Trust Funds v. Buchan, 2007 ONCA 462

Date: 2007-06-26

Docket: C46907

Court of Appeal for Ontario

Weiler, Blair and MacFarland JJ.A.

Between:

Connecticut Retirement Plans and Trust Funds on behalf of all similarly situated investors in JDS Uniphase Corporation

(Applicants/Respondents)

and

Gordon Buchan, Mario Leduc and Maurice Tavares and JDS Uniphase Corporation

(Respondents/Appellant)

and

JDS Uniphase Corporation

(Intervenor)

Counsel:

K. Scott McLean for the appellant

Christine P. Tabbert and Antonio DiDomenico for the respondent, Connecticut Retirement Plans & Trust Funds

Phuong Ngo for the intervenor, JDS Uniphase Corporation

Heard: June 11, 2007

On appeal from the judgment of Justice Robert L. Maranger of the Superior Court of Justice dated March 7, 2007.

Weiler J.A.:

Nature of the Appeal

[1] Connecticut Retirement Plans and Trust Funds (Connecticut) is the lead plaintiff in a class action initiated in the United States District Court for the Northern District of California (the "District Court") on behalf of investors who acquired securities in JDS Uniphase Corporation (JDS) between October 8, 1999 and July 26, 2001.

[2] Connecticut obtained Letters Rogatory to examine three persons in Ontario by U.S. counsel pursuant to U.S. rules. Two of the three, Tavares and Leduc, subsequently consented to examination. The third person, Gordon Buchan, did not. Buchan is the former in-house counsel of JDS. He held the title of Vice President of Business Development and Senior Legal Advisor, and also sat on the executive team. He is not a party to the class action.

[3] Connecticut successfully applied to enforce the Letter Rogatory against Buchan. He was ordered to attend for examination by U.S. counsel pursuant to U.S. rules and to produce the documents specified. The application judge also ordered that JDS be allowed to participate and that such participation include the right to object to questions.

[4] Buchan appeals and seeks to set aside the judgment of the application judge ordering him to attend for examination. He submits that the application judge failed to apply the proper legal test for an application to enforce a letter of request. In the alternative, if the examination is to proceed, Buchan seeks an amendment to the judgment so as to require that the examination be conducted by a member of the Law Society of Upper Canada pursuant to Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194. He submits that it would infringe Canadian sovereignty to permit the deposition of Buchan to proceed under the California rules of procedure and rules of evidence. Buchan also argues that permitting American attorneys to conduct the deposition is contrary to the Law Society Act, R.S.O. 1990, c. L.8. because it constitutes the "practice of law".

[5] The intervenor, JDS, takes no position on Buchan's two substantive grounds of appeal. Should this Court grant Buchan's alternative relief and amend the judgment, JDS asks that this Court specify that JDS's right to participate, including its right to object to questions, also be on the basis of Canadian legal principles.

[6] For the reasons that follow I would uphold the decision of the application judge and dismiss this appeal.

ISSUES

1. Did the application judge apply the proper criteria in considering the application?

[7] To grant an order enforcing the Letter Rogatory, the applicant must satisfy the enforcing court that certain criteria are met. Those criteria, as enumerated by this court in Presbyterian Church of Sudan v. Rybiak (2006), 2006 32746 (ON CA), 275 D.L.R. (4th) 512 at para. 30 (Ont. C.A.), are as follows: a) the evidence sought is relevant; b) the evidence sought is necessary for trial and will be adduced at trial, if admissible; c) the evidence is not otherwise obtainable; d) the order sought is not contrary to public policy; e) the documents sought are identified with reasonable specificity; and f) the order sought is not unduly burdensome, bearing in mind what the witnesses will be required to do, and produce, were the action to be tried. In addition, the court is required to balance two broad considerations in deciding whether to exercise its discretion to enforce the Letter Rogatory. Those considerations are the impact on Canadian sovereignty and whether justice requires the taking of commission evidence.

[8] In order to appreciate the substance of the appellant's arguments I have reproduced the core of the application judge's endorsement:

The relief requested in this case is for the most part an exercise in Judicial discretion governed by Section 60(1) of the Ontario Evidence Act, the section is reproduced at paragraph 24 of the Applicant's Factum and forms part of my Reasons.

I have considered the written and oral arguments of counsel for all parties in this matter and find that an order with specific provisions as to the manner, scope and timing of the examination of Mr. Buchan is appropriate. I came to this conclusion by reason of the following:

(a) There is little doubt based upon the Affidavit evidence filed that the prospective witness has information that is likely relevant to the issues to be tried by the California Court. Mr. Buchan was a Senior Legal Advisor and Vice President with J.D.S. Uniphase Corp.

(b) The evidence also supports a finding that certain specific information is more likely than not only available through his testimony. The evidence located at paragraphs 5(b) and 5(c) of the Affidavit of Michael Stocker is specific to this witness.

(c) The general principle of comity of nations which suggests that a Canadian court should give full force and effect to foreign requests for Judicial assistance, within prescribed limits applies in this case. Furthermore there is no public policy consideration as the letters rogatory do not limit or infringe upon Canadian Sovereignty.

(d) The arguments raised by the Respondent Buchan are for the most part without a basis in evidence and call for speculation on the part of the Court. Furthermore it seems to me that many of the objections go to limiting the examination of Mr. Buchan rather than denying the relief completely. The examination will be limited to what is contained in paragraph 5 of Michael Stocker's affidavit which generally speaking is what is described in the letters rogatory.

[9] Buchan submits that when the application judge wrote in para. (a) of his endorsement that he had information "that is likely relevant to the issues to be tried", the application judge applied the wrong test. [Emphasis added.] The evidence must be shown to be relevant, not likely relevant.

[10] In using the phrase "likely relevant" in para. (a), the application judge was simply applying the first criterion in Presbyterian Church, supra, relevance, on a balance of probabilities. Paragraph (b) of the application judge's reasons supports this conclusion. There, the application judge states: "The evidence also supports a finding that certain specific information is more likely than not only available through [Buchan's] testimony." The application judge did not err in applying the first criterion.

[11] Buchan advances several other arguments in support of his submission that the application judge failed to apply the criteria in Presbyterian Church, supra.

[12] One argument he puts forward is that the application judge simply relied on a bald statement contained in the affidavit filed in support of the application that Buchan's evidence was relevant and necessary.

[13] I disagree. Justice Laporte of the District Court ruled that Buchan "has evidence relevant to this action". The Canadian court does not function as an appellate court in respect of the decision of a foreign court.

[14] In paragraph (b) of his endorsement the application judge in effect held that the criteria of necessity and of the evidence not being otherwise obtainable were met. He referenced the evidence located at paragraphs 5(b) and 5(c) of the Affidavit of Michael Stocker and said that that evidence "supports a finding that certain specific information is more likely than not available only through his testimony" and is "specific to this witness".

[15] The affidavit of Michael Stocker states that during the class period, Buchan communicated by email with two of JDS's senior executives, Straus and Abbe, and told them about a $100 million dollar price concession that Lucent demanded. Within a week, when JDS stock price was high, these executives sold $175 million dollars worth of JDS stock and the defendants as a group sold $295 million. The affiant deposes

I believe that Mr. Buchan communicated negative financial information directly to the individual defendants and can testify both to the falsity of the defendants' statements [that they did not omit to disclose any material facts about JDS 'financial condition before selling their stock] and their knowledge of that falsehood…. He has evidence that cannot be otherwise obtained by the plaintiff in Connecticut…"

I agree with the application judge that the evidence put forward is not a bald statement of necessity but one that is very specific.

[16] Another submission is that subsequent depositions taken in this action raise the possibility that Buchan's evidence is no longer necessary and that Connecticut failed to discharge the onus on it of showing that it was. Following the application being made and prior to the application being heard, Connecticut conducted 25 intervening examinations but the substance of these examinations was not disclosed to the court. As a result, Buchan submits that the application judge was unable to make a determination as to whether the evidence sought from him was not otherwise obtainable and that the application judge could not apply the third criterion in Presbyterian Church, supra.

[17] I would disagree that the application judge ought to have been interested in whether subsequent depositions by Straus, Abbe and others had resulted in the obtention of the evidence sought. The application rests on the affidavit that is filed with the application. Evidence given under oath is presumed to be true. If the affidavit is no longer accurate or there is something wrong with that affidavit then there is an evidentiary onus on Buchan to bring that forward.

[18] Another argument put forward by Buchan is that the application judge reversed the burden of proof that lay on Connecticut by requiring Buchan to demonstrate that the evidence Connecticut sought to elicit from him was otherwise obtainable. In support of this submission, Buchan relies on the application judge's sentence in paragraph (d): "The arguments raised by the Respondent Buchan [to the application] are for the most part without a basis in the evidence and call for speculation on the part of the Court." The application judge was simply responding to the argument advanced before him that he ought to take into account the other depositions that had been obtained after the application had been filed but that had not been produced to the court. It was quite appropriate for him to state that he did not wish to engage in speculation as to the content of those depositions. The application judge did not reverse the onus of proof.

[19] Finally, the tenor of Buchan's submissions is that the criterion of the "evidence being otherwise unavailable" must be interpreted as meaning no evidence on the subject in issue is unavailable. I would not interpret this criterion so narrowly. Rather, I would read this criterion as meaning that evidence of the same value as that sought from the person to be examined cannot otherwise be obtained. In addition, as held by Campbell J. in MAN Aktiengesellschaft et al. v. Valentini et al. (2006), 2006 23922 (ON SC), 81 O.R. (3d) 680 at para. 28 (S.C.J.): "Where fraud is alleged, both confirmation of other information and credibility will be important issues."

[20] The application judge did not err in applying the criteria in Presbyterian Church, supra..

2. Did the application judge err in law and jurisdiction in ordering that the examination of Buchan be conducted by U.S. counsel, pursuant to U.S. rules, contrary to the interests of sovereignty?

[21] The application judge ordered the conduct of an examination in Ontario. Buchan submits that the examination is now an Ontario proceeding and that a U.S. attorney examining a witness is acting as a barrister and solicitor contrary to the Law Society Act. To suggest otherwise, he submits, challenges the sovereignty of Ontario and Canada. As a result, he says the application judge erred in failing to weigh the interest of sovereignty against the principle of judicial comity.

[22] Further, Buchan submits that nothing in the Letter of Request asks that a U.S. attorney conduct the examination or that U.S. rules apply. Thus, the order goes further than does the Letter of Request itself.

[23] I disagree that Connecticut's request that U.S. rules and practices be applied at the deposition infringes Canada's sovereignty. Buchan advances no authority in support of his position on this issue. The action for which the information is sought is not an Ontario action. The Ontario Rules of Civil Procedure are specific to Ontario actions.

[24] When the U.S. attorney is questioning Buchan with respect to matters arising out of and relating to the action in the U.S., that attorney is not practising law in Ontario. If judicial comity is to be meaningful, courts in Ontario must from time to time play an active role in facilitating judicial processes in other jurisdictions.

[25] In United States of America v. Pressey (1988), 1988 4530 (ON CA), 65 O.R. (2d) 141 (Ont. C.A.), this court held at paras. 11-12 that the "technical" rules of evidence of the requesting state should apply to the examination unless the proceedings are dealing with fundamental values and the rights of witnesses. While that case was concerned with s. 43 of the Canada Evidence Act, R.S.C. 1970, c E-10, its counterpart, on which the application judge relied, is s. 60(1) of the Ontario Evidence Act, R.S.O. 1990, c. E.23. That section empowers the judge to whom application is made to enforce a Letter Rogatory "…to order the examination of such witness …in the manner and form directed by the …order or other process". The judge "….may give all such directions as to… all other matters connected therewith as seem proper…"

[26] No factors militate against enforcing the letter on the basis of public policy concerns such as the constitutional or fundamental rights of the proposed witness.

[27] The application judge did not err in ordering that the examination be conducted by U.S. counsel pursuant to the U.S. Rules.

[28] In view of our conclusion, it is not necessary for me to address the intervenor's submissions.

Costs

[29] Pending this appeal a motion to stay the application judge's order was brought and the costs of that motion were left to this court. I would award the costs of that stay application to Buchan in the amount of $2500.

[30] Buchan submits that it is entitled to his costs of this appeal regardless of the outcome because this is a request for a specific exercise of discretion. He seeks costs of the appeal in the amount of $9707. I disagree that Buchan is entitled to any costs on this appeal. The application judge rejected Buchan's argument and it has even less force here. I would also hold that the respondent, which did not attempt to file its responding factum until two days prior to the appeal being heard, is not entitled to costs. In the result, each party will bear its own costs of the appeal.

RELEASED: June 26, 2007 ("KMW")

"Karen M. Weiler J.A."

"I agree R. A. Blair J.A."

"I agree J. MacFarland J.A."