In an increasingly global society, obtaining evidence from
witnesses outside of a party's jurisdiction can be costly.
For those seeking a costs order for complying with requests for
inter-jurisdictional production, however, courts will consider the
"reasonable costs" in the circumstances and whether the
witness is a true "stranger to the litigation."
In The Scoular Company v Detlefsen, the
Ontario Superior Court considered an application to enforce Letters
Rogatory issued in connection with an action brought against a
corporate defendant in the United States District Court for the
District of Minnesota.
The respondents, former executives of the defendant, had agreed
to comply with Letters Rogatory compelling production of evidence,
but sought to rely on indemnification agreements with their former
employer which entitled them to reimbursement of all
"out-of-pocket costs" if they became involved in
litigation. The respondents argued they were entitled to full
indemnity costs for responding to the discovery request and the
application brought in the Ontario court.
The sole issues before the Court were whether the
respondents' costs should be capped at $20,000, as argued by
the applicant, and whether they should be awarded costs for the
The Court first concluded that the respondents were not true
"strangers to the litigation" as they were not
"neutral non-parties with no interest whatsoever in the
outcome of the action or the parties to the action," but were
closer in nature to defence witnesses. Justice Spies rejected the
narrow interpretation favoured by the respondents that
"strangers" were those not named as parties to the action
in question. That interpretation has historically favoured
full indemnity costs. As evidence for this finding, Justice
Spies relied upon the above-noted indemnification agreements and
affidavits of the respondents indicating that they were central
figures in the litigation who head "clearly aligned themselves
with (the defendant)."
Justice Spies relied on the line of cases including Neuwirth
v DaCosta, AstraZeneca LP v Wolman, and Advance/Newhouse
Partnership v Brighthouse, Inc. in reaching the conclusion
that, while the "general rule" of witness costs in such
applications implicitly included costs on a full indemnity basis,
such costs were subject to a cap to ensure that applicants are
"only compelled to pay the reasonable fees and
disbursements incurred in responding to Letters Rogatory."
According to Justice Spies, entitlement to full indemnity costs
is: "not meant to be construed as a blank cheque." Given
the relationship between the respondents and the defendants in the
Minnesota action, such a blank cheque would "indirectly permit
(the defendant) to prepare important witnesses for trial... at the
cost of the Applicant." Consequently, Justice Spies ruled that
where a court assesses what it considers to be reasonable costs in
the circumstances, on a full indemnity basis, setting a cap on such
costs "avoids the potential for further costs being incurred
by all the parties and the waste of judicial resources in dealing
In ruling in favour of the $20,000 cap, Justice Spies considered
a variety of contextual factors, including these: the respondents
had already produced a large number of documents, the costs of
which ought not be retroactively passed onto the applicant; the
respondents stated that cooperation made it unlikely that further
costs of production would greatly exceed the 52 hours already
billed; and the time limit on examination for discovery of 7 hours
per respondent assisted by counsel charging a reasonable hourly
rate which Justice Spies assessed at $400.00 per hour.
In denying costs for the application, Justice Spies noted that,
while authority existed entitling a non-party to full indemnity
costs regardless of the outcome, since the respondents in this case
were not true "strangers to the litigation" and had
failed in resisting the application. The scale of costs, therefore,
"ultimately remains a matter of discretion of the presiding
judge, having regard to all the circumstances of the
With Notes from Jonathan Langley
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In the recent case of Meehan v. Good, the Ontario Court of Appeal dealt with a situation in which a lawyer was retained to represent a client with respect to the assessment of the accounts of the client's former lawyer.
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