ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CYNTHIA PRENOVOST
Applicant
– and –
DANIEL MARSHALL and 1077976 ONTARIO INC.
Respondents
D. Sayer, counsel for the Applicant
D. Landry, counsel for the Respondents
HEARD: August 13, 2015
REASONS FOR JUDGMENT
LEMAY J.
1Cynthia Prenovost, the Applicant in this matter, is embroiled in contentious family litigation in the state of New Jersey with her soon to be ex-husband, Mr. Christopher Prenovost. As a result of this litigation, she has brought an Application in Ontario to obtain documents, and compel the deposition of the individual Respondent. The Respondents in this matter are Mr. Daniel Marshall, who is Ms. Prenovost’s brother, and 1077976 Ontario Limited, the Company he controls (hereinafter “Mr. Marshall” or “the Respondents”).
2Ms. Prenovost is seeking an Order from this Court giving effect to a commission from the Superior Court of New Jersey, Chancery Division, Family Part (hereinafter “the New Jersey Superior Court”) for the deposition of Mr. Marshall. I will refer to this examination as a deposition throughout my reasons.
3Mr. Marshall resists this Application on the basis that he has already provided significant documentation to Ms. Prenovost for use in the New Jersey litigation, and that a deposition and the production of additional documents is overly intrusive and unnecessary.
4I have considerable sympathy for the position of Mr. Marshall. The documents and questions that are sought to be explored through this commission are at the outer edge of what would be permissible under Ontario law. However, I am persuaded to enforce the bulk of the commission when I have regard to the principle of comity.
5However, I am also persuaded that I should put strict limits on this discovery, including limitations on the location and the scope of the examination. I will set those limitations out in the course of my reasons.
Background Facts
a) The Family Farm
6The parents of Mr. Marshall and Ms. Prenovost owned a farm. In 1997, their father passed away, and they inherited the farm. In Ontario, section 4(2) of the Family Law Act, R.S.O. c F.3 as amended would likely exclude this property from the calculation of net family property. In other words, in this jurisdiction, there would be very strong arguments to support Ms. Prenovost’s position that Mr. Prenovost had no claim to this property.
7After inheriting the farm from their father, Mr. Marshall and Ms. Prenovost transferred it to a Company, the Respondent 1077976 Ontario Inc. Mr. Marshall owns 55% of the shares of this company, and holds the other 45% of the shares of the company in a bare trust for Ms. Prenovost. Mr. Marshall is responsible for the day-to-day management of the company. Ms. Prenovost plays no role in the company.
8These arrangements are set out in a Unanimous Shareholder’s Agreement, which has been provided to Mr. Prenovost’s counsel. This agreement was reached, in part, because of Ms. Prenovost’s lack of knowledge of farming, and the fact that she lived some considerable distance away from the farm.
9Both Mr. Marshall and Ms. Prenovost wish to have the farm remain in their family after they have passed away.
b) The U.S. Litigation and the Previous Production Orders
10In the U.S Litigation, Ms. Prenovost is seeking what is referred to as alimony. In Ontario, it would be called spousal support. She is also seeking child support. Mr. Prenovost resists the claim for spousal support, and seeks to pay a reduced amount of child support. He argues that Ms. Prenovost receives an income from the farm, and that this should be taken into account in assessing his support obligations.
11Ms. Prenovost disputes this claim on the basis that this is an inherited asset and is excluded from the matrimonial property under New Jersey law. She also argues that the company has never declared any dividends and is not a source of income for her. Finally, she argues she should not be legally obligated to sell her interest in the farm.
12As a result of this dispute, a production Order was issued by Justice Michael Casale of the New Jersey Superior Court in April of 2014 for the production of documents, most of which were in the possession of Mr. Marshall or his accountants and advisors. This production request was substantially fulfilled.
13However, in July of 2014 Ms. Prenovost was required to defend Mr. Prenovost’s summary judgment motion, asking that her claim be dismissed on account of the fact that she had not complied with the production requests that had been made of her. This motion was dismissed. However, the Court also noted that there was a risk that it would view the transactions between Ms. Prenovost and Mr. Marshall as “sham” transactions.
14As a result, Ms. Prenovost brought a first motion for additional production in Ontario. This motion was granted by Thompson J. on the consent of Mr. Marshall in January, 2015, and required significant production of bank statements, cheques and other documents.
15Although Mr. Prenovost’s counsel received additional documentation as a result of the Order of Thompson J., he argued that it was insufficient. In an effort to resolve the matter, Ms. Prenovost’s Canadian counsel agreed with Mr. Marshall’s counsel to accept written answers to written questions in the hopes that this would be acceptable to Mr. Prenovost’s counsel. It was not. This brings me to the current Commission.
c) The Current Commission
16As a result of the events outlined above, Ms. Prenovost’s American counsel attempted to negotiate the terms of a Commission with Mr. Prenovost’s counsel. Mr. Prenovost’s counsel was seeking a very broad Commission, broader than the one the Court ultimately signed. I would note that the Commission sought by Mr. Prenovost’s counsel would not have been given effect by this Court as it was overly broad and intrusive. It also appeared to be a “fishing expedition” as that term is described in Canadian case law.
17In the end, on May 19th, 2015 Justice Casale signed a Consent Order for Commission that requested the production of the following documents:
The deposition shall be limited to questions regarding the following: the nature of Plaintiff`s interest in O/A Marshall Farms; the value of O/A Marshall Farms; the income and/or dividends generated or which could have been generated by O/A Marshall Farms, and what rights Plaintiff has to same; payments that have been made to Plaintiff by or on behalf of O/A Marshall Farms; payments that have been made to or for the benefit of Daniel Marshall (or any entity in which he has an interest) by or on behalf of O/A Marshall Farms; investments that have been made by Daniel Marshall with farm assets; and significant expenses that have been paid by the farm.
18The Commission also requested that Mr. Marshall be required to attend an examination for discovery and answer questions limited to the following areas:
The request for documents accompanying the deposition shall be limited to the following: a copy of the canceled check in the amount of $41,000, referenced in the farm bank statements; copies of all account statements for the investment account(s) into which farm assets were deposited by Mr. Marshall; and all documents related to the turbine that Mr. Marshall had installed on the farm, including related to payments made by the farm to Mr. Marshall’s engineering firm. The parties agree that these documents must be produced as they will enable the parties to fully understand certain expenses/investments paid by the farm, disclosed in the previous produced bank statements, which expenses potentially impacted the ability of the farm to generate income.
19In terms of the current Commission, I understand that there have already been a number of days of trial, and that the trial is proceeding to a likely conclusion at the end of August this year. In other words, the trial will likely take place within the month. I also understand that Justice Casale may be prepared to receive the evidence from the Commission after the conclusion of the trial.
20The question I must now determine is whether this Commission should be enforced by this Court.
The Legal Issues and Disposition
21Sections 46(1) of the Canada Evidence Act and section 60(1) of the Ontario Evidence Act provide that, in certain circumstances, an Ontario Court can give effect to a commission or other Order from a foreign Court where the Ontario Court is satisfied that the request has been duly authorized by the foreign Court. Both parties agree that the preconditions under these sections are met, and I so find.
22As a result, I am left with two questions to determine. First, whether the criteria for enforcing a foreign commission have been met and, if so, whether I should exercise my discretion to give force to the Commission. Second, I must address the timing of any examinations and productions that I order.
a) The Criteria for Enforcing a Commission
23The criteria for enforcing a Commission from a foreign Court were enunciated in Friction Division Products Inc. v. E.I. DuPont de Nemours & Co. ((1985) 1986 2827 (ON SC), 56 O.R. (2d) 722). Osborne J. (as he then was) stated (at paragraph 25):
Before an order giving effect to letters rogatory will be made, the evidence (including the letters rogatory) must establish that:
(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.
24Each requirement of this test has to be met (see Safeco Insurance Co. of America v. Cecan, 2014 ONSC 2841 (Daley J. as he then was) at paragraph 30). If one part of the test is not met for a particular portion of the Commission, then the Court should not enforce that portion of the Commission. For a detailed discussion of each factor, see AstraZeneca LP v. Wolman (2009 69793 (ON SC), [2009] O.J. No. 5344 (S.C.J., D.M. Brown J. as he then was), at paragraphs 23 and following.
25It is important to remember that the Court receiving the Commission is not sitting as a reviewing Court, and should not substitute its own judgment for that of the Court that has issued the Commission. However, the Court receiving the Commission should review it in light of the underlying facts as provided to the Court, and determine whether it should be given effect. In conducting that exercise, the receiving Court has the authority to accept, modify or reject the Commission.
26It is also instructive to consider the principles of comity in assessing any request for an examination from a foreign Court. As the Supreme Court of Canada noted in Zingre v. R (1981 32 (SCC), [1981]2 S.C.R. 392 at paragraph 18):
It is upon this comity of nations that international legal assistance rests. Thus the Courts of one jurisdiction will give effect to the laws and judicial decisions of another jurisdiction, not as a matter of obligation but out of mutual defence and respect. A foreign request is given full force and effect unless it be contrary to the public policy of the jurisdiction to which the request is directed (see Gulf Oil Corp v. Gulf Oil Can. Ltd., 1980 192 (SCC), [1980] 2 S.C.R. 39, 15 C.P.C 267, 51 C.P.R (2d) 1, 31 N.R. 451, 111 D.L.R. (3d) 74 or otherwise prejudicial to the sovereignty or the citizens of the latter jurisdiction.
27A final principle that flows from the case law is that the requests of foreign courts should be considered without rigidity (see both Friction Division, supra, at paragraph 30 and the Zingre decision). In other words, there should be a flexible approach to a Commission that respects the authority of the issuing Court.
28In submissions, counsel for the Respondents pointed to three key reasons why I should not enforce this Commission as follows:
a) The evidence is not relevant or necessary as a lot of the documents sought have already been provided.
b) The evidence is not necessary because Ms. Prenovost is arguing that the New Jersey Court should not accept Mr. Prenovost’s claims about the farm. In addition, the evidence is not necessary because Ms. Prenovost already has this information and can provide it in in the U.S. litigation.
c) Mr. Marshall’s privacy interests are not protected by allowing him to be subjected to an examination for discovery in this case. As a result, enforcing this Commission would be contrary to public policy.
29Respondents’ counsel also argued more generally that many of the criteria are not met in this case as they relate to specific parts of the Commission. Although I am of the view that the Commission in this case is at the outer limits of what should be required of a third party by a foreign Court, I am still prepared to enforce the bulk of it. I am not, as will be seen, prepared to enforce all of it.
30I start with the privacy concerns. In essence, Respondents’ counsel argues that this Commission is contrary to public policy because it does not protect their privacy interests. I agree. However, as Ms. Prenovost’s counsel quite rightly noted, this can be addressed by an Order that requires Mr. and Ms. Prenovost to be bound by the deemed undertaking rule as it exists in Ontario.
31The privacy concerns in this case can be addressed by having Mr. and Ms. Prenovost and their counsel provide the same undertaking to Justice Casale for oral evidence as the one I describe below with respect to documents. I so order.
32Then, there is the Respondents argument that the evidence sought is not relevant because Ms. Prenovost is arguing that it is not relevant in the New Jersey action. The mere fact that Ms. Prenovost is arguing against Mr. Prenovost’s claim in New Jersey, and is arguing that the documents are irrelevant does not actually make these documents irrelevant at this stage for two reasons. First, Mr. Prenovost is taking the position that these documents are relevant and, it appears, that Justice Casale is prepared to entertain this argument (see his July, 2014 Order). Second, Ms. Prenovost hopes to use these documents to convince Justice Casale that Mr. Prenovost’s claim is without merit, even if the Court finds the documents to be relevant.
33The position that Ms. Prenovost is taking in the New Jersey litigation does not affect my consideration of what is relevant in this case. It is Mr. Prenovost’s arguments that govern what is relevant because the New Jersey Superior Court may accept those arguments, and Ms. Prenovost must be able to defend against them.
34Mr. Prenovost has put the question of the farm, the income it provides, and who controls it directly in play in the New Jersey litigation. As a result, questions relating to the farm are generally relevant to the action in New Jersey and are, therefore, generally permissible. I will deal with some specific exceptions below.
35There is the argument that Ms. Prenovost already knows much of the information that would be the subject of Mr. Marshall’s deposition and, therefore, deposing Mr. Marshall is not necessary because the evidence is otherwise obtainable. The problem with that argument is that “not otherwise obtainable” does not mean that the Applicant has to show that no one else can provide the evidence. Instead, it requires an assessment of the value of the evidence to be provided by the person sought to be deposed. In this case, because of the nature of the litigation, and Mr. Marshall’s knowledge of the business, the evidence sought from him will be of a higher quality than the evidence that Ms. Prenovost can provide. As a result, with the exceptions noted below, his evidence is necessary. For a discussion of this issue, see Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd. (2013 ONCA 264, at paragraph 64).
36Finally, counsel for the Respondents argues that the questioning should not be permitted because of the fact that most of the necessary documents have already been produced. The Respondents further argue that all of the areas where questioning is proposed have already been addressed by the documents that have been produced. I do not accept this argument. The documents will explain what happened, to a certain extent. They will not, however, explain why things happened or how they happened. It is this additional information that the Court in New Jersey is undoubtedly seeking, and this is within the reasonable scope of a deposition, with some exceptions.
37One of the related arguments is that Mr. Prenovost is on a fishing expedition (which is akin to an investigation- see j2 Global Communications Inc. v. B.C. 2010 ONSC 760 at paragraph 20), which is something that is specifically prohibited in the Canadian Courts. If this Order is a “fishing expedition”, then enforcing it would be contrary to Canadian public policy. When I review the Commission originally sought by Mr. Prenovost’s counsel, it is clear to me that it would have been overly broad, and would have been a fishing expedition. However, Justice Casale has narrowed the information sought, and has limited the questioning to only certain areas.
38In the circumstances, I am persuaded to give effect to the bulk of the Commission when I consider the principle of comity, and the principle that an Order of a foreign court should not be considered in an overly rigid way.
39In addition, the evidence is generally relevant and will be adduced at trial if admissible. Finally, as I have discussed, the evidence sought is only available from Mr. Marshall.
40I now turn to the question of how these principles and arguments should be applied to the specific portions of the Commission.
d) Application of Criteria to the Questioning Requested
Documents
41Based on these principles, I can deal very briefly with the documentary production that is sought. As I understand it, counsel for Ms. Prenovost is seeking production of the documents set out in the Commission. Having reviewed the criteria set out above, I am of the view that I should enforce the Commission, with one significant change.
42I reach this conclusion for a number of reasons, including the following:
a) The documentation that is being sought is relevant to the arguments that Mr. Prenovost is seeking to advance, and will assist the Court in New Jersey in assessing those documents.
b) A request for documentary production is, in my view, significantly less intrusive than a request for an examination for discovery.
c) The test for whether a document should be produced in Ontario from a non-party requires the Court to consider relevance and whether it would be unfair to require a party to proceed to trial without the documents (see Rule 30.10 (2) of the Rules of Civil Procedure). Given the allegations being made by Mr. Prenovost, it is clear to me that the documents sought are relevant, and that it would be unfair to proceed to trial without giving the parties access to these documents.
d) The principle of comity, as outlined above supports enforcing the Commission for these documents.
43As a result, to the extent that the documents sought by the Commission have not already been produced, I am directing that Mr. Marshall and/or the Corporate Respondent produce them, with conditions.
44This brings me to the significant change that I am requiring before any further documents are produced. In Ontario, we have the “deemed undertaking” rule under Rule 30.1 of the Rules of Civil Procedure. Under this Rule, a party that obtains documentation or other oral evidence is deemed to undertake that he or she will not use the documentation or other evidence for any other purpose. There are exceptions to this Rule, including for evidence that is tendered in open Court.
45However, given the privacy concerns that were quite rightly raised by Mr. Marshall’s counsel, I am only prepared to enforce the Commission if both Mr. and Ms. Prenovost and their counsel provide the New Jersey Superior Court with an undertaking that the requested documents will be kept confidential and will only be used for the purposes of the U.S. Divorce proceedings. This undertaking must be in substantially the same form as set out in Rule 30.1 of the Rules of Civil Procedure. This undertaking must also be acceptable to both Justice Casale and counsel for Mr. Marshall, and Mr. Marshall must be able to enforce this Undertaking through contempt proceedings (or other similar proceedings) in the State of New Jersey if it is breached.
46As noted above, this same undertaking will apply to questioning. Documents sufficient to support both undertakings are to be filed by Ms. Prenovost’s counsel with the Court Office in Owen Sound. If any issue exists with respect to the sufficiency of the undertakings that have been provided, I retain jurisdiction to address it, either through a personal appearance or through other means.
Questioning
47My view on the permissible scope of questioning is more limited. As I noted above, requiring a witness to undergo questioning is more intrusive than the mere production of documents. In the circumstances, my findings on each of the areas of questioning are as follows:
a. The nature of Prenovost’s interest in the Corporation. This is an example of an area that is at the outer edge of what should be permitted. The corporate documents illustrate the scope of Ms. Prenovost’s interest. In the circumstances, however, given Justice Casale’s statements about a possible finding of a sham transaction, I find that questioning in this area is to be permitted.
b. The value of the Corporation. As part of the last round of production, Mr. Marshall permitted Ms. Prenovost to have an appraisal done of the farm. This appraisal, I understand, has been produced to Mr. Prenovost’s counsel. I see no reason why questioning on the value of the Corporation should be permitted. Mr. Prenovost’s counsel already has an appraisal and the financial statements, and Mr. Marshall does not (as far as I know) have expertise as a real estate appraiser or business valuator. I decline to give any effect to this portion of the Commission.
c. Income and/or dividends that are generated or could have been generated by the Corporate Respondent, and what rights Ms. Prenovost has to those. I also decline to give any effect to this portion of the Commission. The actual dividends are set out in the Corporate documentation, and the financial statements of the Corporation. Questions in this area would either call for speculation on Mr. Marshall’s part, or would require Mr. Marshall to provide a legal or financial opinion. I heard no evidence to support that Mr. Marshall was qualified in any of these areas. Finally, this is clearly in the nature of an investigation, or a “fishing expedition”.
d. Payments that have been made to the Plaintiff by or on behalf of the Corporate Respondent. This appears to me to be a reasonable area of inquiry, and I give effect to this portion of the Commission.
e. Payments that have been made to or for the benefit of Mr. Marshall, or to any entity in which he has an interest by or on behalf of the Corporate Respondent. I will give effect to this portion of the Commission as well. However, I would note that this is again at the outer edge of what would be relevant in a case like this. I would also note that, given that Mr. Marshall has run the business for the last number of years, that it would be unsurprising to find that he had received payments for his work that Ms. Prenovost had not received. This observation is part of the reason why this area of questioning troubles me.
f. Investments that have been made by Mr. Marshall with farm assets. I will give effect to this area of questioning but, again, note that this is at the outer edge of what is reasonable in a case such as this. The investments will be a corporate asset that should be shown on the balance sheet.
g. Significant expenses that have been paid by the farm. I will give effect to this part of the Commission, but I am going to limit it in two ways. First, significant shall mean anything of $7,500.00 or more in a single expenditure. Second, I am limiting the questioning to expenses from 2008 to the present.
e) Timing
48I have exercised my discretion to require Mr. Marshall and the Corporate respondent to produce the requested documentation. I have also exercised my discretion to require Mr. Marshall to attend and answer most of the questions that are sought to be asked of him.
49Both parties acknowledged that this was an urgent matter, and that a decision should be issued promptly. In the circumstances, I have acceded to this request, and issued a decision today, less than a week after the Application was heard.
50I would note that this Application was originally scheduled for a short motion (less than one hour) in Owen Sound on Friday, June 5th, 2015, which would likely have been the first date when it could have been returnable after Justice Casale signed the Commission. At that time, Edwards J. adjourned it to a long motion date, as it was both legally and factually too complex to be addressed in a short motion. In my view, the delay occasioned by this adjournment was entirely necessary, and was not the fault of Ms. Prenovost’s counsel, who has been attempting to move this matter very quickly through the Court system in Ontario.
51On that subject, I note that Counsel for Ms. Prenovost also argued, quite firmly, that I should direct that an examination should take place in the next week or two to ensure that this evidence can be completed before the conclusion of the Trial. Counsel for Mr. Marshall opposes this request, as she is on vacation for the next two weeks, and it will be difficult to get a reporter in Owen Sound during the summer in any event. Counsel for Ms. Prenovost suggests that I should simply require Mr. Marshall to use another lawyer to attend and assist him at the deposition.
52As I indicated at the hearing of the motion, Mr. Marshall is being inconvenienced in this matter by being required to attend and answer questions. I do not intend to inconvenience him further by requiring him to obtain a new counsel so that this deposition can be held to suit the calendar of Mr. Prenovost’s counsel or a trial that is to continue. I also do not intend to inconvenience Mr. Marshall’s counsel by either requiring her to travel to Toronto to conduct this examination for discovery or to have it completed by videolink.
53As a result, any deposition will take place in Owen Sound in person, at a time in the near future that is convenient to Mr. Marshall’s counsel. Should either Mr. Prenovost’s counsel or Ms. Prenovost’s counsel wish to ask questions, they may do so within the framework set out above. Their attendance shall be at their own expense.
54As a result, I make the following additional Orders with respect to the examination for discovery:
a) The examination is to take place in Owen Sound, and all counsel are to attend in person.
b) The examination may be videotaped and/or recorded for the assistance of the New Jersey Court.
c) The date of the examination is to be at a time convenient to Mr. Marshall and his counsel. It would be preferable if it could be scheduled in the next four to six weeks.
d) The costs of Mr. Marshall’s attendance at this examination, including the costs of his lawyer’s presence, are to be paid for by the Applicant. As noted in AstraZeneca, supra, at paragraph 65, the general rule in a case of this nature is that the Applicant pays the costs of the Respondent for the attendance. I see no reason to depart from this general rule in this case.
e) In the event that there are any disputes or problems regarding this examination, I retain jurisdiction over this matter to ensure that these disputes are addressed promptly.
55Counsel should agree on the terms of the formal Order to be issued by the Court. In the event that they are unable to agree on those terms, I may be contacted through the Trial Coordinator in Owen Sound.
Conclusion
56In the circumstances, Ms. Prenovost has been reasonably successful in having the Commission enforced. However, as I noted above, this Commission includes requests that are at the outer edge of what should be enforced. Further, Mr. Marshall has been quite cooperative with documentary production.
57Accordingly, if counsel cannot agree on costs, then they will make costs submissions to me no later than twenty one (21) days from the date of the release of these reasons. These submissions will be no longer than four (4) double spaced pages, exclusive of bills of costs and case law. The submissions will be filed on the same day, and there will be no reply submissions without leave of the Court.
58As a final matter, if the parties would be assisted in having my costs decision deferred until the U.S. action is concluded, I am prepared to consider such a request.
59I would be remiss if I did not, again, note that both Ms. Sayer and Ms. Landry presented and argued their cases in a well-organized, cogent and persuasive manner. It made my job in resolving this issue significantly easier, and I thank them both for that.
LeMay J.
Released: August 17, 2015