Ontario court declines to enforce New Jersey court’s letters rogatory

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The recent Ontario court decision in Third Point LLC v. Fenwick, 2011 ONSC 2068 (CanLII) provides a useful summary of the law on letters rogatory (letters of request).

Grace, J. of the Ontario Superior Court of Justice heard an application brought by some defendants in a New Jersey action,  requesting the court to  to enforce letters of request issued by a New Jersey court.

The U.S. plaintiffs filed a complaint alleging that over several years, numerous defendants, including the applicants, disseminated false information in order to profit from the decline in the price of shares in the U.S. plaintiff’s company.

On March 8, 2011, the U.S. plaintiffs and the applicants, consented to an order for letters rogatory (in Ontario, called letters of request)  issued by the Honourable Justice Stephan Hansbury of the  Superior Court of New Jersey Law Division: Morris County. The letters of request asked the Ontario court to require the respondent to attend to be examined and to cause a transcript and videotape of his testimony to be transmitted to the New Jersey Court.

The respondent was not a party to the New Jersey action, but authored a report dated February 22, 2011 relating to the U.S. plaintiff’s company and summarizing certain financials. With a fact discovery deadline looming in the U.S. proceeding, the applicants moved quickly to obtain an order and letters of request from the New Jersey Court.

The Ontario court declined to enforce the New Jersey letters of request.

Justice Grace summarized the applicable legal principles as follows:

“[8]          The applicable legal principles are well established.

[9]          First, the court has authority to enforce letters of request pursuant to federal[1] and provincial[2] legislation.

[10]      Second, whenever possible courts in this country give a request of a foreign court full force and effect out of mutual deference and respect

[11]      Third, that does not mean that an Ontario court is bound to accept the language or request of the foreign court.[3] To the contrary, an Ontario court will not do so if it would be contrary to public policy or otherwise prejudicial to the sovereignty or the citizens of Canada.[4]  Consequently, requests for the testimony of or production of documents by a Canadian citizen have been denied when the requests were too vague or general or the main purpose of the examination investigative or part of a “fishing expedition”;[5]

[12]      Fourth, the applicant must fulfill several preconditions before an Ontario court will require that a witness such as Mr. Fenwick submit to an examination.  Six factors are ordinarily listed.  Because the applicants in this case do not seek any documentary production from Mr. Fenwick, I refer to only five of them for the moment.  They are:

a)      The evidence sought must be relevant;

b)      The evidence sought must be necessary for trial;

c)      The evidence must not be otherwise available;

d)      The order sought must not be contrary to public policy;

e)      The order requested must not be unduly burdensome on the proposed witness.[6]

[13]      Fifth, the court has jurisdiction to order that a witness submit to examination for the purposes of providing evidence at trial, pre-trial proceedings or discovery.[7]  Historically there was reluctance to provide assistance in a discovery process that was broader than in Canada.  That is still a factor to be considered but is not fatal to the application.[8]

[14]      Sixth, after considering the relevant factors, the court has discretion.[9]  It can enforce the letters of request.  It can decline to do so.  It can narrow the scope of the inquiry.[10]

The complaint in the New Jersey action commenced in July 2006, running “one hundred and sixty pages long and seek[ing] more than $6 billion USD in damages” was contrasted with the letters of request that contained only a brief description of the respondent and his financial analysis.

The court struggled and failed to find any relevance to the respondent’s role or potential evidence that he may proffer in the New Jersey litigation, noting:

[33]      I saw nothing else in the analysis which referred to, let alone discussed, anything other than current operational, management and industry issues.  The balance of the report reviewed the financial results for 2010 and what was expected in 2011.  I saw nothing which addressed whether the current “recommendation” was impacted by anything that happened – or is alleged to have happened – in the U.S. proceedings.

[34]      In short, the applicants have not satisfied me why Mr. Fenwick is “an important witness for purposes of disproving Plaintiffs’ primary damages theory”.  It is not clear to me why the evidence the applicants know Mr. Fenwick can provide is relevant to matters raised in the U.S. proceeding either in terms of subject matter or timeframe.  Clearly the applicants hope that an examination of Mr. Fenwick concerning the February 22, 2011 report will lead to other, helpful testimony but that is not, in my respectful view, sufficient.[19]

The Ontario court also failed to find that the evidence sought was necessary for trial, concluding that  the link between the respondent’s putative evidence and the U.S. proceedings was “simply too tenuous.”  “It does not appear to me that [the respondent] can do more than throw a few pebbles into the sea”, writes Justice Grace.

The Ontario court also held that the evidence was otherwise attainable from other analysts referred to in the applicant’s supporting affidavit stating that there are “numerous analysts have been examined in the U.S.”

While the letters of request were neither contrary to public policy nor unduly burdensome, the Ontario court concludes:

 [47]     However, given the failure of the applicants… to satisfy me with respect to the relevant factors, I am unable to fashion even a limited order.  I would be doing so for the purposes of accommodating the New Jersey Court despite the deficiencies in the applicant’s evidence and position.  That is not, in my view, principled and therefore it is not appropriate.

[48]      In the circumstances and with respect, I decline to enforce the letters of request.  The application is dismissed without prejudice to the applicants filing a further application with letters of request revised to address the concerns I have, with reluctance, expressed.

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One Response to “Ontario court declines to enforce New Jersey court’s letters rogatory”

  1. Case of the Day: Third Point LLC v. Fenwick « Letters Blogatory Says:

    […] to Antonin I. Pribetic for bringing to light the case of the day, Third Point LLC v. Fenwick, 2011 ONSC 2068, an Ontario […]

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