Court File and Parties

Court of Appeal for Ontario Date: 2023-12-28 Docket: COA-23-CV-0410

Before: Rouleau, Benotto and Roberts JJ.A.

Between: Skymark Properties Corporation, Inc., Skymark Properties II, LLC, Skymark Properties III, LLC, Skymark SPE, LLC, Hazelton Homes Corporation, and 2399021 Ontario Inc. Applicants (Respondents)

And: 63263101 Canada Inc. c.o.b. as First Line Canadian Investment Group, Duca Financial Services Credit Union Ltd., First American Title Insurance Company, Noble Mortgages Inc., Ata Tamjidi, Rouzbeh Behrouz*, and Majestic Food Service, Inc.* Respondents (Appellants*)

Counsel: Justin Nasseri and Gordon Vance, for the appellants Symon Zucker, for the respondents

Heard: November 30, 2023

On appeal from the order of Justice Paul M. Perell of the Superior Court of Justice, dated February 16, 2023, with reasons dated March 6, 2023, reported at 2023 ONSC 1520.

Reasons for Decision

[1] The appellants, Rouzbeh Behrouz and Majestic Food Service Inc., appeal the application judge’s February 16, 2023 order (“the order”), giving effect to the Letter Rogatory dated June 8, 2021 that was issued by the United States District Court in an action in the Eastern District of Michigan, Southern Division. This action was brought in the United States by the respondents against the appellants and others (“the U.S. proceeding”). The order issued by the application judge compels Rouzbeh Behrouz to “be made available as a witness to testify concerning the contents of the declaration and related matters” and the appellants to produce various financial records and other documents for use in the U.S. proceeding.

[2] In the U.S. proceeding, the respondents allege that the appellants and others have violated U.S. Iran-trade embargo laws, that some of their actions took place in Ontario or through financial institutions located in Ontario, and that some of the monies in issue are also in issue in proceedings before the Ontario courts and Ontario Securities Commission.

[3] The appellants essentially repeat the arguments that were rejected by the application judge. They submit that in granting the application, the application judge erred in two ways: 1) he admitted inadmissible hearsay evidence in support of the application; and 2) he failed to scrutinize the application in accordance with the oft-cited factors set out in Friction Division Products Inc v. E.I. du Pont deNemours & Co. (1986), 56 O.R. (2d) 722 (H.C.J.), at paras. 25 and 30 (“the Friction factors”)[1].

[4] We are not persuaded that the application judge made any reversible error.

[5] First, the application judge made no error in relying on evidence of what the appellants are alleged to have said for the purpose of determining the first two Friction factors, namely, whether the evidence sought from the appellants is relevant and necessary for trial, and will be adduced at trial, if admissible. The application judge quite rightly distinguished between relying on what the appellants are alleged to have said, as opposed to the truth of what they are alleged to have said, noting that the latter issue will be determined at trial if, as the second Friction factor notes, the evidence is admissible. The application judge was entitled to use this evidence in his consideration of the Friction factors.

[6] Second, the application judge made specific reference to and applied the Friction factors, as well as the broader governing principles that he was required to examine, in considering whether to grant the application in accordance with s. 60(1) of the Ontario Evidence Act, R.S.O. 1990, c. E.23. His reasons, read as a whole, demonstrate that he considered the relevant principles and made the necessary findings that support his conclusions. He followed the recommended analytical framework in R. v. Zingre, [1981] 2 S.C.R. 392, at para. 18, stepped back, and balanced Canadian sovereignty considerations with the justice of the enforcement request.

[7] The appellants submit that the evidence sought is otherwise obtainable because the appellants are parties to the U.S. proceeding and have already been deposed there, making the application judge’s order duplicative. They say that the application judge erred by relying on a “bald statement” by the respondents’ U.S. attorney that a U.S. court cannot compel the appellants, as Canadian residents, to attend or produce documents in the U.S. proceeding. Finally, they argue that the respondents failed to meet their onus by providing evidence that the documents ordered to be produced by the appellants are not otherwise obtainable.

[8] We do not agree with the appellants’ submissions.

[9] First, unless to do so would be contrary to the interests of justice or would infringe Canadian sovereignty, this court is required to pay deference to the U.S. court that concluded, after a hearing, that the appellants’ evidence and documentation is necessary to ensure justice is done in the U.S. proceeding: Zingre, at p. 401; Ontario Service Employees Union Pension Trust Fund v. Clark (2006), 270 D.L.R. (4th) 429 (Ont. C.A.), at para. 22. Presumably, if the U.S. court had concluded that the respondents could obtain the documentation through further legal process in Michigan, it would not have ordered the remedy of a Letter Rogatory. There is no evidence on the record that the appellants’ documents are available from other sources without the appellants’ consent or court order, or that the documents have been produced to-date by others in the U.S. proceeding.

[10] The fact that the appellants are now parties to the U.S. proceedings and have been deposed there does not undermine the U.S. court’s finding.

[11] Notwithstanding the Letter Rogatory requires the examination of Mr. Behrouz, it also requires the production of documents and is therefore not duplicative. Sean W. Walsh, the appellants’ U.S. attorney, deposed in his November 7, 2021 affidavit on this application that “an order that Mr. Behrouz produce documents and/or be examined in Ontario is likely to duplicate steps which will already have occurred in [the U.S. proceeding].” However, although Mr. Behrouz, for himself and the corporate appellant, was subsequently deposed in the U.S. proceeding on November 9, 2021, he did not agree during his examination that the appellants would comply with the Letter Rogatory and produce documents. There is no evidence on the record that the appellants have to-date produced any documents.

[12] Further, the statements by the respondents’ U.S. attorney are not controversial. There is no dispute that Canadian residents are not compellable witnesses in U.S. proceedings, nor does a U.S. court have the jurisdiction to compel Canadian individuals or corporations to produce documents for use in U.S. proceedings: Perlmutter v. Smith, 2020 ONCA 570, at para. 36; Actava TV, Inc. v. Matvil Corp., 2021 ONCA 105, at para. 39.

[13] In any event, as this court instructed in Connecticut Retirement Plans and Trust Funds v. Buchan, 2007 ONCA 462, at para. 19, the criterion of evidence being otherwise unavailable ought to be interpreted as meaning “that evidence of the same value as that sought from the person to be examined cannot otherwise be obtained”, and, importantly, “where fraud is alleged, both confirmation of other information and credibility will be important issues”.

[14] Accordingly, the application judge made no error in concluding that the evidence sought in the Letter Rogatory is not otherwise available.

Disposition

[15] For these reasons, the appeal is dismissed.

[16] The respondents are entitled to their costs of the appeal from the appellants in the agreed upon amount of $15,000, inclusive of all amounts.

“Paul Rouleau J.A.”

“M.L. Benotto J.A.”

“L.B. Roberts J.A.”

[1] (1) the evidence sought is relevant; (2) the evidence sought is necessary for trial and will be adduced at trial, if admissible; (3) the evidence is not otherwise obtainable; (4) the order sought is not contrary to public policy; (5) the documents sought are identified with reasonable specificity; (6) the order sought is not unduly burdensome, having in mind what the relevant witnesses would be required to do, and produce, were the action to be tried here