COURT FILE NO.: CV-18-596927
DATE: 20210517
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: May 14, 2021
ENDORSEMENT
[1] The endorsement applies as well to the related proceeding under Court File No. CV-20-636500.
[2] I have previously written about the US litigation between Mr. Peerenboom and the Perlmutters in Florida. 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.
[3] Both the Perlmutters and Mr. Peerenboom obtained letters of request from the Florida Court to ask this court to compel Mr. Smith to produce documents located on electronic devices that were being held by the police here and to attend for examination here.
[4] By order dated May 11, 2020 Lederer J. enforced the letters of request. The Court of Appeal upheld this order.
[5] Lederer J. and the Court of Appeal both recognized that oral examinations of Mr. Smith could take place here under the Letters of Request or in the US. Similarly, document production was attainable under the Letters of Request or by the US court in its own process. In fact, Mr. Smith argued expressly that the Letters of Request were unnecessary because he was compellable in the US.
[6] In deciding that the order of Lederer J. made the Pelrmutters and Mr. Peerenboom liable to pay the costs of PWC to obtain document from it for the purposes of examination here, I also reserved the other option:
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.
[7] I was very clear in my decision, that what I was doing was enforcing the order of Lederer J. and the Letters of Request. I was not finding that there were grounds under Ontario law to require the Perlmutters or Mr. Peerenboom to pre-pay production costs of Mr. Smith as a litigant with his own production obligations. The issues of the scope and costs of Mr. Smith’s production obligations were for the US Court.
[8] To that end, I wrote:
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.
[9] The Letters of Request did essentially two things. First, they sought examinations in Ontario if Mr. Smith would not go to the US voluntarily. They also dealt with the handling of Mr. Smith’s electronic devices which were still in the possession of the police at the time. It was apparent that document production was required whether examinations took place here or in Florida.
[10] Pursuant to Justice Lederer’s order, the parties retained PWC and jointly instructed it as to the agreed upon manner of proceeding. PWC was to conduct searches of the devices for agreed search terms and provide the responsive documents to counsel for review as ordered or agreed.
[11] Early on in the piece, I noted a risk that Mr. Smith could try to frustrate the document review process by firing his Ontario counsel. I indicated that such conduct would not be an effective tactic to prevent enforcement of the courts’ orders.
[12] On March 3, 2021, the US Court ordered Mr. Smith to produce relevant documents including all the non-privileged documents on the devices being held by PWC. The US Court required Mr. Smith to produce a list of documents over which he claimed privileged by March 15, 2021 and to produce all non-privileged, relevant documents by March 24, 2021.
[13] On March 15, 2021, Mr Smith’s US counsel, Mr. Rosenquest, produced a privilege log from the PWC documents in the US litigation as required.
[14] On March 24, 2021, the day Mr. Smith was required to produce non-privileged documents, Mr Rosenquest filed a motion to withdraw (to be removed from the record) as Mr. Smith’s counsel.
[15] Mr. Smith did not produce the relevant, non-privileged documents from his devices that day as required in the US litigation.
[16] On April 20, 2021, the US Court scheduled a hearing for Mr. Smith to show cause why he should not be held in contempt of court. In addition, the US Court deferred Mr. Rosenquest’s motion to withdraw and the judge ordered Mr. Rosenquest personally, as counsel of record, to produce all documents from Mr. Smith’s devices that were not listed in the privilege log within 15 days. The Court found that there was “zero question as to [the documents’] discoverability” and that as an officer of the Court and under the Florida Rules of Professional Conduct, Mr. Rosenquest was bound to comply with a lawful discovery request.
[17] Although no mention was made to the US Court, it appears that on March 26, 2021, Mr. Smith purported to instruct PWC to withdraw Mr. Rosenquest’s access to its database. Mr. Rosenquest had had access to the database throughout and as recently as days earlier when he prepared the privilege log.
[18] PWC is a stakeholder in the true sense. It is neutral and holds the stakes for others. It has no personal interest other than to do as it is properly instructed and to protect itself from lawsuits by fulfilling its jurisdiction honestly, in good faith, and with an even hand
[19] Apparently, when contacted by counsel for the Perlmutters on May 6, 2021, PWC briefly reinstated Mr. Rosenquest’s connection to the database. Then, on May 7, it blocked him from the database again.
[20] PWC’s position as expressed by its General Counsel is as follows:
PwC will continue to host and protect and preserve the documents as previously directed by the parties and the Ontario court. PwC will also continue to provide access to the parties’ current legal counsel. To the extent that the parties wish to instruct PwC to provide access to the documents to any other individual, including Mr. Smith’s former counsel in Florida, or take any other steps with respect to the documents or database, the consent of all parties, or an order of the Ontario Court, is required.
[21] PWC’s demand for unanimity or an order of this court is interesting in that it did not seem to need either of those things to disconnect Mr. Rosenquest from the database in the first place.
[22] Be that as it may, I am not asked today to enforce the US Court’s order against Mr. Rosenquest. I have not received a request from the US Court to do so.
[23] Rather, I am asked to deal with an issue that has arisen under the terms of Justice Lederer’s order under which PWC was established as the independent third party to review and search Mr. Smith’s devices.
[24] Mr. Smith’s counsel argue that I have already ordered that the Perlmutters and Mr. Perenboom are required to pay $100,000 each to his Ontario counsel to conduct a relevancy review of his e-documents. That is true – in connection with disclosure associated with examinations in Ontario under the Letters of Request.
[25] That is not what is in issue before me. As noted above, the devices are being held both for the examinations here and to assist the US Court with US discovery through Mr. Smith’s US counsel.
[26] Mr. Peerenbloom and the Perlmutters are not seeking to require Adair Goldblatt to review documents under my various orders. They are asking me to clarify the terms applicable to PWC as independent third party under the order of Lederer J. As PWC apparently recognizes, it is a creature of the parties’ agreement implementing the order of this court.
[27] Having allowed Mr. Rosenquest to prepare and deliver the privilege log under para. 24 (f), is it conceivable that the intention of the order would be to allow Mr. Smith to fire his counsel at the last minute to avoid the discovery process that he had undertaken? I commented on this prospect on the Canadian side of the border previously and said it would have been intolerable. Whether phrased in bad faith, or as an implied term of the order, or as an abuse of process, I cannot conceive of a basis to interpret the order of Lederer J. to expect that the independent third party process could be thwarted by Mr. Smith firing the lawyer who has carriage of the process.
[28] Moreover, given PWC’s recognition of the need for consent to alter its position, it is apparent to me that para. 24 of the order cannot be read to allow Mr. Smith to unilaterally fire counsel to avoid the obligation on Mr. Smith or his counsel to make documentary discovery. The whole purpose of the order is to organize affairs to provide discovery fairly, lawfully, and in cooperation with the US Court’s process. Reading the order to allow Mr. Smith to take a unilateral step to frustrate its purpose makes it a toothless tiger.
[29] In my view, PWC was not authorized to accept the unilaterally imposed demand of Mr. Smith to remove Mr. Rosenquest or his firm from having access to the database. The discovery process had been carefully calibrated to accommodate counsel and parties on both sides of the border. The recipients’ list of communication to and from PWC has been extensive. Contact with PWC had generally been transparent. While I am not saying that Mr. Smith could never change counsel, that is not what happened here. As Ontario counsel’s presence today shows, Mr. Smith has cherry-picked counsel for obvious ends.
[30] In my view, until Mr. Rosenquest is lawfully removed as Mr. Smith’s counsel of record, PWC is required to allow him and his firm access to the database to fulfill the process set out in para 24 of Justice Lederer’s order. An order will go making a direction to PWC accordingly. It is indifferent to the outcome. It just needs clarity and the security of an order.
[31] While I required that the fees of Adair, Goldblatt be pre-paid, I also made it clear that the fees could be claimed in the US action because the ultimate arbiter of the burden of costs of the US discovery process was the US court. As noted above, I expressly allowed for the possibility of production through the US discovery process at Mr. Smith’s own cost.
[32] The parties were on notice that this issue would be the topic of the case conference under Rule 50.13 (6). In my view, nothing would be served by hearing further evidence or submissions. The basic chronology is not disputed. The matter is sui generis and strikes at the court’s need to control and protect the integrity of its process. Counsel satisfied me that PWC needed direction as to the scope of its authority that only this court can provide. In view of the timing of upcoming proceedings in the US and the amount of time elapsed since the order of Lederer J., I also view the matter as too urgent to await further formality without substance.
F L Myers J
Date: May 17, 2021