Court File and Parties

COURT FILE NO.: CV-18-596927 DATE: 20210222 ONTARIO SUPERIOR COURT OF JUSTICE

RE: Perlmutter et al., Applicants -and- Smith, Respondent

BEFORE: F.L. Myers J.

COUNSEL: P Masic and W Fogarty, for the applicants S Bieber and J Katz, for the respondent J Morse and D Trafford, for Harold Peerenboom

HEARD: February 22, 2021

Endorsement

[1] The endorsement applies as well to the related proceeding under Court File No. CV-20-636500.

[2] Mr. Peerenboom and the Perlmutters have a dispute in Florida. It is a nasty dispute among neighbours that has something to do with the tennis courts in a wealthy gated community.

[3] Mr. Smith is alleged to have engaged in a horrendous poison pen letter-writing campaign either to help the Perlmutters injure Mr. Peerenboom or, using the cover of the neighbours’ dispute, to inflict injury on Mr. Peerenboom for his own reasons. While the allegations against Mr. Smith remain unproven, there is some serious prima facie evidence indicating, at minimum, that he was involved with the poison pen letters whether on his own behalf or otherwise.

[4] The US litigation among the parties is coming to trial and to an arbitration in the US very soon. Mr. Smith is a defendant in the US but has yet to produce documents or to attend for deposition there. That will be an issue before a US judge later this week.

[5] Meanwhile, both the Perlmutters and Mr. Peerenboom obtained letters of request from the Florida Court to ask this court to compel Mr. Smith to attend for examination here.

[6] The letters of request provide that the costs of document production in association with the examinations under the letters of request will be paid by the Perlmutters and Mr. Peerenboom equally.

[7] By order dated May 11, 2020 Lederer J. enforced the letters of request. The Court of Appeal upheld this order.

[8] The order made by Lederer J. provides that only documents that are relevant to the Florida litigation need be disclosed by Mr. Smith.

[9] At the time of the order, several electronic devices belonging to Mr. Smith were being held by Toronto Police Service. The parties agreed to a TAR (Technology Assisted Review) process under which an independent expert would be retained at the expense of the Perlmutters and Mr. Peerenboom to search the data on Mr. Smith’s devices.

[10] The agreed process was set out in the order made by Lederer J. It provided that all the parties were to agree on a list of search terms for the expert to use to search the data on the devices.

[11] Documents identified by the expert as containing the search terms would then be reviewed by Mr. Smith’s counsel for privilege. The order then provides:

(e) Counsel for David Smith shall deliver relevant and non-privileged documents to [the Perlmutters and Mr. Peerenboom].

[12] The order does not specifically call for counsel for Mr. Smith to review the documents for relevancy.

[13] An issue arose between the parties because the search terms initially provided by the Perlmutters and Mr. Peerenboom were so broadly drafted that Mr. Smith expressed concern that the searches would yield a very high volume of documents containing the terms (“hits”). He was concerned that private and confidential information that was totally irrelevant to the Florida litigation would be produced in response to the terms requested. He offered to agree to the search terms as proposed as long as his counsel had an opportunity to review the hits for privilege and for relevancy.

[14] The Perlmutters and Mr. Peerenboom objected to counsel for Mr. Smith reviewing the documents to narrow the production set generated by TAR other than for privilege.

[15] By endorsement dated December 4, 2020, I interpreted the order as allowing Mr Smith’s counsel to review the documents for relevancy. The order was very clear that only relevant documents were required to be produced. There are a number of very specific rules set out in the order about what is and what is not relevant regardless of the findings or hits by TAR. Someone has to decide what is producible. I gave some rather pointed directions to counsel for Mr. Smith as to the nature of its obligations in making independent relevancy determinations.

[16] I was under no illusion that what was about to be undertaken was a large document review process in a very compressed period of time.

[17] Paragraph 15 of Justice Lederer’s order expressly requires the Perlmutters and Mr. Peerenboom to pay the “reasonable legal costs of David Smith related to the preparation for, and attending at, the examination on a full indemnity basis.” It requires each of the Perlmutters and Mr. Peerenboom to pre-pay $10,000 toward those costs at least fourteen days prior to the examination date.

[18] The modest quantum ordered might lead one to conclude that Lederer J. was thinking about the actual examination and not a massive document review process. However, the breadth of the process had not been determined when the matter was before him in May, 2020. That came later when the Perlmutters and Mr. Peerenboom provided their list of search terms in November or December last.

[19] The importance of para. 15, in my view, is that it is consistent with the letters of request providing that the full costs of Mr. Smith are to be paid.

[20] On February 2, 2021, Mr. Smith asked to schedule a motion to seek pre-payment of the costs being incurred by his counsel in reviewing the documents. Counsel for the Perlmutters and Mr. Peerenboom complained that production was proceeding too slowly. They wanted an order to let their US counsel review documents on a “counsels’ eyes only” basis instead of using Mr. Smith’s counsel.

[21] I deferred the issues pending a possible US decision on whether Mr. Smith would be ordered to attend depositions in the US and to produce the documents at his own cost in that examination. I also ordered rolling productions to commence and continue every 48 hours thereafter.

[22] It was obvious that Mr. Smith might try to discharge his counsel to avoid incurring the costs of production and I warned that if that occurred I would hear an urgent motion to ensure that the relevant documents identified by the TAR process would be reviewed by the Perlmutters and Mr. Peerenboom on a timely basis before the examination under the letters of request.

[23] The US motion is now scheduled for February 25, 2021. In the meantime, both sides came back to me again last week with the same issues. They both asked for the scheduling of motions on an urgent basis. Mr. Smith asks for an order that the Perlmutters and Mr. Peerenboom pay his counsel for their production review. He says he cannot afford to pay them. The opposition seek orders allowing them to have the documents reviewed by their own counsel with conditions to protect privilege and confidentiality concerns.

[24] I agree with the Perlmutters and Mr. Peerenboom that Mr. Smith is not an independent third party witness whom the case law typically protects from incurring any costs liability when enforcing letters of request. I agree that his case is different. He is an interested party. Mr. Smith also would not meet the test for a pre-payment of costs in an ordinary civil action. His evidence of impecuniosity is not close to the type of disclosure required to prove that fact. Moreover, I find it difficult to justify protecting him from costs in an examination here under the letters of request when in the US action he may well have an independent obligation to produce his documents at his own cost.

[25] If I was deciding this matter afresh, I might approach it differently. But I am not. I have already ruled that the review by counsel for Mr. Smith is intended by the order made by Lederer J. enforcing the letters of request. Moreover, the letters of request that he enforced made specific provision for the payment of document review costs by the Perlmutters and Mr. Peerenboom. They are already liable for the costs of the independent expert.

[26] US counsel for the Perlmutters and Mr. Peerenboom drafted the letters of request as they did for their own good reasons. The Perlmutters and Mr. Peerenboom made very broad requests for search terms that generated a very large number of hits. All of that was within their control.

[27] In my February 2, 2021 endorsement I held that the Perlmutters and Mr. Peerenboom could send priority lists to counsel for Mr. Smith and that the hits that contain the priority terms should be searched first. Documents are still being produced at a snail’s pace. But speeding up necessarily will involve more people and therefore even greater cost.

[28] My order dated December 4, 2020 was clear that Adair Goldblatt Bieber LLP was going to be the firm conducting the document review. It is too late to now suggest that it should be done elsewhere on a more economical basis. That might well have been a useful thing to negotiate had the parties been in a negotiating mood.

[29] Mr. Smith has not fired the firm precipitously and the firm remains engaged pending this motion. But either the Perlmutters and Mr. Peerenboom pay the costs claimed by the law firm now, or it will go off the record. While it is possible to fashion a process for review of the hits in that event, it will not be either quick or easy. The documents cannot just given to the parties opposite without any review for relevancy or privilege.

[30] The fees charged by the law firm will, as always, be subject to assessment for reasonableness. But, it should be clear at all times that the liability on the Perlmutters and Mr. Peerenboom under the letters of request, the order, my prior endorsements, and this endorsement, is to pay the full indemnity costs reasonably billed by Adair Goldblatt Bieber LLP for it personally conducting the document review on the search terms and priority lists submitted by the Perlmutters and Mr. Peerenboom. If, as was suggested today, the law firm has ignored the priority lists and reviewed a large number of documents that it was not yet required to review, that can be an issue on an assessment.

[31] I noted above that Mr. Smith would not qualify for pre-payment of costs in an ordinary case. However, given that the liability for costs on the Perlmutters and Mr. Peerenboom is already determined in any event of the cause, I see no basis for Mr. Smith or the law firm to have to grant them credit especially given the degree of antipathy between and among these parties. The reasonableness of the quantum will be worked out at assessment if necessary.

[32] Nothing in this decision prevents the Perlmutters and Mr. Peerenboom from arguing later in Florida that they should be entitled to recoup the costs paid under the Letters of Request. It is not for me to speculate whether that argument will play well in the Florida court.

[33] If the Perlmutters and Mr. Peerenboom want to receive further documents from Mr. Smith’s devices for use on the examinations under the letters of request, they shall each pay $100,000 to Adair Goldblatt Bieber LLP in trust to be applied toward Mr. Smith’s costs of preparing for and attending the examination set out in para. 15 of the order made by Lederer J. dated May 11, 2020;

[34] Notwithstanding anything in the order made by Lederer J. dated May 11, 2020 and any of my prior endorsements, from and after 6:00 pm, February 22, 2021, Adair Goldblatt Bieber LLP may down tools and stop reviewing and delivering any documents identified from Mr. Smith’s electronic devices until it has received $200,000 in the aggregate from the Perlmutters and Mr. Peerenboom as set out in the preceding paragraph.

[35] Finally, I am not telling anyone how they should proceed with their US litigation. I am just enforcing the order made by Lederer J. enforcing the letters of request. It remains open to the Perlmutters and Mr. Peerenboom to decline to fund Adair Goldblatt Bieber LLP if they do not wish to obtain the documents on Mr. Smith’s devices for the examinations under the letters of request. The longer they wait; the fewer they will likely receive anyway. They may choose not to proceed with the examination at all.

F L Myers J Date: February 22, 2021