) that the data in the  
SAP system was not static but could be altered.  
[129] Laliberte explained that not all information was available for earlier years on SAP as was  
available for later years and that SAP extracted the most recent phone number it had for an  
Page: 37  
employee and populated it into the relevant box on its forms. Others also testified at trial  
that SAP automatically deleted information after a certain period. In regard to concerns  
about the SAP system being changeable and not static, that is the case with most record  
keeping systems.  
[130] Laliberte struck me as a credible witness. She was straightforward and candid. She was  
simply asked to go into the SAP system and extract information. She had no reason to do  
[131] Moreover, as noted, Laliberte was responsible for following up with people who were  
delinquent in responding to the annual sign off requirement. Had Holmes not signed off  
annually, he would have been subject to follow up which likely would have attracted  
attention. Undue attention is something that someone who was engaged in a multi-million  
dollar self-dealing scheme would want to avoid.  
[132] Holmes submitted that the Code of Conduct did not apply to him and that he did not receive  
the annual signoff because he remained a unionized employee throughout his tenure at CN.  
As proof, Holmes pointed to the fact that he continued to pay union dues even as a Program  
and Track Supervisor. I do not accept that submission.  
[133] Christine O’Neill was CN’s human resources manager for Eastern Canada between 2005  
and 2013. She testified that the positions of Program Supervisor and Track Supervisor  
were non-unionized positions. A number of other witnesses testified to the effect that  
former union employees who were promoted to management positions could choose to  
keep paying union dues even though they were now in management. Doing so allowed  
Page: 38  
them to maintain their seniority within the union if they ever returned to a unionized  
position. Continuing to pay union dues did not, however, make them unionized employees.  
I accept that evidence.  
[134] Moreover, Holmes did not explain why he received a conflict sign off in 2008 if the Code  
of Conduct did not apply because he continued to pay union dues.  
[135] If there were any doubt at all about Holmes’ knowledge of his conflict obligations (which  
I find there is not), it should have been dispelled by an email that Holmes received from  
his then superior, Daryl Barnett, after a meeting on May 3, 2006.28 The email stated:  
We also discussed maintaining an arms length relationship with all  
vendors. This would mean not holding stocks or ownership in  
companies that we regularly do business [sic]. This would ensure  
that the decisions that we make are not adversely compromising  
what is best for the company.  
[136] Holmes agrees that he never disclosed a conflict to Barnett.  
[137] Holmes tried to put some context around the use of his own companies during the trial by  
noting that there was a significant push within CN to reduce or eliminate overtime.  
Holmes’ companies employed CN workers after hours without paying overtime. A general  
corporate desire to decrease overtime does not, however, amount to tearing up the  
corporation’s conflict policies or changing the law on fiduciary duties.  
28 Exhibit 120.  
Page: 39  
[138] When Holmes was confronted with the fact that he did not disclose his interest in his  
various corporations to CN, his answer was that it depends on how you look at it.” Holmes  
says he believes Dobbie knew about Holmes’ interest in the companies but does not recall  
anyone other than Dobbie knowing.  
[139] There is no doubt in my mind that Holmes knew he was engaging in conduct that was  
improper by retaining his own companies. As Dobbie put it in one of his earlier  
Redacted Quotation: [...] 29  
[140] Holmes’ evidence about the conflict policy and the secrecy with which he ran his  
corporations is rife with unexplained contradictions. On my view of the evidence, Holmes  
knew about CN’s Code of Conduct and conflict policies at all material times, signed off on  
the Code of Conduct annually, and knowingly breached those policies.  
II. Fiduciary Duty Claim - Legal Analysis  
[141] Whatever the facts may be about causing CN to retain the Holmes Companies, Holmes  
submits that he was not a fiduciary of CN. In the alternative, Holmes submits that if he  
was a fiduciary, his fiduciary duty was limited to the period between 2004 to 2008 and was  
limited to invoices that Holmes approved. I find that Holmes was a fiduciary from at least  
29 Exhibit 114, SEALED-Excerpts of the Transcript of Examination of Wayne Dobbie, January 14, 2009, at p. 18 of  
the transcript, at p. 7 of the Exhibit.  
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1999 onward when he started to cause CN to contract with the Holmes Companies and that  
his fiduciary duties extended to all invoices between CN and the Holmes Companies.  
A. Was Holmes a Fiduciary?  
[142] A fiduciary relationship exists where one party has placed “trust and confidence” in another  
and the latter has accepted expressly or by operation of law to act in a manner  
consistent with such “trust and confidence.”30 In her dissenting reasons in Frame v. Smith,  
Wilson J. noted that fiduciary obligations have been imposed in situations possessing the  
following three general characteristics: (1) the scope for the exercise of some power or  
discretion; (2) the ability to unilaterally exercise that power or discretion to affect the  
beneficiary’s legal or practical interests; and (3) a beneficiary who is peculiarly vulnerable  
to, or at the mercy of, the person holding the power or discretion.31 Those characteristics  
have since become broadly accepted.  
[143] Holmes denies that he was a fiduciary. He says he was a low-level supervisor, one rung  
above the unionized employees he oversaw. He was one of more than 35 supervisory-level  
employees at CN at the time, and one of many who had approval authority relating to third  
party contractors. He was not management, nor was he a key employee. Holmes submits  
that if he is a fiduciary, then so are a “vast swathof other CN employees.  
[144] Holmes further submits that fiduciary obligations are imposed only within the context of a  
relationship of power-dependency”. He argues that the controls CN had in place regarding  
30 South Nahanni Trading Co. v. Gravel, 2007 CanLII 30668 (Ont. S.C.), at para. 9, citing Mark Vincent Ellis,  
Fiduciary Duties in Canada (Toronto: Thompson Canada Limited, 2004), at pp. 1-2.  
31 [1987] 2 S.C.R. 99, at p. 136. See also Hodgkinson v. Simms, [1994] 3 S.C.R. 377.  
Page: 41  
procurement and payment of contractors belie CN’s claims of vulnerability and therefore  
undermine the imposition of fiduciary obligations of even a limited nature.  
[145] In my view, these submissions misconceive the concept of a fiduciary. The essence of a  
fiduciary duty does not depend on seniority within an enterprise, the importance of the  
individual to an organization, the number of people who might be burdened with such a  
duty, or whether an organization has controls in place that might detect financial  
wrongdoing. Rather, it depends on the indicia articulated in Frame. Those indicia are  
present here.  
[146] Holmes had the discretion and power to hire contractors of his choice. He could unilaterally  
exercise that power so as to affect CN’s legal or practical interests. He could hire  
contractors unilaterally and did not require the approval of any superior within CN to do  
so. He could also unilaterally approve invoices up to $10,000. CN was peculiarly  
vulnerable to, or at the mercy of, Holmes exercising his power. An organization of CN’s  
size must delegate decision-making authority. It cannot reserve every contracting decision  
or invoice approval to a senior level executive. It depends on individuals like Holmes to  
make contracting and payment decisions in the interests of CN and is vulnerable to and at  
the mercy of employees with that authority.  
[147] Although the extent of the fiduciary duties applicable to someone in Holmes’ position may  
not be as broad as those applicable to a more senior employee, the fiduciary duty extends  
at least so far as to apply to the powers that Holmes could exercise on behalf of CN. That  
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is to say, he was required to exercise those powers solely in the interest of CN and could  
not exercise them for his personal benefit without CN’s express consent.32  
[148] The fact that CN may have financial controls in place to try to detect misuse does not belie  
the existence of a fiduciary duty. If anything, it might demonstrate the existence of a  
fiduciary duty. It provides evidence of peculiar vulnerability which CN has tried to limit  
by way of financial controls. If the existence of financial controls negated fiduciary duties,  
no employee of a large organization could ever be a fiduciary because such organizations  
invariably have some sort of financial controls in place. A fiduciary duty does not depend  
on an absence of financial controls; it depends on the trust reposed in individuals. Financial  
controls do not demonstrate lack of trust. They demonstrate trust with verification.  
[149] Employees with signing authority to bind a company financially have been found to be  
fiduciaries.33 Non-management employees have also been found to owe fiduciary duties  
to their employers.34  
[150] In Boehmer Box L.P. v. Ellis Packaging Limited,35 Justice D. Brown (as he then was) held  
that the ability of a nonmanagement employee to set prices, conclude contracts, or  
supervise other employees reflects a level of trust indicative of a fiduciary relationship:  
Factors, in my view, that have led courts to find the existence of this  
above-average level of trust in a non-management employee include  
the employee's exclusive relationships with customers of the  
32 Felker v. Cunningham (2000), 191 D.L.R. (4th) 734 (Ont. C.A.), at para. 14.  
33 South Nahanni Trading Co. v. Gravel, 2007 CanLII 30668 (Ont. S.C.), at para. 11.  
34 See Fraser v. Proscience Inc., 2005 CanLII 21549 (Ont. S.C.); Manley Inc. v. Fallis (1977), 2 B.L.R. 277 (Ont.  
Sup. Ct. (A.D.)); GasTOPS Ltd. v. Forsyth, 2012 ONCA 134, 288 O.A.C. 201; Guzzo v. Randazzo et al., 2015  
ONSC 6936; Ford. v. Keegan, 2014 ONSC 4989, 13 C.C.L.T. (4th) 188.  
35 2007 CanLII 14619 (Ont. S.C.).  
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employer and the ability of the employee to act unilaterally to bind  
the employer's interest by setting prices or concluding contracts.  
Supervisory responsibility over other employees, shy of being part  
of the formal management structure, also has operated as a factor  
pointing to a potential fiduciary relationship. Obviously these  
factors are not exhaustive, but they reflect circumstances where an  
employer has placed a higher degree of trust and confidence in a  
person than in most employees, with the resulting ability of that  
person to affect the economic interests of the employer.36  
[151] Enbridge Gas Distribution Inc. v. Marinaccio37 is a case with material similarities to the  
one before me. In that case, the defendant employee was a supervisor who had authority to  
hire outside contractors for Enbridge and approve invoices up to $5,000. The employee  
created his own company and hired it to do work for Enbridge. In upholding the finding  
that the employee owed Enbridge fiduciary duties, Laskin J.A. noted that:  
A fiduciary relationship may exist where the fiduciary undertakes to  
act in the best interests of the beneficiary, the fiduciary has the  
power to affect the legal or substantial interests of the beneficiary,  
and, as a result, the beneficiary is vulnerable to the fiduciary: see  
Perez v. Galambos, 2009 SCC 48, 2009 3 S.C.R. 247 (S.C.C.) at  
paras. 68-70; Elder Advocates of Alberta Society v. Alberta, 2011  
SCC 24, 2011 2 S.C.R. 261 (S.C.C.) at paras. 30-34. In the  
employment context, an employee may therefore be said to owe a  
fiduciary duty to his or her employer where the employee has  
discretionary power to affect adversely the employer's interests and  
the employer is vulnerable to the exercise of that power.38  
[152] It is well-established that a fiduciary employee cannot have interests that conflict with their  
employer without making full disclosure and obtaining the employer’s consent.39  
36 Boehmer, at para. 52.  
37 2012 ONCA 650, 298 O.A.C. 189.  
38 Marinaccio, at para. 16.  
39 Felker, at para. 14.  
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B. Alleged Limitations on Holmes’ Fiduciary Duty  
[153] Holmes submits that even if he was a fiduciary, CN only pleaded a limited fiduciary duty  
that was circumscribed in time between 2004 and 2008 and circumscribed in scope to  
invoices that Holmes personally approved. I reject both such limitations.  
[154] Holmes presumably relies on paragraphs 28 and 32 of the Amended Statement of Claim  
for those limitations. Paragraph 28 states:  
Holmes was employed as a Track Supervisor in the engineering  
group of CN.”  
[155] What follows after paragraph 28 is a more detailed fleshing out of his fiduciary duties.  
Holmes did not become a Track Supervisor until 2004. Holmes reads the description of  
him being a Track Supervisor (as of 2004) as a general limitation on the description of the  
duties that follow.  
[156] In addition, paragraph 32 provides, among other things, that:  
CN placed specific trust in him to approve only legitimate  
invoices that were within his area of control.”  
[157] Holmes appears to read this as limiting any fiduciary duties to invoices that he approved.  
[158] I do not think a fair reading of the Amended Statement of Claim supports those limitations.  
As a general rule, pleadings are to be interpreted broadly and generously.40 I reproduce  
40 Link v. Venture Steel Inc., 2010 ONCA 144, 259 O.A.C. 199, at para. 36; Holland v. Saskatchewan, 2008 SCC 42,  
[2008] 2 S.C.R. 551, at paras. 7, 16.  
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below paragraphs 28-34 of the Amended Statement of Claim to provide the appropriate  
context to the pleading. I have bolded particular passages that, in my view, make it clear  
that the allegations of fiduciary duty went beyond the time Holmes acted as Track  
Supervisor and go beyond invoices that Holmes approved.  
28. Holmes was employed as a Track Supervisor in the  
engineering group of CN.  
29. As a result, Holmes was responsible for dealing with the  
maintenance and construction of CN’s trackage and related  
30. Holmes had access to, and participated in, the procurement  
and authorization for payment of third-party construction  
services and equipment provided to CN.  
31. As a CN employee, Holmes was obliged to faithfully comply  
with the CN Code of Business Conduct including provisions dealing  
with the absolute prohibition against engaging in any activity  
wherein Holmes would place himself in a position of conflict vis-à-  
vis his employer CN. Adherence to the CN Code of Business  
Conduct was an express term of his employment with CN.  
Accordingly, Holmes had an unequivocal obligation not [to] place  
himself in a position of conflict of interest, financial or otherwise,  
between his personal and corporate interests and those of CN.  
32. Holmes was in a fiduciary position vis-à-vis CN in respect of his  
autonomy and independence in approving invoices for construction  
related expenses. CN placed specific trust in him to approve only  
legitimate invoices that were within his area of control.  
33. Holmes owed CN a duty of good faith and a duty of loyalty  
throughout the employment relationship. These duties required  
Holmes to faithfully exercise his authority in CN’s best interests,  
and to forthwith disclose to CN any activity which would be or was  
an impediment to his compliance with these duties or the provisions  
of the CN Code of Business Conduct.  
34. Holmes, in violation of the CN Code of Business Conduct  
and his obligations to CN, incorporated, participated in and  
profited directly and indirectly from various businesses  
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providing services to CN without disclosure of those interests.  
He put his personal interests before those of his employer to profit  
from his position of authority within CN. In so doing, he  
appropriated and availed himself of confidential information as to  
systems and availability of contracts and divulged this information  
to entities in which he and his family members had a direct or  
indirect financial interest. (Emphasis added)  
[159] The critical question about the link between the pleading and any alleged limitation on the  
fiduciary duty is whether Holmes has somehow been misled into believing that the claim  
against him was limited to invoices he approved between 2004 and 2008. Holmes does not  
actually make that claim nor would he have any basis for doing so. It was clear from the  
productions and CN’s expert report that CN was claiming disgorgement of all profits  
earned by the Holmes Companies as a result of invoices sent to CN regardless of when  
they were issued. Moreover, Holmes’ authority to approve invoices was not limited to his  
time as Track Supervisor. Holmes testified at trial that he obtained approval authority  
shortly after he became a Program Supervisor in 1994. That puts beyond doubt the fact  
that he had approval authority when he began incorporating his companies in 1999.  
Conclusion on Fiduciary Duties  
[160] I find that Holmes owed fiduciary duties to CN and breached those duties in two ways.  
First, he hired his own companies to do business with CN without disclosing his interest in  
those companies. The fact the Dobbie knew about the scheme does not amount to  
disclosure given that Dobbie was a co-conspirator of Holmes’ who benefited from the  
breach of duty. Proper disclosure is disclosure to someone in management who does not  
benefit from the breach. Second, he caused CN to approve invoices from the Holmes  
Companies by (1) approving the invoices himself (sometimes using PINs and passwords  
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of others), (2) having his associate, Wayne Dobbie, approve the invoices, or (3) instructing  
subordinates to approve the invoices using Holmes’ PIN and password.  
[161] Holmes took additional steps to hide his interest in the companies from others at CN by  
having others, real or fictitious, act as officers and directors, sometimes without their  
knowledge. Whoever may have been listed on publicly searchable documents as an officer  
or director, Holmes was always the one with direction, power, and control over the  
[162] Holmes was at all times aware of the fiduciary duties that were expected of him. His own  
description of what CN could reasonably expect from an employee accords with the general  
thrust of common law fiduciary duties. In addition, those duties were spelled out for  
Holmes in the 1986 Policy Guide, the 2004 Code of Conduct, and the May 3, 2006 email  
from Daryl Barnett.  
III. Breach of Confidence  
[163] An employee will breach his obligations of confidence to his employer where:  
Confidential information was conveyed;  
The information was conveyed in confidence; and  
The information was misused by the defendant to the detriment of the plaintiff.41  
41 Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, at p. 635; CTT Pharmaceutical  
Holdings, Inc. v. Rapid Dose Therapeutics Inc., 2019 ONCA 1018, at paras. 31-32.  
Page: 48  
All three elements are present here.  
[164] Holmes testified that he had information about a wide variety of CN’s upcoming projects,  
schedules, and budgets. He also had information about the pricing and other bid terms of  
competitors on contracts that he ultimately awarded to his own companies. The CN  
budgets and the terms of other bids amounted to confidential information that belonged to  
[165] The information about budgets and other bids was conveyed to Holmes in confidence.  
Holmes was not free to share this information with others.  
[166] Holmes submits that there was no evidence of confidential information being misused. I  
disagree. Any use of confidential information that is not authorized by the party who  
originally communicated the information is an unauthorized use.42 The relevant question,  
then, is: what was the recipient entitled to do with the information?43  
[167] Budget and bid information were conveyed to Holmes so he could obtain three arm’s length  
bids for each project and select the bid that was most advantageous to CN. Instead, Holmes  
used the budget information and the arm’s length bids to submit a bid himself. Holmes  
says there was no damage to CN because his bids were more advantageous than arm’s  
length bids. That in and of itself establishes the breach of confidence. The purpose of  
conveying the information to Holmes was to select the most advantageous arm’s length  
42 Lac Minerals, at p. 642.  
43 Lac Minerals, at p. 642.  
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bid, not to allow Holmes to award the contract to himself by underbidding arm’s length  
bidders, assuming that his bids were in fact more advantageous to CN.  
[168] Holmes submits that breach of confidence requires damage as a constituent part of the tort  
and that CN has not established any. I disagree. As the Court of Appeal for Ontario noted  
in Rodaro v. Royal Bank of Canada:44  
Disclosure of confidential information is actionable if it results in  
detriment or damage to the confider or wrongful gain to the  
confidant45 (emphasis added).  
[169] Holmes’ profits from self-dealing are wrongful gains.  
[170] Even if the terms of Holmes’ contracts were truly more advantageous to CN than those of  
arm’s length suppliers, it was still to CN’s long term detriment to accept those contracts.  
If word were to get out that CN was manipulating the bidding process by allowing CN  
employees to underbid others and award contracts to themselves, arm’s length suppliers  
would quickly stop investing the time, money, and energy into bidding on CN jobs. That  
would leave CN at the mercy of people like Holmes and would deprive it of the benefit of  
a competitive market.  
44 (2002), 59 O.R. (3d) 74 (C.A.), at para. 48.  
45 Rodaro, at para. 48, citing Lac Minerals, at pp. 638-39, ICAM Technologies Corp. v. EBCO Industries Ltd.  
(1993), 52 C.P.R. (3d) 61 (B.C. C.A.), at p. 63, leave to appeal abandoned [1994] S.C.C.A. No. 23, and P. Perell,  
Breach of Confidence to the Rescue(2002) 25 Adv. Q. 199, at p. 205.  
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IV. Breach of Contract Claim  
[171] CN also submits that Holmes breached express or implied terms of his employment  
contract with CN by causing it to contract with the Holmes Companies.  
[172] Even if there was an absence of any formal conflict policy, I find that it was an implied  
term of Holmes’ employment contract that he would not use his discretionary authority as  
a CN employee to contract with entities he controlled without CN’s express approval.  
[173] As noted earlier, Holmes agreed that it was reasonable for CN to expect that employees  
would arrange their affairs to prevent conflicts of interest; that any conflicts should be  
resolved in favour of CN; and that employees would not take advantage of information  
they obtained in the course of their duties if that information was not publicly available.  
The 1986 Policy Guide and the 2004 Code of Conduct made express what Holmes already  
knew were implied expectations. Holmes breached those express and implied expectations  
by taking information about bids and contracts and using it for his own benefit.  
V. Conspiracy and Jennifer Flynn  
[174] CN seeks to hold Flynn liable equally with Holmes on the theory that she conspired with  
him to engage in unlawful conduct to the detriment of CN.  
[175] Flynn defends on the basis that there is no hard evidence of actual conspiracy in the sense  
of making an agreement and that there is no independently actionable conduct on her part.  
[176] For the reasons set out below, I find that there is ample evidence from which I can infer an  
agreement or understanding between Flynn and Holmes. I find that Flynn knew or ought  
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to have known of Holmes’ wrongdoing. To the extent that she did not, she was wilfully  
or recklessly blind to the truth. I also find that Flynn engaged in independently actionable  
conduct for purposes of the tort of conspiracy, namely engaging in deceit and falling short  
of the standard of care expected of a corporate director and officer.  
A. Evidence of Conspiracy  
[177] The defendants46 argue that there is insufficient evidence to demonstrate a conspiracy  
between Flynn and Holmes because there is nothing to show them expressly agreeing to  
do anything to hide Holmes’ involvement in the Holmes Companies from CN.  
[178] The lack of evidence of an express agreement is not unusual in conspiracy cases. It has  
long been recognized that conspiracy claims are often based on inferences because it is  
difficult or impossible to prove them by direct evidence.47 As Rinfret J. put it in Paradis v.  
The King:  
Conspiracy, like all other crimes, may be established by inference  
from the conduct of the parties. No doubt the agreement between  
them is the gist of the offence, but only in very rare cases will it be  
possible to prove it by direct evidence. Ordinarily the evidence must  
proceed by steps. The actual agreement must be gathered from  
“several isolated doings” . . . having possibly little or no value taken  
by themselves, but the bearing of which one upon the other must be  
interpreted; and their cumulative effect, properly estimated in the  
light of all surrounding circumstances, may raise a presumption of  
46 By referring to the defendants in these reasons, I refer to those who defended at trial, namely Holmes, Flynn,  
Complete Excavating Ltd., Efficient Construction, 2035113 Ontario Ltd., Monterey Consulting & Construction  
Ltd., 2071442 Ontario Ltd., the Scott Holmes Living Trust, and the Jennifer Lynn Flynn Living Trust.  
47 Extreme Venture Partners Fund I LP v. Varma, 2019 ONSC 2907, 94 B.L.R. (5th) 38, at para. 242, aff’d 2021  
ONCA 853.  
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concerted purpose entitling the jury to find the existence of the  
unlawful agreement.48  
[179] Circumstantial evidence of a conspiracy is often all the court has.49  
[180] There is ample evidence here that leads me to infer that Flynn agreed to engage in conduct  
with Holmes to facilitate his breach of fiduciary duty. Flynn knew that the Holmes  
Companies were doing business principally with CN. She claims that Holmes told her that  
CN was aware of his ownership of the Holmes Companies and still agreed to contract with  
them. I do not accept that evidence. In my view, Flynn either knew or ought to have  
known of Holmes’ misconduct vis-à-vis CN.  
[181] Flynn’s only job before meeting Holmes was working in administration for 18 years in  
what she described as one of Royal LePage’s busiest realty offices. She agreed on cross-  
examination that if she had wanted to hire a family member to do work for Royal LePage,  
she would have had to disclose the relationship to her employer. She understood the  
concept of a conflict of interest and knew that disclosure and consent was the way to  
address it.  
[182] With that knowledge, and with knowledge that the Holmes’ Companies were working  
almost exclusively for CN, she agreed to become an officer, director, and signing authority  
for the Holmes Companies. She used her birth name, Parisien, in connection with the  
Holmes Companies. Flynn was the surname she acquired as a result of her first marriage.  
48 [1934] S.C.R. 165, at p. 168. See also Canadian Community Reading Plan Inc. v. Quality Service Programs Inc.  
(2001), 141 O.A.C. 289 (C.A.), at para. 27.  
49 HSBC Bank Canada v. Fuss, 2013 ABCA 235, 90 Alta. L.R. (5th) 400, at para. 27.  
Page: 53  
She testified at trial that she wanted to use the name Parisien as of September 2005 when  
she moved in with Holmes because that marked a new chapter in her life. That might make  
sense if she had begun using the name Parisien in other aspects of her life. That, however,  
was not the case. On the record before me, she continued to use the name Flynn in every  
aspect of her life but for the Holmes Companies. In those circumstances, I can only infer  
that Flynn knowingly used the name Parisien to keep her involvement as Holmes’ spouse  
hidden from public disclosure.  
[183] Flynn consistently asked accountants for quarterly reports of the Holmes Companies.  
Flynn signed a wide variety of documents for the Holmes Companies, including minutes  
of shareholders meetings, waivers of notices of meetings, consents to audit exemptions,  
share purchase agreements, a contract for the purchase of a Ford pickup truck, audit  
engagement letters, management representation letters to accountants, cheques, and other  
banking documents. Many of those documents purported to be documents that she signed  
as Secretary of a meeting she is described as having attended with either Helmer or Fussee.  
She never attended any such meetings and says she was never present when either Helmer  
or Fussee purported to sign the documents. As noted earlier, Helmer is fictitious. Flynn  
admits that she never met him. Fussee never signed the documents in question. The  
signatures that purport to be his are not actually his.  
[184] Every time Flynn signed a corporate document, it required a deliberate act of will to sign  
using a name that she did not use in any other aspect of her life. If she truly had been using  
her birth name because she had intended to open a new chapter of her life, one would think  
that it might have dawned on her at some point in the following 3 years that she was still  
Page: 54  
using the name Flynn in all other aspects of her life. This should have led her to ask  
whether it was not more appropriate to use the name Flynn when signing corporate  
documents. There is no evidence that she ever asked that question either of herself or of  
others. In my view, she did not ask because she knew she was using the name Parisien as  
part of an understanding with Holmes to hide her, and therefore his, involvement in the  
Holmes Companies and not because she was opening a new chapter in her life.  
B. Independently Actionable Conduct  
[185] There are two types of conspiracy:  
one that requires the plaintiff to demonstrate that the defendants entered into  
an agreement the primary purpose of which was to cause injury to the  
plaintiff, whether by lawful or unlawful means;  
the other that requires the plaintiff to demonstrate that the defendants agreed  
to engage in unlawful conduct that they knew or should have known would  
likely cause injury to the respondent, regardless of its primary purpose.50  
CN relies on the second type of conspiracy, namely, unlawful conduct conspiracy.  
[186] Flynn relies on the Ontario Court of Appeal’s decision in Agribrands Purina Canada Inc.  
v. Kasamekas51 for the proposition that CN must establish a specific unlawful act on her  
part before she can be held liable for conspiracy. Alleging that Flynn conspired with  
Holmes to breach his fiduciary duty to CN is insufficient because Flynn was not a fiduciary  
50 Cement LaFarge v. B.C. Lightweight Aggregate, [1983] 1 S.C.R. 452, at pp. 471-472.  
51 2011 ONCA 460, 106 O.R. (3d) 427.  
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of CN. As a result, any involvement Flynn had in a breach of fiduciary duty would not be  
tortious as against her. As the Court of Appeal put it in Agribrands:  
There is no basis for finding an individual liable for unlawful  
conduct conspiracy if his or her conduct is lawful … The tort is  
designed to catch unlawful conduct done in concert, not to turn  
lawful conduct into tortious conduct.52  
[187] Flynn adds that even if the Holmes Companies acted unlawfully in their business dealings  
with CN, it does not constitute a civil wrong to be a director or officer of a company that  
commits a tort.53  
[188] In Agribrands, the Court of Appeal held that “to constitute unlawful conduct for the  
purposes of the tort of intentional interference, the conduct must be actionable” in the sense  
that it is wrong in law.54 The court went on to hold that the conduct need not be actionable  
in the sense that a full cause of action must exist for it. If that were the requirement, it  
would mean that criminal conduct could never form the basis of a civil conspiracy because  
criminal conduct is not actionable at the suit of a civil plaintiff.55 Thus, while Flynn was  
not a fiduciary of CN, if she engaged in other, independent, unlawful conduct as part of an  
overall scheme that helped Holmes breach his fiduciary duties to CN, she is liable for  
52 Agribrands, at para. 28.  
53 Henry v. 1213962 Ontario Ltd., 2005 CanLII 18312 (Ont. S.C.), at para. 9; Laurier Glass Ltd., v. Simplicity  
Computer Solutions Inc., 2011 ONSC 1510, 80 B.L.R. (4th) 305, at para. 39.  
54 Agribrands, at para. 33.  
55 Agribrands, at para. 37.  
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[189] In my view, there are two intertwined categories of behaviour by Flynn that were actionable  
in the sense that they were wrong in law: (1) falling short of the standard of care expected  
of an officer or director of a corporation56 and (2) engaging in deceit.  
[190] As noted, Flynn consistently signed corporate documents without knowing what she was  
signing. She did that as part of a broader pattern of conduct that was aimed at aiding and  
abetting Holmes’ breach of fiduciary duty to CN.  
[191] The documents she signed misrepresented the state of affairs. Those documents indicated  
that she had been present at meetings with Helmer or Fussee when that was not the case.  
[192] Flynn seeks to avoid liability by claiming that she did not know what she was signing. That  
is of no avail.  
[193] Ignorance does not excuse officers and directors from their responsibilities to those who  
may be injured by corporate conduct57 where they failed to exercise reasonable diligence.58  
As Thorburn J. (as she then was) noted when she dismissed the defendants’ motion for  
summary judgment against CN at an earlier stage of this proceeding:  
Directors cannot plead ignorance to shield themselves from their  
responsibilities as directors and officers of the corporation or to  
those who may be injured by the corporation’s conduct. An officer  
56 Section 134 (1) of the Business Corporations Act, RSO 1990, c B.16 requires: “ Every director and officer of a  
corporation in exercising his or her powers and discharging his or her duties to the corporation shall,  
(a) act honestly and in good faith with a view to the best interests of the corporation; and  
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable  
57 1394943 Ontario Inc. v. Roy, 2009 CanLII 9460 (Ont. S.C.), at para. 78.  
58 699982 Ontario Ltd v. Chu, [2000] O.J. No. 2397 (S.C.), at para. 19.  
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or director of a corporation may be liable for wrongdoing where  
there are findings of fraud, deceit or dishonesty. Courts have not  
excused directors from liability for wrongdoing where the director  
failed to exercise reasonable due diligence in circumstances where  
further inquiry is warranted.59  
[194] In Re Morlock & Cline, Ltd.,60 Morlock claimed that he should be relieved of liability  
because he was a “dummy” director. The court rejected the possibility of being a director  
in name only:  
The further objection is taken in this case that the assignor Morlock  
was a director in the company. The answer is made that he was only  
a “dummy” director, but the law does not draw any distinction  
between “dummy” and non-dummy directors and one who has  
accepted the position of director must be so dumb that he cannot say  
he was not a director it would never do to allow a director to better  
his position by asserting that he did not do his duty as a director.61  
[195] Flynn’s overall conduct also amounts to deceit. Deceit is made out where the defendant  
either knows the representations she is making are untrue or is reckless as to the truth of  
the representation.62  
[196] All that is required for Flynn to be held liable is that she was aware that Holmes was  
dishonestly breaching his fiduciary duty and that she participated in that scheme.63 I find  
that Flynn knew that Holmes was dishonestly breaching his fiduciary duty to CN. Flynn  
knew it was inappropriate for an employee to cause his employer to do business with an  
59 Canadian National Railway v. Holmes, 2014 ONSC 2914, at para. 37.  
60 1911 CarswellOnt 116 (H.C.), at para. 17.  
61 Morlock, at para. 17.  
62 Midland Resources Holding Limited v. Shtaif, 2017 ONCA 320, 135 O.R. (3d) 481, at para. 162 .  
63 Marinaccio, at paras. 24-27.  
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entity related to the employee without the employer’s knowledge and consent. I cannot  
accept Flynn’s testimony to the effect that Holmes told her that CN had consented to him  
billing CN through his own companies. If that were in fact the case, there would be no  
reason to keep Holmes off publicly searchable corporate records, nor would there be any  
need for Flynn to sign under a pseudonym.  
[197] False representations include misrepresentations by omission, silence, half-truths, inaction,  
or the non-disclosure of material information.64 A course of conduct may also constitute a  
false representation.65 Flynn is culpable of all of these. She engaged in a course of conduct  
whereby she says she omitted to read the documents she was signing. She did not tell the  
accountants that she did not know what she was signing. She did not tell the accountants  
that she was signing using a name that she used in no other aspect of her life. She did not  
tell the accountants that she had not attended meetings with Helmer and Fussee (as the  
documents she signed suggested she had). She did not raise any of these issues with  
Holmes and did not ask him to explain why he required her to sign in the manner she did.  
[198] Where a reasonable person would consider a scheme to be dishonest, there is a duty not to  
participate in the scheme.66 There is no doubt in my mind that a reasonable person would  
consider it dishonest to sign documents under a pseudonym which documents reflect  
meetings with at least one fictitious person and which meetings never occurred, all as part  
64 Borrelli v. Chan, 2018 ONSC 1429, 58 C.B.R. (6th) 1, at para. 912.  
65 Holmes, at para. 39.  
66 Holmes, at para. 39; Harland v. Fanscali, 1993 CanLII 8457 (Ont. Gen. Div.), at paras. 13, 28.  
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of a scheme to keep Holmes’ name off publicly searchable records in furtherance of  
business dealings that required CN’s informed consent.  
[199] Flynn cites a number of cases for the proposition that acquiescence without knowledge and  
that following directions from one’s superior67 are insufficient to find a conspiracy.68 While  
I accept that as a proposition of law, I have inferred from the circumstances that Flynn  
knew of Holmes’ dishonest breach of fiduciary duty and engaged in deceit and directors’  
negligence as part of her conspiracy with him to further the breach of fiduciary duty.  
[200] Signing corporate documents without reading them also demonstrates recklessness about  
the truth of the documents. Recklessness includes (i) acting in a way that creates obvious  
or serious risk; and (ii) doing so either without thought to the risk or recognizing the risk  
but deciding to take it.69 For Flynn to sign corporate documents without knowing what she  
was signing creates obvious risk: it commits the corporation to things without any  
knowledge on her part about what she is committing the corporation to.  
[201] To the extent that damages are required as a component part of deceit when it forms part  
of the actionable conduct for conspiracy as opposed to a stand-alone tort, the damage here  
was to the integrity of the governance of the Holmes Companies and to the integrity of the  
bidding process of CN. As noted in paragraph 170 above, the manipulation of CN’s  
bidding process creates the risk of arm’s length suppliers refusing to participate, thereby  
67 At trial, Flynn gave evidence that Scott Holmes was her “boss” as well as her spouse.  
68 McFlow Capital Corp. v. James, 2020 ONSC 374, at para. 351; Atlas Copco Canada Inc. v. David Hillier, 2018  
ONSC 1588, 58 C.B.R. (6th) 305, at para. 53.  
69 Machias v. Mr. Submarine Ltd., 2002 CanLII 49643 (Ont. S.C.), at para. 146; 1169822 Ontario Limited v. The  
Toronto-Dominion Bank, 2018 ONSC 1631, at para. 138.  
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leaving CN at the mercy of people like Holmes and depriving it of the benefit of a  
competitive market.  
[202] The defendants also argue that if CN wanted to allege that Flynn committed a tort as a  
corporate officer or director, it was required to plead sufficient particulars of what she did  
or failed to do, failing which the claim should be dismissed.70 While that might be  
appropriate as a general rule of pleading, it must be tempered when the facts become known  
only as a result of the defendant’s defence. At the time of pleading, CN did not know that  
Flynn was signing documents without knowing what she was signing. These are facts  
Flynn raised as part of her defence. In part it is Flynn’s own defence theory that makes her  
liable. There was, moreover, no suggestion that Flynn was taken by surprise by any of the  
allegations against her at trial.  
[203] Finally, with respect to conspiracy, the defendants complain that in its closing submissions,  
CN accuses them of fraud when fraud was not pleaded. Although fraud was not specifically  
pleaded, deceit was. The Supreme Court of Canada made it clear in Bruno Appliance and  
Furniture Inc. v. Hryniak71 that deceit is a form of fraud and that deceit and fraud are one  
and the same.  
VI. Credibility Issues  
A. Credibility with respect to Flynn  
70 Henry, at para. 9; Laurier Glass, at para. 39.  
71 Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126, at paras. 18, 21.  
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[204] Flynn’s counsel tried to present her as an innocent, inexperienced, naïve individual who  
was beyond her depth in the affairs of the Holmes Companies. As is implicit in my liability  
finding for conspiracy, I do not accept that characterization.  
[205] Although Flynn initially seemed unsophisticated and nervous during examination-in-chief,  
I found her to be a more sophisticated individual than she first let on. She was able to  
handle herself effectively in cross-examination by handling difficult questions in a deft and  
nuanced manner. By way of example, when it was put to her in cross-examination that she  
understood while she was at Royal LePage that it was not appropriate for her to have hired  
a family member without advising her employer about the relationship, she asked to have  
the question repeated, initially answered that she was not sure what policies would have  
applied for that type of situation, added that it was common practice at Royal LePage for  
real estate agents to buy and sell their own homes, and that she was not sure how she would  
have answered that question at the time. Those are all relatively sophisticated strategies to  
avoid a difficult question. She ultimately agreed that it would make sense for her to have  
disclosed the relationship and that she would have done so in order to be up front with her  
[206] On other occasions, she had the confidence to ask the cross-examiner to scroll up and down  
in a document72 to get the full context of the document. She also pushed back on cross-  
examination questions by noting that the cross-examiner was not looking at the full context  
72 She was being examined virtually and was being shown documents through the share screen function.  
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of a conversation or that she “might not have been clear about a point she was trying to get  
across.” Again, these are relatively sophisticated communication strategies.  
[207] If anything, I found Flynn to be a more sophisticated, articulate, and nuanced  
communicator than Holmes was. Given her polite assertiveness, her communication skills,  
and the observational skills inherent in them, I have no doubt that she could and should  
have asked questions of Holmes and the accountants about the things she was signing,  
unless of course she knew what she was signing and why.  
B. Credibility Issues with Respect to Holmes  
[208] As already noted on numerous occasions, Holmes provided numerous explanations for  
things at trial that were implausible or that contradicted other evidence he had given. More  
instances of the lack of credibility in Holmes’ testimony are found in the section on  
litigation conduct at paras. 393-438 below.  
[209] If there were any doubt about Holmes’ deception in the business transactions underlying  
this trial, his deception was starkly manifested in his first interview with CN on July 4,  
2008. Holmes admitted at trial that he was not truthful during that interview.73  
[210] By way of example, during that interview he asserted that he had never heard of Jennifer  
Parisien. When asked about Jennifer Flynn, he identified her as a real estate agent. He  
identified Scott Pole as a truck diver. He claimed not to know the location of Complete  
73 Holmes Cross, June 21, 2021, pp. 4068.  
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Excavating and denied ever having been to the premises of Efficient Construction,  
Complete Excavating, or Monterey.  
[211] At trial, he tried to justify these falsehoods by explaining that he “was worried when they  
asked about Jennifer Flynn what they would do.”74 This answer made no sense because  
Holmes misled CN repeatedly in the interview before anyone ever asked about Flynn.75  
Indeed, Flynn is not mentioned until page 4 of the interview notes. Before that, Holmes  
was untruthful about his knowledge of Efficient Construction, Monterey, and Complete  
Excavating. He then tried to explain that contradiction away by changing his earlier answer  
and saying that he was worried about Flynn from the start of the interview.  
[212] As the Court of Appeal for British Columbia noted in its classic statement in Faryna v.  
The credibility of interested witnesses, particularly in cases of  
conflict of evidence, cannot be gauged solely by the test of whether  
the personal demeanour of the particular witness carried conviction  
of the truth. The test must reasonably subject his story to an  
examination of its consistency with the probabilities that surround  
the currently existing conditions. The real test of the truth of the  
story of a witness in such a case must be its harmony with the  
preponderance of the probabilities which a practical and informed  
person would readily recognize as reasonable in that place and in  
those conditions.76  
[213] I assess both Flynn’s and Holmes’ evidence in light of their consistency with the  
probabilities surrounding circumstances at issue. I find their general explanation of events  
74 Holmes Chief, June 18, 2021, pp. 3848.  
75 Holmes Cross, June 21, 2021, pp. 4068-4075; Exhibit 6.  
[1952] 2 D.L.R. 354, at p. 357. Cited with approval in Brousseau. v. La Cité Collégiale et al., 2021 ONSC 2676,  
at para. 12.  
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to be internally inconsistent and to be inconsistent with the probabilities surrounding the  
circumstances at issue.  
VII. Adverse Inferences  
[214] CN asks me to draw an adverse inference from Holmes’ decision not to call his accountant,  
Pole, or Ted Brinker as witnesses at trial.  
[215] A court may draw an adverse inference where a party fails to call a material witness.77 The  
decision to draw an adverse inference from the failure to call a witness is discretionary. In  
exercising that discretion, a court should consider several factors, including:  
(i) Whether the witness has material evidence to give at trial;  
(ii) Whether the witness is best placed to provide, or the only person who can  
provide, the evidence;  
(iii) Whether the witness is available to both parties equally; and  
(iv) Whether there is a legitimate explanation for the decision to not call a witness.78  
[216] Until well into the trial, the defendants indicated that they intended to call Pole as a witness  
and that he would testify about, among other things, the existence of Robert Helmer; the  
integrity of the Holmes Companies’ invoices to CN; the preparation and organization of  
the Holmes Companies’ invoices to CN; and the appearance of signatures for various  
individuals, including Maurice, Fussee, and Helmer.  
77 Levesque v. Comeau et al., [1970] S.C.R. 1010, at pp. 1012-1013.  
78 Peter Sankoff, The Law of Witnesses and Evidence in Canada, loose-leaf (Toronto: Thomson Reuters, 2019), at  
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[217] In addition, at trial, Holmes and Flynn attributed responsibility to Pole for a number of  
issues, including receiving and maintaining labour records, issuing invoices, burning  
corporate records, asking Fussee to become an officer and director of the Holmes  
Companies, and arranging for the J.M. Construction invoices to CN.  
[218] As the learned authors of Sopinka, Lederman & Bryant - The Law of Evidence in Canada  
put it:  
The failure to call a material witness amounts to an implied  
admission that the evidence of the absent witness would be  
contrary to the party's case, or at least would not support it.79  
[219] Holmes submits that there would have been nothing to gain by calling Pole because CN  
took the position that after he was noted in default, he could do nothing but testify in  
accordance with the allegations in the claim which he is deemed to have admitted. That,  
however, was merely CN’s position. No ruling had been made on the point because the  
issue never became live as a result of the defendants’ decision not to call Pole. Moreover,  
any evidence that Pole may have given would not necessarily be inconsistent with whatever  
specific allegations he was deemed to have admitted to. By way of example, there is  
nothing in the Statement of Claim suggesting that Pole had or had not selected directors,  
forged signatures, burnt records, or put Helmer’s name on invoices. Even had he been  
deemed to have admitted the facts contained in the Statement of Claim, there were no facts  
79 Lederman, Bryant, and Fuerst, at §6.471. See also Edelstein v. Monteleone, 2017 ONSC 2717, at para. 60.  
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alleged against him on these issues. As a result, the concern Holmes raised about the scope  
of Pole’s evidence would never have arisen.  
[220] In addition, CN asks me to draw an adverse inference from Holmes’ failure to call Ted  
Brinker as a witness. At various times in their evidence, Holmes and Flynn attributed  
responsibility to Brinker for organizing the activities of Complete Excavating, obtaining  
Fussee’s signature, and retaining corporate documents.  
[221] CN asks me to draw adverse inferences to the effect that:  
(i) Holmes was responsible for the invoices the Holmes Companies submitted to  
(ii) The reason for Efficient Construction invoicing CN was not related to tax  
(iii) The reason the invoices were addressed to Schamehorn, or listed Robert  
Helmer, was not because of an invoice template issue;  
(iv) Holmes and Flynn forged signatures of Helmer, Fussee, and Maurice; and  
(v) The invoices prepared by the Holmes Companies and submitted to CN were  
false and regularly charged for services not provided.  
[222] I am prepared to draw the adverse inferences requested in sub-paragraphs (i), (ii), and (iii)  
above. With respect to the inference sought in sub-paragraph (iv) above, I infer that  
Holmes forged the signatures of Helmer, Fussee, and Maurice but do not infer that Flynn  
forged those signatures. While Flynn may or may not have known about the forgeries, I  
find it less likely that Flynn would forge a signature beside her own signature. There would  
be too much risk that the style of writing would be similar. I will discuss the inference  
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sought in sub-paragraph (v) above in the section of these reasons that address phantom  
[223] With respect to the inference that Holmes had responsibility for invoices, there is no doubt  
that Holmes had overall responsibility for invoices within the Holmes Companies even if  
Pole was the one who issued them. As noted earlier, Holmes was at all times the directing  
mind of the Holmes Companies.  
[224] With respect to Efficient Construction not being created for tax reasons, Holmes’  
accountants clearly would have had material evidence to give in light of his explanation  
for creating Efficient Construction. They would have been best placed to provide evidence  
to support Holmes’ explanation. Holmes provided no explanation for not calling the  
[225] With respect to the addressees of invoices or Helmer’s name being on the invoice, Pole  
would have had material evidence on that issue, at least according to Holmes’ explanation  
of events. On Holmes’ version of events, Pole would also have been the only person who  
was able to provide evidence on those points. Holmes provided no explanation for failing  
to call Pole.  
[226] With respect to the forged signatures, Holmes testified that Pole would sign for these  
individuals if they were unavailable. In that light, Pole was the only person who could  
possibly give evidence on the point.  
[227] Although it might have been possible for CN to call the accountants or Pole as witnesses,  
it was not CN’s job to establish Holmes’ defence.