Divisional Court File No.: 167/08

Court File No: 07-CL-6864

Released: 20080429

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Re: Manulife Securities International Ltd. (Respondent/Plaintiff) and Société Générale, Société Générale (Canada), Lyxor Asset Management and Société Générale Securities Inc. (Applicants/Defendants)

Proceeding under the Class Proceedings Act, 1992

Before: J. Macdonald J.

Counsel: Manulife Securities International Ltd.:

Mr. Jeffrey Leon and Mr. David Hallsman

Société Générale, Société Générale (Canada),

Lyxor Asset Management and

Société Générale Securities Inc.:

Mr. Alan J. Lenczner, Q.C.

Mr. Kristian Borg-Olivier

Heard at Toronto: April 22, 2008

E N D O R S E M E N T

[1] The applicants seek leave to appeal to the Divisional Court from the Order of Mr. Justice C. L. Campbell dated March 20, 2008, which dismissed the applicant's motion to strike out a summons to witness. Pursuant to the summons, the respondent sought to examine a representative of the applicants in connection with the applicants' pending motion for determination of questions of law raised by the respondent's Statement of Claim, pursuant to rule 21.01(1) (a) of the Rules of Civil Procedure.

[2] The applicants rely on rule 62.02(4)(b), which states:

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(4) Leave to appeal shall not be granted unless,

a)….

b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

[3] The applicants submit that their motion under rule 21.01(1) (a) raises a question of law: does the respondent have standing to advance certain claims in the Statement of Claim? The applicants submit that the Statement of Claim will be assumed to be factual and the respondent has no valid reason for inquiring into factual issues. Examining the witness about factual issues will undermine the purpose of rule 21.01(1) (a). The applicants therefore submit that there is good reason to doubt the correctness of the Motions Court judge's refusal to strike out the respondent's summons to their representative. The applicants also submit that the order and the proposed appeal have the requisite degree of importance because the Motions Court judge's decision will be a precedent which effectively eviscerates rule 21.

[4] The respondent disputes the applicability of rule 21.01(1) (a) to the pleading in issue. The respondent takes the position that the questions posed in the applicant's rule 21.01(1) (a) motion are not questions of law, they are questions of fact or questions of mixed law and fact. The summons to witness is for the purpose of eliciting evidence to establish the inapplicability of rule 21.01(1) (a), on this basis. Consequently, the respondent submits that the Motions Court judge was correct in not striking out the summons.

[5] Rule 21.01(1)(a) states:

21.01(1) A party may move before a judge,

(a) for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs;…

Rule 21.01(2) (a) states:

(2) no evidence is admissible on a motion,

(a) under clause (1) (a), except with leave of a judge or on consent of the parties;…

[6] I conclude that there does not appear to be good reason to doubt the correctness of the order, for the following reasons.

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[7] The motion was to strike out the summons served in accordance with rule 34.04(4), which requires that the particular witness be served with a summons to witness.

The procedure thereby invoked was pursuant to rule 39.03(1), which states in its relevant part:

39.03(1)…a person may be examined as a witness before the hearing of a pending motion or application for the purpose of having a transcript of his or her evidence available for use at the hearing.

[8] The Motions Court judge declined to set aside the summons to witness because he found "a reasonable possibility that some of the evidence may have some relevance". That was because of the particular facts surrounding the circumstances giving rise to the respondent's claims. The Motions Court judge stated "I am not prepared to say at this stage in the circumstances of the nature of the claims made by the investors through Manulife that there can be no relevance on the rule 21 motion". In short, the Motions Court judge found that the evidence to be elicited by the examination of the witness pursuant to the summons was potentially relevant to the rule 21.01(1) (a) motion.

[9] The Motions Court judge therefore applied the usual test in deciding not to strike out a summons to witness served in relation to a motion. The applicant's argument is that he erred in doing so because he did not take into account that the motion is a rule 21.01(1)(a) motion.

[10] The applicants submit that rule 21.01(1) (a) motions are intended to be decided in a preliminary fashion, when determining a question of law which is raised by a pleading may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs. The applicants argue that the Motions Court judge's decision is contrary to these principles because it opens the floodgates by permitting early examinations for discovery in respect of such questions, thereby threatening both the purpose of the rule and its benefits.

[11] I do not accept the latter submission. It is not the Motion Court judge's decision, it is rule 21.01(2)(a) which creates the limited evidentiary opportunity which the respondent seeks to utilize. There is no basis for the suggestion that rule 21.01(2)(a) has opened the floodgates to abuse of this limited evidentiary opportunity. Further, if it becomes more common for rule 21.01(1) (a) motions to be met by a summons to witness, litigants and the court have ample means to ensure that this procedure has been implemented for proper reasons. For example, on a motion to set aside the summons, the court will consider whether the evidence likely to be obtained is potentially relevant. If not, the summons will be set aside with costs consequences. If the summons stands and the witness is examined, the examination may be confined to proper grounds by implementing the procedure mentioned in rule 34.14(1), including the significant costs sanctions available pursuant to rule 34.14(2). Once the evidence has been elicited, unless

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the parties consent to its admission at the hearing of the rule 21.01(1)(a) motion, it is inadmissible pursuant to rule 21.01(2)(a) except with leave of a judge.

[12] The requisite importance of the order and the proposed appeal has not been established. The Motions Court judge's decision is entirely dependent on the facts of this case. The decision, therefore, is not a precedent of general application to rule 21 motions.

[13] Leave to appeal is refused and the motion is dismissed.

[14] If the parties cannot agree on costs, they may make brief written submissions within twenty-one days.

John Macdonald J.

Released: April 29, 2008