Citation:
2016TCC42
Date: 201060212
Docket: 2014-385(IT)G
BETWEEN:
TERANET
INC.,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR ORDER
V.A. Miller J.
[1]
The Respondent has brought two motions pursuant
to section 99 of the Tax Court of Canada Rules (General Procedure) (the
“Rules”) for Orders granting her leave to conduct examinations for
discovery of third parties, namely Brian Allard from EY Canada, formerly Ernst
& Young Orenda Inc. (“EY”) (the “EY Motion”) and a knowledgeable person
from Deloitte Touche (“Deloitte”) (the “Deloitte Motion”). These motions were
brought after the close of the examinations for discovery and undertakings
following discovery. The Appellant has opposed the motions.
Background
[2]
The circumstances which gave rise to this appeal
are as follows. The Appellant’s primary business is the operation and
maintenance of Ontario’s electronic land registration system. As a result of
two amalgamations, the Appellant became the successor to the corporation whose
activities and tax liabilities are the subject of this appeal. On June 16,
2006, the Appellant and other corporate entities were part of a corporate
reorganization which resulted in a corporate/income trust structure (the “2006
Reorganization”). As a consequence of this reorganization, the Appellant became
liable for two unsecured demand promissory notes issued to Teranet Holdings
Limited Partnership (“THLP”), a non-arm’s length partnership in the Appellant’s
corporate structure. THLP owned all of the issued and outstanding shares of the
Appellant.
[3]
The principal amounts of the promissory notes
were $1.215 billion and $10 million; both notes bore an interest rate of 9.75%
per annum with interest payable monthly. The Appellant claimed interest
deductions on these notes during the taxation years ending December 31, 2006, December
31, 2007, November 10, 2008 and February 28, 2009. The Minister of National
Revenue (the “Minister”) reassessed the Appellant in respect of these years and
disallowed a portion of the interest expense which had been claimed on the
basis that a reasonable interest rate would not be higher than 5.45% per annum.
[4]
The questions to be answered on appeal are
whether the interest rate was reasonable and whether the interest was incurred
for the purpose of earning income.
Grounds Relied on by the
Respondent
[5]
In its request to examine Brian Allard, the
Respondent has relied on the following grounds:
i.
Brian Allard and EY have knowledge relevant to
the issues on appeal, specifically, how the terms and conditions, including the
interest rate of the $1.25 billion promissory note, were determined;
ii.
The Appellant has refused or cannot provide this
information and EY will not consent to providing this information without a
court order;
iii.
The Appellant has indicated that it intends to
rely on the report prepared by Brian Allard and EY;
iv.
It would be unfair to require the Respondent to
proceed to trial without an opportunity to examine Brian Allard;
v.
The examination will not unduly delay the
hearing of the appeal; entail unreasonable expenses for other parties; or,
result in unfairness to Brian Allard or EY.
[6]
The grounds relied on by the Respondent in her
request to examine a knowledgeable person from Deloitte are similar to those
she relied on in her EY Motion. The additional grounds in the Deloitte Motion
were that:
i.
The Appellant has refused or cannot provide
information about various steps involved in the restructuring and the flow of
funds involved in the restructuring;
ii.
Deloitte was retained by the Appellant at the
time of the restructuring and it appears to have knowledge about the
restructuring;
iii.
The Respondent has requested the information
from the Appellant and Deloitte, but to date, has not received the information;
iv.
Deloitte has not consented to provide the
information or to attend at a third party discovery.
Facts
[7]
The Appellant’s nominee for discovery was
Gregory Pope who is the vice president and chief financial officer of the
Appellant. At the time of his examination for discovery on June 8, 2015, he had
been employed with the Appellant for five years, always in this position. He
testified that he informed himself of the matters raised in the pleadings by
reading a number of documents considered pertinent to this appeal. Although he
was not employed by the Appellant at the time of the 2006 Reorganization, he
did not speak to anyone who had been involved with the 2006 Reorganization.
According to Mr. Pope, there is no one remaining at the Appellant who was
involved in the restructuring.
[8]
I have read the transcript of Mr. Pope’s
discovery evidence and it was readily apparent that he was not well informed.
He could not answer the majority of the questions asked by counsel for the
Respondent which resulted in 52 undertakings being given during his examination
for discovery. It is my opinion that Mr. Pope did not prepare himself for the
examination on discovery as is required by subsection 95(2) of the Rules.
[9]
During the examination for discovery and in the
response to undertakings, the Respondent was told that many of the Appellant’s
records were lost or destroyed or “may have been lost
or deleted”.
[10]
According to the litigation timetable,
undertakings given at the examinations for discovery were to be satisfied by
August 31, 2015. The Appellant delivered its answers to its undertakings on
August 21, 2015 and with these answers it also gave the Respondent a USB
containing 82 additional documents. Several of these documents were prepared by
EY and Deloitte. It was only on receipt of these documents that the Respondent
learned of Deloitte’s involvement in the 2006 Reorganization.
[11]
On October 9, 2015, the Respondent delivered
follow-up questions which arose out of the Appellant’s answers to its
undertakings. The Appellant delivered its answers to the follow-up questions on
November 11, 2015, after the Respondent had filed the present motions. In its
covering letter, counsel for the Appellant wrote that it had not answered the “vast majority of the Respondent’s follow-up questions that
purport to relate to the Deloitte document produced” pursuant to the
undertaking as these questions should have been put to Mr. Pope at his
examination.
[12]
In a letter dated September 29, 2015, the
Respondent requested that EY provide her with its files pertaining to the
issues in this appeal and those files regarding the Appellant’s conversion to
an Income Trust and the names of individuals involved in providing services to
the Appellant and its affiliates in 2006. On the same date, the Respondent
requested that Deloitte provide her with its files pertaining to the work it
carried out regarding Teranet’s conversion to an Income Fund in 2006 and to
advise which individuals were involved.
[13]
On October 13, 2015, counsel for Deloitte
replied that they were reviewing the Respondent’s request. No further response
was received from Deloitte but counsel for Deloitte appeared at the hearing of
these motions.
[14]
On October 23, 2015, counsel for EY advised that
any information in their possession with respect to their client is
confidential and they were unable to provide the information requested. Counsel
for EY also appeared at the hearing of these motions.
Law
[15]
The examination of a non-party is provided in
section 99 of the Rules. This is an extraordinary remedy and all five
criteria in subsection 99(2) of the Rules must be satisfied before the
court will exercise its discretion to make an order under section 99: Teelucksingh
v The Queen, 2007 TCC 125 at paragraph 2. Section 99 provides:
99 (1) The Court may grant leave, on such terms respecting costs and other
matters as are just, to examine for discovery any person who there is reason to
believe has information relevant to a material issue in the appeal, other than
an expert engaged by or on behalf of a party in preparation for contemplated or
pending litigation.
(2) Leave under subsection (1) shall not be granted unless the Court is
satisfied that,
(a) the moving party has been unable to
obtain the information from other persons whom the moving party is entitled to
examine for discovery, or from the person sought to be examined,
(b) it would be unfair to require the
moving party to proceed to hearing without having the opportunity of examining
the person, and
(c) the examination will not,
(i) unduly delay the commencement of the
hearing of the proceeding,
(ii) entail unreasonable expense for
other parties, or
(iii) result in unfairness to the person
the moving party seeks to examine.
(3) A party who examines a person orally under this section shall, if
requested, serve any party who attended or was represented on the examination
with the transcript free of charge, unless the Court directs otherwise.
(4) The examining party is not entitled to recover the costs of the
examination from another party unless the Court expressly directs otherwise.
(5) The evidence of a person examined under this section may not be
read into evidence at the hearing under subsection 100(1).
[16]
The first question to address on a motion under
subsection 99(1) of the Rules is relevance: Sackman v The Queen,
2008 FCA 177 at paragraph 17. It is necessary that the moving party demonstrate
that the non-party has some information relevant to a material issue in the
appeal. Where the non-party to be examined is not an individual, the inability
to identify a specific and knowledgeable person within the non-party (as in the
present case of Deloitte) is not a bar to obtaining an Order under section 99.
In this regard, Rip, CJ, as he then was, explained at paragraphs 32 and 33 of
his decision in Advantex Marketing International Inc v The Queen, 2014
TCC 21:
32 Respondent's
counsel submitted that Rule 99 refers to the examination for discovery of “any
person” who there is reason to believe has information, not necessarily a
“knowledgeable” person as is required by Rule 93. However, in my view, once a
person is identified as a non-party being examined for discovery, that person
must have some knowledge or obtain knowledge of the subject matter of the
examination. If the person to be examined lacks knowledge about the subject
matter of the examination, the examination probably will be useless.
33 The party
examining a non-party to be examined, who is not an individual, should not be
in any lesser position then when he or she examines an opposing party. Thus
Rules 93(2) and 95(2) apply to a non-party as well as to a party: the non-party
to be examined, other than an individual, is to select a knowledgeable current
or former employee, officer or director to be examined on its behalf and prior
to the examination that individual is to make all reasonable inquiries
regarding the matters in issue in accordance with Rule 95(2).
[17]
In accordance with paragraph 99(2)(a) of the Rules,
the moving party must satisfy the Court that it has been unable to obtain the
information from the persons it is entitled to examine or from the person
sought to be examined. The “or” in this
paragraph is written conjunctively as both of these requirements must be
satisfied: Barker v The Queen, 2012 TCC 64 at paragraph 13.
[18]
The moving party must also demonstrate that (i)
it would be unfair to require her to proceed to trial without having the
opportunity to examine the non-party; (ii) the examination will not unduly
delay the commencement of the hearing; or (iii) entail unreasonable expense for
other parties; or (iv) result in unfairness to the non-party.
Analysis
A. Relevance
(1)
EY
[19]
The Respondent is seeking to examine Mr. Allard
of EY on how the terms and conditions, including the interest rate, of the
$1.215 billion and $10 million promissory notes were determined. As the issues
in this appeal are the reasonability of the interest rate and the purpose of
the promissory notes, if Mr. Allard has any information on these matters,
that information would be relevant.
[20]
The Appellant has argued that Mr. Allard and EY
have no information which is relevant to the issues on appeal. Counsel for the
Appellant stated that the Appellant established the interest rate and only
sought EY’s opinion on the reasonability of the interest rate. As such it will
be relying on the EY Report only to demonstrate its due diligence. In support
of its position, the Appellant highlighted its engagement letter with EY, dated
January 11, 2006. The scope of procedures to be performed as set out in the
letter, read:
In order to
prepare the Deliverable, we will perform limited review procedures to obtain an
understanding of the proposed transactions to be described in the Prospectus
(the “Transaction”). We will perform these limited procedures in order to
determine whether we believe that it is not unreasonable to conclude that the
proposed interest rate on the intercompany loan is likely not higher than the
interest rate that an arms length lender might reasonable agree to in the
circumstances.[1]
[21]
According to counsel for the Appellant, this
demonstrated that EY did not advise on the terms and conditions of the
promissory notes or suggest different terms and conditions or suggest different
interest rates. Counsel for the Appellant stated that EY was simply “given interest rates and they assessed those rates for
reasonableness”.[2]
[22]
The Respondent stated that the documents
provided by the Appellant demonstrate that Mr. Allard and EY were involved in
determining the interest rate of the promissory notes. Counsel for the
Respondent referred to the following documents: (i) the EY Letter regarding the
intercompany loan review “THLP Note”;[3]
(ii) the EY Work Schedule Breakdown regarding the THLP Note;[4] (iii) the EY Memo Regarding
the THLP Note;[5]
(iv) the EY Presentation regarding the valuation of identifiable assets of
Teranet;[6]
(v) the email from Mr. Allard to M. Galloro, regarding the Teranet Income
Trust Tax Model;[7]
and (vi) various letters from EY to Teranet regarding the Intercompany Loan
Review “THLP Note”[8].
[23]
In the circumstances of this case, the Appellant
may have ultimately chosen the interest rate for the promissory notes but based
on the evidence and arguments presented at the motion, it does not necessarily
follow that EY has no information relevant to the issues in this appeal. At the
examination for discovery, Mr. Pope was asked when the principal amount of the
$1.215 billion promissory note was determined. He replied:
I don’t know an
exact date. It would obviously be before June 16, 2006. I seem to recall that
there were other documents contemplating other amounts prior to that, but by a
few weeks, not months, so presumably not long before the June 16 date on
the note itself.[9]
[24]
The EY engagement letter is dated January 11,
2006 – five months prior to the date of the promissory note. Counsel for the
Appellant stated that the Appellant gave EY interest rates and EY was to assess
those rates for reasonability. This was five months prior to the 2006
Reorganization. I have inferred from counsel’s statement that the principal
amount of the promissory note was known some time prior to June 16, 2016.
[25]
It is plain that Mr. Allard and EY have
information concerning the decision to choose the 9.75% interest rate. In
addition to the above, the EY Work Schedule Breakdown regarding the THLP Note
illustrates that EY employees spent 109 hours on the Appellant’s mandate, of
which Brian Allard spent 59.5 hours.
[26]
The Respondent has established that Mr. Allard
and EY have information concerning how the terms and conditions, including the
interest rate, of the $1.215 billion and $10 million promissory notes were
determined.
(2) Deloitte
[27]
The Appellant did not contest that Deloitte has
information which is relevant to the issues in this appeal.
[28]
Counsel for the Respondent stated that: (i)
Deloitte prepared documents regarding the conversion of Teranet Inc. to Teranet
Income Fund;[10]
(ii) Deloitte prepared a Tax Steps Memo and Tax Model; pro forma
financial statements for Teranet’s management; and, comfort letters;[11] and (iii) Deloitte made a
presentation to the management of Teranet on November 15, 2005 with respect to
the “Teranet Income Fund IPO Proposal”[12]
. This was seven months prior to the 2006 Reorganization.
[29]
It is my opinion that the Respondent has
established that Deloitte has information relevant to the issues in this
appeal.
(a) Unable
to Obtain Responses from the Appellant
(i) The
Appellant
[30]
The Appellant had an obligation under subsection
93(2) of the Rules to choose a knowledgeable current or former officer. It
chose Mr. Pope, a current officer, as its nominee for discovery. Mr. Pope was
not employed with the Appellant during the 2006 Reorganization and as the
Appellant’s nominee he had the responsibility under subsection 95(2) to acquire
the knowledge necessary for the discovery. As I stated earlier, it was apparent
from reading the transcript of the examination for discovery that Mr. Pope did
not inform himself beyond reading certain documents in the possession of the
Appellant. He testified at the discovery that he neither spoke to any of the
Appellant’s former employees who were involved in the 2006 Reorganization nor
did he review any emails.
[31]
Mr. Pope could only answer a few questions and
those that he could answer necessitated prompting with documents. He could not
answer questions with respect to the structure of the Appellant prior to the
2006 Reorganization. He did not know the Appellant’s financial obligations
prior to the restructuring. He could not answer questions concerning who was
involved with the restructuring or who was involved in establishing the terms
and conditions of the promissory notes. Towards the end of the examination,
counsel for the Appellant began to answer the majority of the questions put to
Mr. Pope. Mr. Pope’s inability to answer questions led to the Appellant giving
52 undertakings.
[32]
The following exchanges were typical of the
discovery. Mr. Pope was asked:
Q. The promissory
note ultimately uses an interest rate of 9.75 percent. Was the choice of that
interest rate of 9.75 percent based exclusively on the recommendation of Ernst
& Young at R00036?
A. I would be
unable to answer that.
…
Q. If you could
turn back to the promissory note at exhibit R00100, when was the principal amount
of the $1.215-billion determined?
A. I don’t know
the exact date. It would obviously be before June 16, 2006
…
Q. Who were the
people involved in determining the principal amount of the note?
A. I don’t know.
…
Q. Who were the
people from Teranet involved in determining the interest rate?
A. I would expect
it to be the chief financial officer at the time, but I don’t know.[13]
At the examination for discovery of Mr. Pope, the Respondent asked
how funds were flowed:
Q. […] How did
money flow from Teranet Holdings Limited Partnership to the Teranet Operating
Trust?
A. I don’t know.
Q. Could you
undertake to advise?
Mr. Finkelstein:
Yes.[14]
The
answer to the undertaking provided by the Appellant was:
From a review of
Teranet’s consolidated financial statements, it appears that Teranet Holdings
Limited Partnership issued distributions to the holder of its partnership
units, Teranet Operating Trust.[15]
Another
example of the typical exchange between the Respondent and Mr. Pope is as
follows:
Q. […] the note between
Teranet Operating Trust and the Holder. How was the interest rate of four
percent determined?
A. I don’t know.
Q. Would you
undertake to advise?
Mr. Finkelstein:
We’ll use our best efforts to do that.[16]
The
Appellant, in undertakings, answered:
Teranet is not
aware and cannot locate documents to explain how the 4% rate was determined.[17]
The
following is a typical example of the full exchange between the parties,
examination for discovery, undertakings, and follow-up questions:
Q. Were the
principals of those three entities and the other 15 percent the persons who
were involved in the restructuring and determining the terms of the promissory
note?
A. No.
Q. Who was?
A. It would be –
I don’t know.[18]
Counsel
for the Respondent asked for an undertaking to identify the individuals in
charge of making the decisions about the restructuring and the interest rate,
and to identify any documents or emails surrounding the restructuring. In
response, counsel for the Appellant stated:
Mr. Finkelstein:
Just unpacking you request, Teranet Inc. will identify the people and tell you
their positions, that was the first group. In terms of searching for documents,
as you can appreciate, OMERS owns Teranet now and so we’re not going to go
outside and start looking for documents, but Teranet will look internally to
see whether it has documents from those people that relate to the issue.[19]
The
Appellant’s answer to the undertaking was:
From Ternate’s
review of the documents, it appears that Teranet’s CFO at the time of the transaction,
Brian Kyle, was among those responsible for “spearheading” the transaction.[20]
The
Respondent asked a follow-up question:
The question was
not limited to a review of the documents, nor to identifying a single
individual. The questions seek information as to all individuals involved in
the decision making process regarding the restructuring and making the note.
Respond.[21]
The
Appellant replied:
Teranet made best
efforts to respond to UT 4. Brian Kyle was the only individual Teranet was able
to identify who appeared to be making material decisions in respect of the
restructuring in the documents. As no individuals with decision-making
authority remain at Teranet who were also at the company in June 2006, the only
way for Teranet to respond to this undertaking was from a review of the
relevant documents.[22]
[33]
As can be seen from the above exchanges, Mr.
Pope was not knowledgeable about the issues in this appeal and the Appellant
was not willing to inform itself by asking former employees so that it could
answer the Respondent’s questions. At the discovery, the Appellant also refused
to give its consent if the Respondent asked EY to produce its file. Further, in
answers to undertakings, the Appellant stated that many of the records of the
Appellant may have been destroyed or lost. It is not surprising that the
Respondent has asked to discover the third parties to obtain the information it
seeks. When a party chooses not to respond to proper questions put to it or not
to inform itself, section 99 of the Rules provides an extraordinary
remedy so that the purpose of discoveries is not defeated.
(ii) EY
[34]
It is the Appellant’s position that the EY
Report and the Appellant’s interaction with EY are irrelevant from the
perspective of determining a reasonable rate. Counsel for the Appellant stated:
Ultimately what’s
going to matter is what the company actually did. What were the terms of the
debt? What was the interest rate? What would an arm’s length party charge for
this type of debt? […] [H]ow the company got to that point is actually
irrelevant. And E&Y’s analysis, to the extent that we are relying on it, it
speaks for itself.[23]
[35]
The Respondent may have the EY Report but it was
clear from the examination of Mr. Pope that he could not speak to the role that
EY or the EY Report played in determining the interest rate for the promissory
notes.
(iii) Deloitte
[36]
The Respondent has requested to discover a
knowledgeable person with Deloitte with respect to (i) the purpose of each step
in the series of transactions specified in the draft Term Sheet, including the
purpose of the intercompany promissory notes: (ii) the flow of funds in the
transactions; and (iii) how the principal and interest rates of the
intercompany promissory notes were determined.
[37]
During the examination of Mr. Pope, the
Respondent was unaware of Deloitte’s involvement in the 2006 Reorganization of
the Appellant. The Respondent received documents created by Deloitte when the
Appellant produced them in answer to undertakings. In follow-up questions, the
Respondent asked the Appellant questions with respect to each of the areas
listed in paragraph 36 above.
[38]
The record showed that the Appellant answered
the Respondent’s questions with respect to the purpose of the series of
transactions but it did not answer the questions about the purpose of each step
in the series of transactions.
[39]
Counsel for the Respondent also asked follow-up
questions concerning the flow of funds in the transactions. Counsel for the
Appellant stated that this was not a proper follow-up question and the
Respondent cannot now ask Deloitte about the flow of funds because these
questions should have been posed to Mr. Pope at the examination for
discovery. In support of his position, counsel stated that Nicholas Correia,
the auditor with the Canada Revenue Agency (“CRA”), prepared a document
entitled “Teranet Income Fund, Flow of Funds Flowchart” which illustrated the
steps in the transaction, who gets what and the cash flows. Counsel argued that
Mr. Pope should have been asked questions about the CRA document and because he
was not, the Respondent should not be allowed to ask Deloitte this question.
[40]
I disagree. An audit does not necessarily
contemplate litigation and what a lawyer may require in the litigation process
is not necessarily what an auditor was looking for during an audit: Advantex
Marketing International Inc (supra) at paragraph 34.
[41]
It is my view that the Deloitte documents
directed counsel for the Respondent to a different line of inquiry beyond the
diagram produced by the CRA auditor. The CRA diagram merely illustrated the
steps in the 2006 Reorganization. Whereas, the Deloitte document indicated that
Deloitte considered how to structure the 2006 Reorganization to minimize the
tax risk. Deloitte reviewed or considered “structuring
the acquisition of Teranet shares/flow of funds to maximize the deductions in
Teranet Amalco II to limit any corporate income taxes during the modelling
period (2006 to 2017)”.[24]
This document also showed that Deloitte addressed or considered other issues
including the “reasonability of interest rates used in
alternative structures” and “interest
deductibility”.[25]
One of the reasons the Income Trust structure was recommended was because the “interest rates used in the model to create desired outcome”
appeared plausible.[26]
[42]
As the examining party, the Respondent is
entitled to have any information and production of any documents which may lead
to a train of inquiry that may directly or indirectly advance her case or
damage that of the opposing party: Teelucksingh v The Queen, 2010 TCC 94
at paragraph 15.
[43]
Instead of asking the Appellant to describe the
structure of the 2006 Reorganization, counsel for the Respondent has asked the
Appellant why the 2006 Reorganization was structured the way it was. This was a
proper follow-up question. It resulted from the newly produced Deloitte
documents and these documents quite rightly required an explanation: Blais v
Toronto Area Transit Operating Authority, 2011 ONSC 1880 at paragraphs 61
to 63.
[44]
In this case, the Appellant has not answered the
follow-up questions with respect to the Deloitte documents nor has it
demonstrated that it is capable of answering the questions.
[45]
The Appellant also argued that the Respondent
should not be permitted to examine Deloitte because there was no evidence that
Deloitte had any information concerning how the principal and interest rate of
the promissory notes were determined. However, at the examination for
discovery, the Appellant’s nominee could not say who was involved in setting
the interest rate other than Brian Kyle, nor could he explain what went into
determining the interest rate. It appeared from the Deloitte documents and
Deloitte’s involvement that Deloitte may have knowledge of who was involved in
setting the rate and what considerations went into setting the rate.
[46]
The Respondent requested the information from
both EY and Deloitte and her request was refused.
[47]
It is my view that the Respondent has satisfied
both conditions in paragraph 99(2)(a) of the Rules; that is, she was
unable to obtain the information from the Appellant, EY or Deloitte.
(b) Unfairness
to the Respondent to Proceed to Trial Without Examining the Third Party
[48]
The Appellant argued that there is no unfairness
to the Respondent if she is not allowed to examine third parties because the
CRA is very familiar with income fund structures. Counsel also stated that the
Respondent should not be permitted to discover someone from EY because EY’s
involvement with respect to the interest rate and its interaction with the
Appellant are irrelevant from a valuation perspective.[27]
[49]
The Respondent stated at the hearing of the
motion, that should she be required to proceed to trial without having the
opportunity to examine either EY or Deloitte, she would not be aware of the
documents in their possession. As the Appellant has advised that few documents
remain in its possession, proceeding to trial, without examining the
non-parties, would likely result in a request for an adjournment to review the
documents of EY and Deloitte.
[50]
It is my view that, to the extent that the
Respondent needs information from the third parties to litigate this case, it
should have access to that information before trial: Sackman (supra)
at paragraph 19.
(c) Unduly
Delay the Hearing; Unreasonable Costs to the Other Parties; and Unfairness to
the Third Parties
[51]
The Respondent stated that if the Motions are
granted, the trial will not be unduly delayed. The Respondent indicated that
she would be able to proceed to trial in late May or early June as requested by
the Appellant. The examinations for discovery of the third parties would be
limited to one day for each party.
[52]
At the motion, counsel for EY and counsel for
Deloitte requested that they be reimbursed for costs in the event that the
motion is granted. The Respondent indicated that she was prepared to cover
reasonable costs to EY and Deloitte.
[53]
Neither of the third parties nor the Appellant
indicated that the examinations for discovery of EY and Deloitte would cause
unfairness.
Conclusion
[54]
For these reasons, I allow the Respondent’s
motions. I will issue an order granting the Respondent leave to examine a third
party from EY, namely Brian Allard and a knowledgeable nominee from Deloitte as
a third party so that the Respondent can obtain answers to its questions. Both
EY and Deloitte will produce documents in its control which are relevant to the
issues in this appeal. These documents are to be given to the Respondent prior
to the examination for discovery.
[55]
Costs for these motions are awarded to the
Respondent.
Signed at Ottawa,
Canada, this 12th day of February 2016.
“V.A. Miller”
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