On July 5, 2016, Justice Perell of the Ontario Superior Court
released a decision in Fischer v IG Investment Management Ltd., which (among
other things) denied the plaintiffs' motion to examine certain
senior executives of the defendant AIC Limited ("AIC"),
and CI Financial Corp. (parent of the defendant CI Mutual Funds
Fischer is a class proceeding dealing with the
investment technique known as 'market timing', which
involves short-term 'in-and-out' trading of mutual funds.
The plaintiffs in Fischer allege that the defendant mutual
fund managers AIC and CI breached a duty of care and fiduciary duty
owed to class members by permitting market timing activity.
Fischer endured a long road to certification,
culminating in the Supreme Court's decision to uphold
certification, discussed in detail in our ending in our
earlier post and
Osler Update (where we reviewed the Court's changes to the
"preferable procedure" analysis).
Seeking Second Discovery of Senior Executives
The plaintiffs brought the motion to examine top senior
executives as additional discovery witnesses, each corporate
defendant having already produced another less-senior witness for
At AIC, the plaintiffs now sought leave to examine Michael
Lee-Chin, President and CEO of AIC at the relevant time. Notably,
class counsel had originally sought to examine Mr. Lee-Chin as
AIC's discovery witness, but were advised that Mr. Lee-Chin did
not have any recollection of the matters at issue and that in fact
no one employed at AIC at that time had knowledge or recollection
of the events.
At CI, the plaintiffs now sought leave to examine Stephen
MacPhail, President and CEO of CI Financial Corp. Class counsel had
originally sought to examine Bill Holland, who was Mr.
MacPhail's predecessor at CI Financial Corp., but were advised
that neither Mr. Holland, nor any employee of CI, had comprehensive
knowledge of the events.
The Test for Examining a Second Witness
To examine the senior executives, the plaintiffs were required
to meet the test for additional witnesses and demonstrate: (a) that
they cannot otherwise obtain the discovery to which they are
entitled from the examined party's witness; and (b) that there
are other special circumstances related to whether the initial
representative was uninformed about the material issues.
The plaintiffs failed to meet this test. In
his decision released July 5, 2016 denying the plaintiffs'
motion, Justice Perell said the plaintiffs' underlying
submission was that their request ought to be granted as a matter
of justice and the pursuit of truth. Justice Perell also noted that
the plaintiffs knew that the initial discovery witnesses were not
involved – or had limited involvement – in the relevant
events, and yet had agreed to discover those witnesses anyway
(after initially requesting to discover the CEOs).
Key Take-Aways for Class Action Defendants
Corporate defendants in large, high-profile actions (in
particular, class proceedings) are often faced with plaintiffs
seeking to examine for discovery senior executives of defendants.
This approach is typically undertaken to publicize the case,
possibly embarrass the defendant corporation and/or its senior
executives, and leverage settlement.
Importantly, where a person has already been examined on behalf
of the corporation, Justice Perell reinforced that parties seeking
to examine a second discovery witness, including high-profile
witnesses, will face a very high hurdle and that such requests are
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