Court File and Parties
COURT FILE NO.: CV-22-00687702-00CL DATE: 20230824
SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)
RE: SHAWN P. CUNIX and ELIZABETH ALEXANDER, Applicants AND: SOL GLOBAL INVESTMENTS CORP., CORMACK SECURITIES LTD., HAYWOOD SECURITIES INC. and PRICEWATERHOUSECOOPERS LLP, Respondents
BEFORE: KIMMEL J.
COUNSEL: Kate McGrann and Joshua Shneer, for the Applicants Steven Sofer and Valerie Pelchat, for the Respondent Sol Global Investments Corp.
HEARD: July 31, 2023
ENDORSEMENT (application to enforce letters rogatory)
The Application
1The applicants seek an Order giving effect to the Letters Rogatory, entered on May 18, 2022 (the “Letters Rogatory”), by the United States District Court for the Southern District of New York (the “New York Court”) in the action titled: In re Aphria, Inc. Securities Litigation, Case No. 1:18-cv-11376-GBD-JW (the “New York Action”). There is also a certified primary and secondary market securities class action in Ontario on behalf of Canadian shareholders (the “Ontario Action”). The respondents to this application are not named as defendants in either the New York Action or the Ontario Action.
2In the New York Action, the Applicants allege that Aphria Inc. (“Aphria”) made fraudulent misrepresentations to the public in violation of federal securities laws in the United States, including with respect to the acquisition of three corporations in Latin America and the Caribbean: Marigold Acquisitions Inc. in Jamaica, MMJ International Investments Inc. in Argentina, and MMJ Colombia Partners Inc. in Colombia (the “LATAM Assets”). Similar allegations are made in the Ontario Action in respect of breaches of the applicable laws in Ontario.
3To date, there has been no request or order made for non-party discovery in the Ontario Action. The fact discovery deadline in the New York Action has been extended to February 29, 2024.
4Following the first return of this application in March, 2023, consent orders were entered (the “Consent Orders”) in respect of three of the respondents, Cormack Securities Ltd., Haywood Securities Inc., and PricewaterhouseCoopers LLP (“PwC”). Pursuant to the Consent Orders, those respondents agreed to make certain production and agreed to some time-limited examinations of their representatives; and the applicants agreed to cover reasonable costs capped, in the case of PwC at the highest amount, at CAD $50,000. Efforts to settle with the remaining respondent, Sol Global Investments Corp. (“Sol Global”), were not successful. The application proceeded as against Sol Global only, on a more restricted basis (the applicants’ requests having been narrowed from what was contained in the schedules to the Letters Rogatory).
5On July 24, 2023, the applicants made an on the record offer (the “Offer”) that memorialized the narrower requests for production from Sol Global that they are seeking pursuant to the Letters Rogatory. The applicants had previously advised (in their reply factum filed in advance of the first return date) that they were no longer seeking to examine a representative of Sol Global.
6The Offer that forms the basis of the relief now sought by the applicants seeks production from Sol Global within 30 days of the following documents or categories of documents, excluding any privileged documents, to the extent they are in Sol Global’s possession, custody, or control (collectively, the “Sol Global Production”):
a. Any Sol Global board minutes, resolutions, and board materials that are responsive to Schedule E of the Letters Rogatory;
b. The “closing books” for Sol Global’s purchase of the LATAM Assets and the subsequent sale of the LATAM Assets by Sol Global to Aphria;
c. All Documents relating to issuances or transfers of Sol Global securities by Sol Global relating to its acquisition of the LATAM Assets. Specifically, this category of Documents includes unredacted copies of the Form 9s filed by Sol Global with the Canadian Securities Exchange (“CSE”) in August and September 2018 and the underlying Documents Relating to these Form 9s. These documents shall include in an unredacted form the identities of any persons who received Sol Global securities relating to Sol Global’s acquisition of the LATAM Assets and the number of securities issued or transferred by Sol Global and/or received by these persons; and
d. All Documents during the Relevant Time Period (defined in Schedule E to the Letters Rogatory to be the period from January 1, 2018 to June 30, 2019 (inclusive)) identified by applying the following search terms to Scythian’s electronic files, document management system(s), and email accounts (e.g. the domain names “@solglobal.com” and “@scythianbio.com”), excluding any emails from Sol Global’s email accounts sent to the domain name “aphria.com” and Documents that Sol Global can prove to have been provided electronically to Vic Neufeld (excepting documents provided to Neufeld in his capacity as a director of Sol Global to an Sol Global email account), or Carl Merton:
i. ABP ii. Colcanna OR Colombia OR Columbia iii. Delavaco AND (Argentina OR Caribbean OR Jamaica) iv. Marigold v. MMJ vi. LATAM vii. Neufeld
7The documents in sub-categories a, b and c are comprised of materials that Sol Global acknowledges it is required to maintain among its corporate records.
8The Offer also contemplates certain ancillary steps for certifications, follow-up requests, and responses and contains provisions to address inadvertent production of privileged material, confidentiality protections, and the stay and eventual dismissal of the application. It provides as follows with respect to the cost of making the Sol Global Production:
The Applicants shall bear the reasonable costs of Sol Global’s compliance with the Letters Rogatory in the all-inclusive sum of C$50,000 (“Sol Global’s Costs”). The Applicants and Sol Global agree that Sol Global’s Costs are a full and complete payment for the costs and fees that have or will be incurred by Sol Global in responding to the Applicants’ Application seeking to give effect to the Letters Rogatory, producing the Sol Global Production, the Certification, any outstanding Documents identified in the Notification, and any Responding Letter.
9Sol Global was not prepared to agree to the narrowed request contained in the Offer, primarily because it was not prepared to agree to the proposed cap of $50,000 on the cost of making the requested Sol Global Production. Absent agreement, the application for enforcement of the Letters Rogatory was opposed. It was argued on the basis of the narrower request for Sol Global Production contained in the Offer.
10The applicants are seeking production relatively quickly in view of the fact discovery deadlines in the New York Action, which the New York Court extended from September 30, 2023 to February 29, 2024 after the Consent Orders were made. The applicants wish to use the Sol Global Production in their fact discovery and depositions and thus seek the production sufficiently in advance of that deadline for that purpose.
The Test for Enforcement of Letters Rogatory
11The parties agree on the test the court must apply to determine this application.
12Section 60 of the Ontario Evidence Act, R.S.O. 1990, c. E.23, and ss. 46 and 47 of the Canada Evidence Act, R.S.C. 1985, c. C-5 authorize this court to order the production of documents and the examination under oath of Ontario residents at the request of a foreign country.
13There are four statutory preconditions for enforcing letters rogatory: (i) it must appear that a foreign court is desirous of obtaining the evidence; (ii) the witness whose evidence is sought must be within the jurisdiction of the court which is asked to make the order; (iii) the evidence sought must be in relation to a civil, commercial, or criminal matter pending before the foreign court; and (iv) the foreign court must be a court of competent jurisdiction. See Ontario Evidence Act, s. 60 and Canada Evidence Act, s. 46; Actava TV, Inc. v. Matvil Corp., 2021 ONCA 105, 457 D.L.R. (4th) 138, at para. 40.
14The parties agree that these four statutory preconditions for enforcing the more narrowed request for the Sol Global Production pursuant to the Letters Rogatory are satisfied in this case.
15Requests from foreign courts are enforced by Ontario courts pursuant to the principles of international comity, mutual deference, and respect.
16Ontario courts will enforce letters rogatory that are not contrary to the public policy of Canada and Ontario, and if there is no prejudice to the sovereignty or the citizens of Canada. See Actava TV, at paras. 41–42, 51.
17Ontario courts consider the following non-exclusive “guideposts” in exercising their discretion to enforce letters rogatory: (i) the evidence sought is relevant; (ii) the evidence sought is necessary for trial and will be adduced at trial, if admissible; (iii) the evidence is not otherwise obtainable; (iv) the order sought is not contrary to public policy; (v) the documents sought are identified with reasonable specificity; and (vi) 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 in Ontario. See Actava TV, at para. 50, applying the factors established in Re Friction Division Products, Inc. and E.I. Du Pont de Nemours & Co. Inc. et al. (No. 2) (1986), 1986 CanLII 2827 (ON SC), 56 O.R. (2d) 722 (H.C.), at p. 732, that have consistently since then been considered and sometimes supplemented in their application by the Ontario courts.
Analysis
18Since satisfaction of the statutory preconditions is not disputed, the analysis of whether to grant the request of the New York Court and enforce the Letters Rogatory as against Sol Global (in accordance with the narrowed request for Sol Global Production in accordance with the Offer) is focused on the six Friction Division guideposts (also referred to as factors).
19The applicants have quite properly not suggested that the following conclusions of the New York Court stated in the Letters Rogatory when deciding to make this request, which precisely track the six guideposts, are determinative of this application:
Having reviewed Plaintiffs’ requests for evidence, I determine that: (i) the evidence sought is relevant to the within civil proceeding; (ii) the evidence is necessary for trial and may be adduced at trial, if admissible; (iii) the evidence is not otherwise obtainable outside of the jurisdiction of Your Honorable Court [i.e., the Ontario Superior Court]; (iv) the evidence sought is not contrary to public policy; (v) the evidence sought has been identified with reasonable specificity; and (vi) the evidence sought will not impose undue burden on any witness from whom such evidence is requested, will in no way require any person to commit any offense, or to undergo a broader form of inquiry than he or she would if the litigation were conducted in a Canadian court.
20While a systematic examination of each is not required, and the guideposts need not be rigidly applied in each case, this court must itself be satisfied, on the record presented on this application, of the recognized factors and the “overarching the principles of comity, public policy, and the absence of prejudice to the sovereignty or the citizens of Canada.” See Actava TV, at para. 52.
21The applicants have the onus of establishing each of the Friction Division factors (MLLP Ventures Inc. v. Boyd, 2014 ONSC 219, at para. 20). Sol Global maintains that they have failed to establish any (or at least most) of them. Aside from the disagreement about the cost burden in making the requested Sol Global Production, Sol Global’s opposition to this application can be generally broken down into concerns about relevance with respect to documents internal to Sol Global and concerns about the availability from other sources of external documents sent to or received by Sol Global. The other guideposts are also not conceded. Each will be addressed in the analysis that follows.
a) Are Documents Included in the Sol Global Production Relevant?
22Relevance is case and fact specific. There is an attraction to affording some deference to the foreign court on the question of the relevance of the evidence sought, since that is a matter that is ultimately within its domain.
23Nonetheless, the Ontario court must reach its own findings and conclusions even on this factor. The significance of the findings of the foreign court to an application to enforce letters rogatory in Ontario were elaborated upon in Aker Biomarine AS et al. v. KGK Synergize Inc., 2013 ONSC 4897, 47 C.P.C. (7th) 284, at para. 26:
Observations and conclusions of the foreign court generally are entitled to deference and respect especially if they are reached after a thorough review of the matter and full and contested argument. However, it is also possible that the court issuing the letters rogatory may have done so in a perfunctory manner, without consideration of the matters at issue and without testing the evidence relied on in support of the request. The Ontario court therefore is entitled and obliged to go behind the text and terms of the request to examine precisely what it is the foreign court is seeking to do, and give effect to the request only if the Ontario court is independently satisfied that the requirements of the law in this jurisdiction have been met. See: Westinghouse Electric Corp. v. Duquesne Light Co. (1977), 1977 CanLII 1315 (ON SC), 16 O.R. (2d) 273 (H.C.J.), at paragraph 26; Fecht v. Deloitte & Touche (1996), 1996 CanLII 11782 (ON SC), 28 O.R. (3d) 188 (Gen.Div.), at paragraph 18, aff’d supra; Connecticut Retirement Plans & Trust Funds v. Buchan, supra, at paragraph 13; Presbyterian Church of Sudan v. Rybiak, supra, at paragraph 32; O.P.S.E.U. Pension Trust Fund v. Clark (2006), 270 D.L.R. (4) 429 (C.A.); AstraZeneca LP v. Wolman, supra, at paragraphs 18-19; Oticon Inc. v. Gennum Corp., supra, at paragraphs 31-32 and 33; and Treat America Ltd. v. Nestlé Canada Inc., 2011 ONCA 560, [2011] O.J. No. 3802 (C.A.), at paragraphs 13-16 and 19-20. See also The Sedona Conference, “Sedona Canada Commentary on Enforcing Letters Rogatory Issued by an American Court in Canada,” June 2011, at p. 3.
24The court in Aker Biomarine observed (at para. 27) that “…the scope of what is discoverable in the United States generally is much broader than in Canada... In Canada, the scope of discovery is much narrower, due to our interpretation of what is ‘relevant,’ In Ontario, evidence must be relevant to matters actually in issue, and this does not include evidence sought only because it ‘may’ be relevant, or relate to matters that ‘could’ be in issue [as is the situation in the United States].”
25As was further observed in Aker Biomarine (at para. 29), “Because of these broad rights to obtain evidence from non-parties, letters rogatory are often issued by American courts ‘on consent, in a relatively perfunctory fashion without any meaningful consideration of the issues and without notice to the non-party.’ See The Sedona Conference, ‘Sedona Canada Commentary on Enforcing Letters Rogatory Issued by an American Court in Canada,’ June 2011, at p. 6.”
26The applicants concede that the Ontario court must itself be satisfied of the relevance of the Sol Global Productions in a case such as this where the defendants in the New York Action did not oppose the request for the Letters Rogatory. Sol Global did not participate in the motion before the New York Court. It questions the relevance of at least some of the requested Sol Global Production, in particular, its own internal documents and how they could be relevant to either the establishment of the actual condition, status and value of the LATAM Assets or to the scienter (subjective knowledge and intent) of the defendants.
27Aphria acquired the LATAM Assets from the respondent Sol Global, on September 27, 2018, for 15,678,310 common shares of Aphria, consideration valued at over C$293 million on the closing date. The Applicants, persons and entities that purchased Aphria securities between July 17, 2018 and April 12, 2019, allege that the description and the value of the LATAM Assets was fraudulently misrepresented in Aphria’s public statements. After questions were raised about the value of the LATAM Assets (in December 2018) and again after Aphria’s financial reporting was eventually adjusted to reflect a reduction in its valuation of the LATAM Assets in April, 2019, Aphria’s stock price dropped significantly.
28The Letters Rogatory provide a useful summary of the matters in issue in the New York Action and the basis on which the applicants are seeking documents from Sol Global. Some relevant extracts are set out below:
a. The testimony and production of documents are intended for use at trial or directly in the preparation of trial, and in the view of this Court, will be relevant to the Plaintiffs’ claims that the Defendants committed Securities Fraud.
b. Plaintiffs allege that Defendants made material misrepresentations and omissions concerning Aphria’s acquisition of the LATAM Assets. As alleged, Defendants’ statements about the LATAM Assets misrepresented the operational status, condition, and value of the assets, which led investors to believe that they were more valuable than they truly were.
c. Plaintiffs further allege that Defendants along with Aphria’s founders, Cole Cacciavillani and John Cervini, and Andrew DeFrancesco and SOL knew the LATAM Assets were materially less valuable than they claimed publicly but proceeded with the transaction notwithstanding because they benefited from it financially due to interests they held in the underlying assets. Plaintiffs claim that Defendants violated Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j, and SEC Rule 10b-5, 17 C.F.R. 240.10b-5, and Section 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. 578t. According to the lawsuit, these violations caused Plaintiffs and the Class hundreds of millions of dollars of damages for which Defendants should be held liable.
d. The Complaint alleges that in late-2017, Defendant Neufeld, Cacciavillani, Cervini, and DeFrancesco, an Aphria shareholder and advisor to Neufeld, acquired the LATAM Assets using various shell companies. In March and April 2018, these Defendants orchestrated the sale of the LATAM Assets for C$100 million to Scythian Biosciences Corp. (“Scythian,” which is now SOL), a related company in which they served as directors and/or officers. In September 2018, using their control over Scythian and Aphria, Plaintiffs allege that they then resold the LATAM Assets from Scythian to Aphria. The closing price of the transaction was C$274 million, an amount that did not coincide with the true value.
e. More specifically, it is alleged that:
i. In late-2017, DeFrancesco, through his private equity firm, the Delavaco Group, began to acquire the LATAM Assets. To do this, he created three shell entities, one for each of the LATAM Assets: “Delavaco Ventures Inc.” to acquire Marigold; “Delavaco MMJ International Inc.” to acquire ABP; and “Delavaco Colombia Partners Inc.” to acquire Colcanna. On the eve of announcing the acquisitions, DeFrancesco changed the names of these shell companies: “Delavaco Ventures Inc.” to “Marigold Acquisitions Inc.”; “Delavaco MMJ International Inc.” to “MMJ International Investments Inc.”; and “Delavaco Colombia Partners Inc.” to “MMJ Colombia Partners Inc.” The amounts DeFrancesco paid for the LATAM Assets are currently unknown.
ii. The Defendant Neufeld and DeFrancesco took Scythian’s board and then forced Scythian to buy the LATAM Assets from DeFrancesco’s shell companies. In January 2018, Scythian’s board of directors changed. Two of Scythian’s directors, Michael Petter and Peter Benz, resigned and were replaced with Neufeld and George Scorsis, a business associate of Neufeld and DeFrancesco. On March 7, 2018, two more of Scythian’s directors resigned, Roger Rai and Gary Leong, and were replaced by Renah Persofsky, an Aphria director, and Robert Reid, Scythian’s CEO. By reconstituting Scythian’s board, Defendant Neufeld and DeFrancesco were able to gain control over Scythian.
iii. Shortly after changing Scythian’s board, in February of 2018 Scythian began entering “letters of intent” to purchase Marigold, ABP, and Colcanna for, respectively, C$34.5 million, C$27 million, and C$39 million. Scythian executed these agreements between March 11, 2018 and April 8, 2018. Once completed, Scythian’s board reverted to its prior makeup and resumed its normal operations. Neufeld and Ms. Persofsky resigned effective April 25, 2018 and Mr. Rai returned effective April 25, 2018.
iv. On July 17, 2018, within just three months of executing its “letters of intent,” Scythian announced that it would be selling the LATAM Assets to Aphria. Aphria ultimately purchased them for C$273,900,000 when the deal closed in September 2018. This netted Scythian a profit of nearly C$175,000,000.
f. On December 3, 2018, Hindenburg Research and Quintessential Capital Management released a report showing that the LATAM Assets were essentially worthless, non-operational businesses (the “Hindenburg Report”). The Hindenburg Report contained photographic evidence and interviews with witnesses depicting abandoned office buildings and vacant lots. The report also included excerpts of official business records revealing for the first time that DeFrancesco and other Aphria insiders were the initial owners of the LATAM Assets and profited when they were sold to Scythian. The Hindenburg report prompted a sharp backlash from analysts and investors. Aphria also ceded to demands from the Ontario Securities Commission and impaired the LATAM Assets by C$50 million. Aphria’s stock price plummeted in response to these events.
g. To prevail on a claim under Section 10(b) and Rule 10b-5, a plaintiff must prove: (1) a material misrepresentation or omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation. Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 37-38 (2011). The discovery that Plaintiffs seek from the Ontario Witnesses concerns the elements of falsity and scienter.
h. Based on its investigation, Plaintiffs’ counsel believes that SOL has in its possession, custody, or control relevant documents and electronic data concerning the Defendants’ alleged misstatements about the LATAM Assets. This information is relevant evidence of the falsity of the Defendants’ statements and whether they acted with scienter and necessary for Plaintiffs to prove their claims.
29The relevance question essentially comes down to whether Sol Global’s internal views and assessments about the condition, status, and value of the LATAM Assets are relevant either to (i) the determination of the actual condition, status, and value of those assets at the time about which the defendants are alleged to have made misrepresentations (e.g., the falsity of those statements); or to ii) what the defendants themselves actually knew about these matters (e.g. scienter).
30The subjective views and assessments of a random third party who happened to have looked at the LATAM Assets and might have information about the condition, status, and value of those assets might not pass the relevance threshold, but that is not the situation here. In both respects in this case, the spectre of relevance is established because of the allegations of self-dealing and the involvement and influence of Aphria insiders and/or persons associated with them in the purchase and sale of the LATAM Assets. Sol Global was party to both transactions, which occurred in close succession to each other, between approximately January 2018 and the end of September 2018.
31It is not necessary for me to determine which standard of relevance should apply, the U.S. or the Ontario one. Even under the Ontario standard of a “semblance of relevance” to matters in issue in the New York Action, the involvement of Sol Global in these transactions which took place during the first half of the Relevant Time Period is a sufficient nexus. I do not agree with the submission of Sol Global that the court would require some expert evidence of New York law to demonstrate, at this pre-trial discovery stage, that the requested Sol Global Production for this purpose would be admissible. At that very basic level, in the absence of any expert evidence from Sol Global to the contrary, the Ontario court can accept that prima facie it would be since the New York court issued the Letters Rogatory. That does not end the relevance inquiry, but it does address the expert evidence issue.
32On the scienter point, Sol Global argues that there are only short periods during which Mr. Neufeld (one of the remaining individual defendants) was actually on the Sol Global board of directors, from March 12 to April 24, 2018, and during which Mr. DeFrancesco was actually on the Sol Global board of directors, from September 4 to 21, 2018. Thus, Sol Global contends that the requested Sol Global Production could only be conceivably relevant to establish the subjective knowledge and understanding of Aphria and other defendants during these limited cross-over periods.
33However, the allegations, as I understand them, are dependent not only upon the time when these Aphria insiders were directors of Sol Global (and thus would have been directly privy to assessments and views of Sol Global during those time periods) but also upon the alleged connections with, and/or influence that they (and other Aphria insiders and persons associated with them) exercised over, Sol Global through its other board members both in the lead up to and the aftermath of those transactions, and upon the information from Sol Global that may have flowed to Aphria insiders or persons associated with them as a result.
34The threshold for relevance is low. I am satisfied that the applicants have demonstrated the relevance of the requested Sol Global Production to issues that have been raised in the New York Action, including the alleged falsity of the defendants’ statements about the LATAM Assets and whether they acted with scienter — with one caveat. I am not satisfied that a sufficient nexus has been established on either the falsity or scienter points for the period after September 2018 during the Relevant Time Period specified in the Letters Rogatory (that would be the later eight months from October 2018 to June 2019, inclusive).
35The applicants suggested that the requested Sol Global Productions in the later period, between October 1, 2018 and June 30, 2019, would self-regulate insofar as they would only be subject to production if they actually are found to relate to the issues of the alleged falsity of the Defendants’ statements about the LATAM Assets and whether they acted with scienter in the earlier period up to the closing of the second transaction at the end of September 2018. The logic presumably is that in this later period from October 2018 to June 2019, information about the LATAM Assets was being discovered and publicly disclosed, and these disclosures might have been discussed and related back to the views and assessments formed by Sol Global representatives during the earlier period from January to September 2018 in which the transactions were undertaken by it.
36I find that to be too far removed to meet the relevance threshold to ground a production order. After-the-fact, post-closing, subjective views and comments of Sol Global representatives (none of whom were cross-over board members with Aphria after September 21, 2018) about subsequent valuations and assessments of the LATAM Assets made by other third parties do not have a sufficient connection to the alleged falsity of the defendants’ statements about the LATAM Assets made in respect of the transaction that closed on September 27, 2018 or to whether the defendants acted with scienter. It is also pure speculation whether any such documents even exist.
37If Sol Global representatives were communicating directly with the defendants during this later time period, then those documents should be obtained from the defendants, or at least efforts to obtain such documents should be made and some basis for suggesting they might exist should first be established. That has not yet occurred, at least as far as I can tell from the evidence that I was directed to in the application material.
38I have considered and taken into account the following observations of this court in Aker Biomarine (at para. 27):
Numerous courts in Ontario have held that they have no power to narrow the request contained in letters rogatory to relevant information, and that if the requested documentation or any part of it is not relevant, the letters rogatory should be denied in their entirety. In other words, if the request for documentary production is of such a sweeping nature that significant portions of it are irrelevant or at best of marginal relevance, the letters rogatory should not be enforced. See Scholnik v. Bank of Nova Scotia (1987), 1987 CanLII 4045 (ON SC), 59 O.R. (2d) 538 (H.C.J.), at p.543; Coats Co. V. Bruno Wessel Ltd. (1990), 46 C.P.C. (2d) 316 (Ont. Gen. Div.), at p. 320; and Fecht v. Deloitte & Touche, at first instance, supra, at paragraph 44, aff’d, supra. However, there is some authority indicating that a court’s discretion may be exercised to narrow the overbroad scope and language of letters rogatory, consistent with considerations of mutual deference and respect between courts; see Pecarsky v. Lipton Wiseman Altbaum & Partners, supra, at paragraph 39.
39The court appreciates the efforts that the applicants have already made to narrow their requests by the Offer, and it was not suggested that the court could not consider the application on that more restricted basis despite the broader wording of the Letters Rogatory, which is the type of pragmatic approach that this court encourages. I consider this to be an appropriate case in which to exercise my discretion to narrow the request for Sol Global Production further to restrict the Relevant Time Period to which the Sol Global Production will apply to the period from January 1, 2018 to September 30, 2018, inclusive. This may also serve to alleviate some of the concerns about the burden and cost of making the Sol Global Production, discussed later in this endorsement.
b) Are the Documents Included in the Sol Global Production Necessary for the Trial of the New York Action?
40In this context, relevance alone is not sufficient to establish necessity. “Necessity requires an assessment of the importance of the discovery that is sought to the underlying dispute”: see Riverview-Trenton Railroad Company v. Michigan Department of Transportation, 2018 ONSC 2124, 13 L.C.R. (2d) 95, at para. 54.
41The Letters Rogatory indicate that, based on its investigation, plaintiffs’ counsel believes the documents and electronic data responsive to the requests in Schedule E (pertaining to Sol Global) to the Letters Rogatory are needed to prove their claims. Sol Global contends that this is not enough and that the applicants have an obligation to conduct a qualitative review of the discovery made to date in the New York Action in order to demonstrate a basis upon which this court can infer there is necessity for “still more discovery”. See Riverview-Trenton Railroad, at paras. 54 to 56.
42The applicants argue that this case is distinguishable from the situation in Riverview-Trenton Railroad, in which there had already been production of 77,000 documents and some of the discovery had already targeted the non-party, but the plaintiff was seeking more. In that context, the U.S. requesting court had expressed doubts about the necessity of the further production sought. But here, there has been no production from or discovery of Sol Global or its representatives in the New York Action to date.
43Sol Global says that necessity also requires the applicant to provide an assessment of the productions that are or could be available from all of the defendants to the New York Action, not only what they have produced but what they might produce or be ordered to produce. It contends that enforcement of the Letters Rogatory will otherwise amount to a fishing expedition. Sol Global contends that it is fatal that the applicants have not canvassed what might be available through the defendants in the New York Action.
44I consider this argument to be relevant to the third guidepost, rather than to necessity which should be more focused on how the applicants intend to prove their case and the importance of the requested Sol Global Production to that proof. As the applicants have pointed out, in the circumstances of this case, the “necessity” factor is largely addressed through the combined analysis of the “relevance” and “not otherwise available” factors.
45The applicants say that they intend to use any Sol Global Production for the purposes of establishing the alleged falsity of the defendants’ statements about the LATAM Assets and/or that the defendants acted with scienter. It is, for this purpose, important to the underlying dispute, the relevance having been established and it having been demonstrated (in the next section of this endorsement) that the internal Sol Global Production is not available from other sources and has not thus far been forthcoming from the named defendants despite various requests and court orders for production having been made.
46In all of these circumstances, I agree that the applicants have established that there is a necessity for the (now restricted) Sol Global Production.
c) Has it been Demonstrated that the Sol Global Productions are not Obtainable from Other Sources?
47Two possible other sources of the Sol Global Production have been identified: from Sol Global itself, through its U.S. division directly1 and from other named defendants to the New York Action.
48I am satisfied that it would be impractical for the applicants to attempt to obtain the Sol Global Production from the Sol Global’s U.S. based division in Miami. As described in the Letters Rogatory:
Sol Global Investments Corp. (formerly Scythian Biosciences Corp.) … main office is in Toronto, Ontario and it also maintains an office in Miami, Florida. Although SOL has an office in the U.S.A., it would be inefficient, cumbersome, and contrary to the proper administration of justice and use of judicial resources to require Plaintiffs to first obtain discovery from SOL's U.S.A. based unit, which cannot provide an appropriate witness or relevant documents and electronic data, and only then seek Letters Rogatory for production from SOL's headquarters in Ontario, Canada.
Based on its investigation, Plaintiffs’ counsel believes that the events surrounding Aphria's acquisition of the LATAM Assets from SOL occurred in Ontario, Canada. The requesting Court is satisfied with Plaintiffs’ counsel’s representations that the evidence sought to be obtained through this request is only available from SOL in Canada. As discussed below, because Aphria acquired the LATAM Assets from SOL, SOL is the only source of information about the subject transactions that is necessary for Plaintiffs to prove their claims.
49The considerations that this factor seeks to address were summarized by the court in Aker Biomarine (at para. 29), as follows:
This factor considers whether evidence of the same value as that sought from the witness to be examined can be obtained by other means. The requirement may be demonstrated even where some evidence on the subject is otherwise available. See AstraZeneca LP v. Wolman, supra, at paragraph 27, and Treat America Ltd. v. Nestlé Canada Inc., supra, at paragraph 24. …. A successful application will put forward evidence indicating the ways in which the applicant has sought to obtain the information, without success. See Treat America Ltd. v. Nestlé Canada Inc., supra, at paragraph 24.
50Unquestionably, the internal documents unique to Sol Global that are included in the requested Sol Global Production cannot be obtained from another source aside from Sol Global. The primary focus of Sol Global’s objection to the requested production of its internal documents was on other grounds (such as the relevance and burden). Consistent with this, the proposed electronic searches for the requested Sol Global Production explicitly excludes documents that would clearly be covered by production from defendants to the New York Action such as Aphria and communications to or from Mr. Neufeld at email addresses that are subject to production and disclosure directly from Aphria or from him personally.
51However, Sol Global still argues that even the internal documents unique to it about the condition, status, and value of the LATAM Assets have not been demonstrated to be of better value to the applicants than other sources of documentation and information about the condition, status, and value of those assets.
52The applicants respond to this with examples from other cases in which the court has found this criterion has been met where fraud is alleged and the evidence sought provides confirmation of other information. See for example, Treat America Ltd. v. Nestlé Canada Inc., 2011 ONCA 560, 282 O.A.C. 311, at para. 24, where the court offered the following observations:
It is not an answer to say that some information pertaining to the Canadian operations might be obtained from production and depositions of the other candy producers and distributors. The issue is whether evidence of the same value as that sought from the person to be examined can otherwise be obtained: Connecticut Retirement Plans and Trust Funds v. Buchan, at para. 19. That cannot be the case in my view, because production and discovery from the other candy producers and distributors will not provide access to internal memoranda, notes of meetings and email exchanges that may exist within the confines of the Nestle Canada internal information system. Moreover, as this Court has previously noted, where fraud-like allegations are in play - as they are in the U.S. Proceedings - evidence providing confirmation of other information is important: Connecticut Retirment Plans and Trust Funds v. Buchan, at para. 19. The criterion that the information is not otherwise readily obtainable has been met.
See also Perlmutter v. Smith, 2020 ONCA 570, 152 O.R. (3d) 185, at paras. 37–39.
53Sol Global acknowledges that confirmation of certain information may be important where fraud-like allegations are at play, but contends that the cases in which this has been considered (above) were cases in which there was a closer affiliation or connection between the non-party from whom production was being sought and the alleged fraudster-defendants. In contrast, no allegations have been made to suggest that Sol Global was involved in the alleged fraud and it is not an affiliate of Aphria or the other defendants in the New York Action. Thus, it contends that there is no basis for asserting that the Sol Global Production will provide the sort of confirmation that has justified production in other cases of alleged fraud.
54I do not agree that there necessarily needs to be an affiliation between the non-party and the alleged fraudsters for confirmation of an alleged fraud to serve as a justification for ordering non-party production in the appropriate case. The question should be focused on the quality of the confirming information. In this case, the unique circumstances of the back-to-back transactions involving the LATAM Assets and allegations of self-dealing by certain individuals establish a foundation for the sort of confirmation of information regarding the condition, status and value of the LATAM Assets that could be expected to be obtained from the internal documents included in the requested Sol Global Production.
55As the Court of Appeal explained in Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2013 ONCA 264, 115 O.R. (3d) 161, at para. 64, “the factor of the evidence being ‘not otherwise obtainable’ does not mean that no evidence on the subject in issue is available. Rather, it means that ‘evidence of the same value as that sought from the person to be examined cannot be otherwise obtained’: Connecticut Retirement, at para. 19; see, also, Treat America, at para. 24.” I find that evidence of the same value as that sought from Sol Global regarding its internal assessments of the condition, status, and value of the LATAM assets cannot be otherwise obtained given its unique position as both the purchaser and seller of those very assets during the (now narrowed) Relevant Time Period.
56That still leaves some aspects of the requested Sol Global Production that might in theory be available from other sources (e.g. that which is not strictly internal to Sol Global), such as:
a. The closing book from the transaction between Sol Global and Aphria should be available from Aphria. In the normal course, one would expect both parties to the transaction to receive the same set of closing documents. It should first be confirmed that Aphria does not have it before Sol Global is asked to produce it. Absent an explanation for why this closing book has not been sought or obtained from Aphria, I am not inclined to order Sol Global to produce it (although it may agree to voluntarily do so since it will be making other production, so long as its cost for reproducing it is covered).
b. It is theoretically possible that other materials covered by the requested Sol Global Production might include documents that are also in the possession of the defendants. However, that could only be ascertained once the documents have been identified, collected, and reviewed.
57In terms of the documents that in theory might be available from other defendants or others who are subject to discovery and deposition in the U.S. (even if also in Sol Global’s possession), Sol Global is correct when it submits that the applicants must demonstrate the efforts they have made to obtain those documents from the defendants directly. As this court observed in Aker Biomarine (at para. 36):
Like Justice Brown in Oticon Inc. v. Gennum Corporation, supra, at paragraphs 31 and 36, I think the “not otherwise obtainable” factor requires further explanation, “especially where the evidence strongly suggests that one of the parties to the U.S. Proceedings likely already possesses some or all of the requested documents”, and that the “absence of concrete evidence from [an applicant] that it was unable to obtain some or all of the documentation sought from its discovery of [parties to the litigation] is fatal ... to this application seeking enforcement of the Letters Rogatory”. Before KGK is subjected to formal orders compelling its direct involvement and disclosures, the Applicants should be obliged to tender appropriate evidence indicating what other means of obtaining disclosure were available and attempted, the extent to which they were successful or unsuccessful, the reasons why such efforts may have failed or fallen short of what was desired, and the extent to which further direct discovery from KGK therefore is necessary to supplement that other disclosure; e.g., because disclosure directly from KGK is the only way to obtain certain information, and/or because KGK’s independent information is somehow necessary in the circumstances to test or confirm the accuracy of information already supplied by others.
58The situation here is different. First, I would observe that in this case the evidence does not strongly suggest that one of the parties to the New York Action likely already possesses some or all of the requested (now narrowed) Sol Global Production. It is only a small subset of that which might theoretically overlap with production from the defendants in the New York Action, nor is there evidence that some or any of the requested Sol Global Production has been secured already from other sources in the New York Action, like in Aker Biomarine.
59Rather, the evidence is that the production thus far from the defendants to the New York Action has been minimal. The applicants did provide disclosure in their original application material about what had been produced by the defendants so far in the New York Action. According to this disclosure, while the defendants in the New York Action have produced some documents, many are outstanding. The defendants have not complied with certain production orders that were issued by the New York Court. The applicants have provided accounts of their unsuccessful efforts to obtain documents through the New York Action. They have also expressly excluded from the proposed targeted electronic searches emails that should theoretically be in the possession of the defendants to the New York Action.
60Nor do I do see the narrowed request for the Sol Global Production to be a fishing expedition. A sufficient foundation of relevance has been demonstrated.
61The applicants’ evidence perhaps could have been updated since the last affidavit filed in January 2023, but the evidence remains unchallenged. As it stands, the evidence satisfies the “not otherwise obtainable” criterion by demonstrating (as the court indicated in Aker Biomarine at para. 36 should have been done) that the applicants have been “unable to obtain some or all of the documentation sought from [their] discovery of [parties to the litigation].” They have tendered evidence of “what other means of obtaining disclosure were available and attempted, the extent to which they were successful or unsuccessful” and of “the extent to which further direct discovery from [Sol Global] therefore is necessary to supplement that other disclosure; e.g., because disclosure directly from [Sol Global] is the only way to obtain certain information, and/or because [Sol Global’s] independent information is somehow necessary in the circumstances to test or confirm the accuracy of information already supplied by others.”
62The applicants have demonstrated that the requested Sol Global Production is not otherwise available with the exception of the closing book from the transaction between Sol Global and Aphria which should be available from Aphria. For the closing book, it should first be confirmed that Aphria does not have it before Sol Global is asked to produce it. As a practical matter, in terms of material that, once identified might turn out to have been at least at one time in the possession, control, or power of other defendants, it would be more efficient for that material to be produced by Sol Global once the work to gather it has already been done, and subject to the concerns about the Relevant Time Period (addressed earlier in this endorsement), privilege, confidentiality, and the cost of doing the work (discussed below).
d) Is the Sol Global Production Sought Contrary to Public Policy?
63The public policy objection raised by Sol Global is based on a concern that, if the court orders the Sol Global Production sought in the New York Action, that could result in a situation in which the plaintiffs in the Ontario Action do not get the same access to these documents from a Canadian-based company that will be available for use by the plaintiffs in the New York Action.
64This position is highly theoretical, too much so to give rise to a public policy concern:
a. It presupposes that the plaintiffs in the Ontario Action would be denied this production if they sought its production under r. 31.10 of the Rules of Civil Procedure. However, they have not sought a third party production order. I was invited to apply the r. 31.10 test and consider whether the Sol Global Production would be ordered under that rule. However, I decline to engage in a theoretical exercise that would require the Court to consider whether it would be unfair for the plaintiffs in the Ontario Action to go to trial without the requested Sol Global Production, particularly when the plaintiffs in the Ontario Action are not participating in this motion.
b. Further, and in any event, I am not persuaded that it would necessarily be contrary to public policy if production from non-party Canadian residents was ordered pursuant to enforcement of Letters Rogatory even if it could not be demonstrated by the plaintiffs in the Ontario Action that a r. 31.10 non-party production order was warranted. While it has been held to provide “assistance in the assessment of whether the requested order is prejudicial to Canadian sovereignty,” the application of the Ontario rule is not determinative. See Actava TV, at para. 93.
c. It presupposes that the existence of an order for the Sol Global Production (or whatever portion of it is determined to be appropriate) would not have any bearing upon, or be considered to be relevant to, the decision of the plaintiffs in the Ontario Action to pursue third party production from Sol Global. It would not surprise me if the plaintiffs in the Ontario Action were waiting to hear the outcome of this Letters Rogatory application before applying for third party production in the Ontario Action.
d. The case of Re Westinghouse Electric Corporation and Duquesne Light Company (1977), 1977 CanLII 1315 (ON SC), 16 O.R. (2d) 273 relied upon by Sol Global in support of this position is distinguishable. In that case, the Canadian government had said the requested documents were not compellable and had stated that production would not be made for its own public policy reasons after having asserted Crown privilege over them. In the face of this, the same production was sought through letters rogatory. The public policy concern in that case had already been established through an earlier administrative decision that the enforcement of the letters rogatory would have undermined.
e. This court has held in Aker Biomarine (at para. 30.) that: “…consideration should be given to the existence of any ‘blocking statutes’ and any similar indications of domestic public policy that would prevent the Ontario court from enforcing letters rogatory. See The Sedona Conference, ‘Sedona Canada Commentary on Enforcing Letters Rogatory Issued by an American Court in Canada,’ June 2011, at p. 3; Westinghouse Electric Corp. v. Duquesne Light Co., supra, at paragraphs 17 and 35; Aker Biomarine et al. v. Neptune Technologies & Bioresources Inc., et al, 2013 QCCS 4841, at paragraphs 35-37.” While it might be contrary to public policy to order production where it could be demonstrated that the production sought could never be compellable under Canadian law, that is not this case.
f. It has also been observed by this court in Aker Biomarine (at para. 30) that: “…In the absence of such an undertaking, or a protective order providing a similar protection [to the r. 30.1 deemed undertaking] to the non-party witness, enforcement of letters rogatory should be regarded as contrary to the public policy of Ontario.” See also Pecarsky v. Lipton Wiseman Altbaum & Partners, supra, at paragraphs 28-31 and 34; D.G. Jewellery of Canada Ltd. v. Valentine, supra, at paragraph 7; AstraZeneka LP v. Wolman, supra, at paragraph 39; and Oticon Inc. v. Gennum Corp., supra, at paragraph 39.” However, that is not a concern in this case where there are several protocols in place to safeguard the Sol Global Production within the New York Action. The New York Court issued an order requiring that the parties abide by a protocol to govern the use of, and protect from public disclosure, any non-public and confidential or proprietary or private information used or disclosed in the New York Action designated as such by the producing party or non-party. The applicants and their U.S. based counsel have provided an undertaking that any Documents produced by the Respondents will only be used by them for the purposes of advancing the New York Action and for no other purpose. They have also offered that Sol Global have the ability to designate its documents as confidential under the confidentiality stipulation in the U.S.
65I do not consider the requested Sol Global Production to be contrary to public policy in Ontario.
e) Has the Sol Global Production Been Identified with Reasonable Specificity?
66The applicants concede that their original requests were offside of this factor. However, they say that the Offer containing the narrowed request for Sol Global Production that is the subject of this decision resolved that issue.
67As this court observed in Aker Biomarine (at para. 31): “Documents may be specifically identified, or identified by class, to pass the threshold test for production. Depending on the circumstances, production requests may be wide yet not unreasonable or unduly onerous. See Friction Division, at para. 43.”
68Sol Global complains that the applicants only narrowed their request on record one week before the hearing, by the July 24, 2023 Offer. That may be relevant to the court’s consideration of costs of this application. However, the narrowed request contained in the Offer is what is to be assessed for specificity. The requested Sol Global Production is now sufficiently identified (individually or by class or with specific search term parameters). The applicants point out that the (now narrowed) Relevant Time Frame and precise nature of the searches will allow for targeted searches that will self-regulate based on the timing of, for example, the underlining transactions that are the subject of the requests and were undertaken within a finite period.
69Sol Global is right to point out that there are aspects of the search terms forming part of the narrowed request that could lead to “false positive” hits. For example, if the search term “Columbia” brings up every communication with a lawyer whose firm happens to have an office in British Columbia. However, this was, as it should be, addressed in the context of the burden and the cost of the document review. It does not diminish the specificity of what ultimately has to be produced pursuant to the narrowed request for Sol Global Production.
70The applicants have established that the narrowed request for Sol Global Production has been made with reasonable specificity.
f) Is the Sol Global Production Sought Unduly Burdensome?
71In Treat America (at para. 27), the Court of Appeal found that production of internal notes, memoranda, and emails was not an unduly burdensome exercise. See also Ontario Public Service Employees Union Pension Trust Fund v. Clark (2005), 2005 CanLII 51027 (ON SC), 77 O.R. (3d) 38 (S.C.), aff’d 2006 CanLII 20839 (ON CA), 270 D.L.R. (4th) 429 (Ont. C.A), at para. 27. While the onus is technically on the applicants to initially show that the requested Sol Global Production is not unduly burdensome, given the narrowing of their request by the Offer (now further narrowed by the court’s restriction of the Relevant Time Period and decision not to order production of the closing books that Aphria should have) and these earlier precedents for ordering the type of production that is contemplated by the Sol Global Production, the applicants have made out a prima facie case that the now narrowed Sol Global Production, if ordered, would not be unduly burdensome.
72The onus is shifted to Sol Global to demonstrate that to make the requested production would be unduly burdensome. To do so, it would have to adduce evidence of the burden beyond bald assertions.
73The question of whether it would be unduly burdensome to require the Sol Global Production is to be considered with regard to what the relevant witnesses would be required to do and produce, were the action to be tried in Ontario. This could, by analogy, lead to a consideration of what might be ordered produced on a r. 30.10 motion for third party production, but only in terms of the work that can be reasonably requested of a third party and the extent to which they should be compensated. See Aker Biomarine (at para. 32):
While enforcement of letters rogatory by an Ontario court against a non-party will not necessarily be limited to situations in which an Ontario court would make an order for discovery of non-parties under Rule 30.10 of our Rules of Civil Procedure, the requirements for such orders may still serve as “useful guideposts” in this area to determine what would be reasonable, as they contain within them elements acknowledged to be important criteria for determining whether an order should be granted giving effect to letters rogatory. In commenting on the application of Rule 30.10 to secure disclosure from non-parties, our Court of Appeal has noted that, “save in the circumstances specifically addressed by the rules, non-parties are immune from the potentially intrusive, costly and time-consuming process of discovery and production.”… As noted above, (in connection with considerations of public policy), the evidence should address and demonstrate that satisfactory measures that will be taken to address and safeguard the non-party's interest in such matters as preservation of confidentiality and preventing collateral use of information provided in further litigation.
74The potential concerns about the preservation of confidentiality and prevention of collateral use have been addressed earlier in this decision in connection with the considerations about public policy.
75To preemptively moderate the anticipated financial burden, the applicants state they are willing to reimburse reasonable fees and costs incurred by the respondents in complying with any order of this court giving effect to the Letters Rogatory. They say that the $50,000 cap for costs that PwC agreed to (for what the applicants say will be a higher volume of production and will also include a time limited examination of a witness) is a reasonable benchmark in the absence of any evidence from Sol Global about the anticipated cost of compliance.
76The financial aspects of this criterion are often considered on the basis of evidence about how many person (and/or lawyer) hours will be required to find, review, and produce the requested documents. There is no such evidence here because Sol Global says it is not in a position to make that assessment without embarking upon the initial steps of what it anticipates could be a significant undertaking, which it is only prepared to do once it is satisfied that it will be reimbursed for the costs it incurs in so doing.
77This inability to estimate the cost of the work that will be involved is exacerbated in this case because there are no longer any persons in the employ of Sol Global with knowledge about the transactions or documents in issue. This means that the results of the electronic searches that would need to be conducted pursuant to the requested Sol Global Production would all need to be reviewed for relevance to these transactions (as opposed to other transactions), confidentiality, personal information, and privilege.
78By way of example, Sol Global points out that there is a likelihood of false positive “hits” from the search term “Columbia” because it would capture references to British Columbia that might not be relevant. This would cause the search to include communications during the Relevant Time Period between Sol Global representatives and any law firm or other organization that had an office in British Columbia. Even with the prospect of confidentiality protections and the opportunity to redact for privilege, Sol Global could only avail itself of these protections if someone looks at the productions.
79Therefore, Sol Global says it expects that there will be a need for significant involvement of counsel, including that counsel may need to review all documents collected before they are produced, which is what it anticipates could cause the cost of the production to exceed the cap of $50,000 proposed by the applicants. Without a full appreciation of what might be involved, it was suggested by Sol Global’s counsel that the cost could exceed $100,000. Sol Global argues that it is an “innocent” bystander in this litigation and the applicants should not be permitted to dictate how it responds to the request for Sol Global Production given these concerns. Rather, Sol Global contends that the applicants should be ordered to pay whatever it costs.
80This is a chicken and egg situation because Sol Global says it does not know what this will entail and does not want to be out of pocket, and the applicants say it is not reasonable that a lawyer or legal professional will have to review each and every document before it is produced, at their expense. The applicants recognize that the burden on a respondent may be alleviated by covering some of the costs, but compensating a respondent “must not be construed as a ‘blank cheque’” and any such costs are still subject to the reasonableness requirement. See Aker Biomarine AS v. KGK Synergize Inc., 2014 ONSC 1401, 61 C.P.C. (7th) 197, at paras. 30–31, cited with approval in The Scoular Company v. Detlefsen, 2016 ONSC 4001, at para. 32.
81Both sides have a point. There is a practical solution that could avoid the uncertainty on both ends, but it will entail a multi-stage production process with the opportunity for a further court attendance if the parties cannot agree.
82The applicants suggested in response to questions from the court about this approach that the parties come back to deal with costs once Sol Global has a proposal for how it is going to go about searching and reviewing records and associated production costs, at which point the court can provide further directions. The applicants say Sol Global should do initial searches and then prepare an estimate for the cost of collection and review that does not entail lawyers’ eyes on every document, but instead relies upon sub-searches to segregate potentially privileged documents for review and uses the claw back and no-deemed wavier provisions for any privileged or confidential documents inadvertently produced.
83While Sol Global’s first position was that no order for the requested Sol Global Production should be made, in the alternative, during oral argument its counsel indicated that it would not be opposed to the court ordering the production subject to a later determination of the amount of reasonable cost it will be reimbursed once it has had the opportunity to better estimate the scope of work and review and the anticipated cost for doing that following some initial investigation and searches. Sol Global notes that it is not reasonable to have expected it to have done this initial work in the week between the Offer and the hearing of the application. I agree.
84The relevant productions from Sol Global may inform other discovery efforts in the New York Action. With the February 29, 2024 fact discovery deadline in mind it is understandable that the plaintiffs in the New York Action may wish to examine key discovery witnesses about the documents that form part of the Sol Global Production. This would, in turn, require the Sol Global Production to have been made before any key fact discovery or depositions are undertaken in the United States during which questions would be asked about the actual value of the LATAM Assets and/or the knowledge that Aphria representatives with connections to Sol Global might have had during the (now narrowed) Relevant Time Period.
85This will have to be done in stages and it is reasonable to expect some time delays or lags. Yet, the applicants are concerned that the outside date for completion of fact discovery and depositions in the New York Action is February 29, 2024, and it has already been adjourned once.
86In the meantime, Sol Global can at least make production of the documents that are discrete and identifiable and that do not require a detailed review, such as closing books (to the extent not in Aphria’s possession) and other corporate records and documents (requests a, b, and c in the requested Sol Global Production).
87The following staged approach is what I consider to be the most proportionate and efficient manner of proceeding, having regard to the general principles that the non-party Sol Global should not be out of pocket for compliance with any order made by this court in connection with the enforcement of the Letters Rogatory and should have some indication in advance of what would be considered reasonable costs for which it will be reimbursed, and that the applicants should not be required to write a blank cheque for those costs and should have some certainty around that which might, in turn, moderate the nature and extent of the production:
a. Sol Global shall, within 60 days of this endorsement, make production of any of the requested Sol Global Production that comes within sub-categories (a), (b) and (c), comprised of corporate documents that it acknowledges it is required to retain and that would not be expected to require any detailed review for privilege or confidentiality. It may submit a bill for the actual time expended and reasonable copying or scanning charges for the production of this material which shall be paid in full by the applicants. This should not entail significant lawyer time or hours, although it may be that paralegals or legal assistants are involved and they may bill at standard hourly rates for their time if it is in addition to reasonable compensation for Sol Global representatives who may be involved in the gathering of this material.
b. Sol Global shall, within 60 days of this endorsement, identify the electronic databases that will need to be searched to make the (now narrowed) Sol Global Production and conduct some preliminary searches of the identified search terms to determine the number of documents that might need to be reviewed for purposes of making the remaining Sol Global Production. It may conduct other sub-searches or tests as it deems appropriate to come up with a budget or estimate of the cost of undertaking the remaining searches and reviews for completing the Sol Global electronic production, including any costs associated with confidentiality designations, privilege redactions, and/or claw backs and other considerations regarding confidentiality and privilege that may be identified later.
c. If the parties can agree on the manner of billing, the cap on such costs and expenses, and the time within which such further Sol Global Production will be made, then they need not return to court and may proceed based on their agreement.
d. If the parties cannot agree, they may re-attend before me on a case conference to be scheduled through the Commercial List scheduling office (of at least one hour or longer if counsel deems appropriate depending on the nature and extent of the issues that they do not agree on). At the case conference, the court will provide further directions so that the production from Sol Global pursuant to the Letters Rogatory can be completed within a time frame that will enable its use in fact discovery and depositions in the New York Action prior to the outside date for their completion.
e. Once the court provides further directions about the scope of production and review and the reasonable costs that the applicants shall be required to reimburse Sol Global for to undertake that work, a further deadline will be ordered within which to make that production.
88While this concept of a multi-stage consideration of what will be the reasonable costs that Sol Global shall be entitled to be reimbursed for was addressed briefly in the course of oral submissions by both sides at the request of the court, the full details were not fully presented or considered. If there are gaps in the process that the Court has now outlined (above) that the parties are unable to agree upon and that require further input and direction from the court, an earlier case conference before me may be requested through the Commercial List scheduling office.
Costs of this Application
89The parties did not attend the hearing prepared to fully address the costs of this application.
90The court assumes that the parties have exchanged their Bills of Costs by August 3, 2023, as discussed at the conclusion of the hearing. There has been no communication from counsel since the hearing regarding any agreement on the costs of this application.
91This may in part be due to the fact that the parties consider the costs may be affected by this decision and the Offer, which on the one hand reflects a narrowing of the requested Sol Global Production that Sol Global contends demonstrates that its original opposition to this application was reasonable, but which, on the other hand, the applicants say ought to have been accepted so as to avoid the necessity of the hearing of this application (but for the issue the reasonable costs that Sol Global will be reimbursed for making the Sol Global Production). Ultimately, they both succeeded on some positions they asserted and were unsuccessful on other positions.
92I would expect that the counsel involved in this case should be able to come to an agreement about the costs of this application in the context of their broader discussion about the reasonable costs that Sol Global will be reimbursed for. If they cannot, I will consider whether to receive further submissions regarding costs at the next case conference to be scheduled (per above).
The Order
93This application is granted on the narrower basis of the Sol Global Production reflected in the Offer, further narrowed to restrict the Relevant Time Period for purposes of that production to January 1 to September 30, 2018 and further narrowed to exclude the requirement for Sol Global to produce the transaction documents/closing book from the transaction between Sol Global’s predecessor and Aphria (unless it can be demonstrated that Aphria does not have those documents to produce).
94The applicants have prepared a draft order that captures the terms of their Offer, including various protections to be afforded in respect of the Sol Global Production. With the further directions provided herein and hereinafter, that form of order should be updated. Once the form and content of it have been approved by both the applicants and Sol Global, it can be submitted to the registrar for signature if a formal order is required.
95If there is disagreement about the form and content of the order, a version reflecting the applicants’ proposed terms (annotated as needed ) with blacklines reflecting Sol Global’s position on points of disagreement (annotated as needed) may be sent to me through my judicial assistant (linda.bunoza@ontario.ca) for consideration, together with a copy of this endorsement. I will either sign the version that I consider reflects the orders made, or convene a further case conference if I deem that to be appropriate.
96In the meantime, this endorsement and the orders and directions contained in it shall have the immediate effect of a court order.
KIMMEL J.
Date: August 24, 2023