Canada: The Hidden Costs Of Enforcing Letters Rogatory In Ontario And How To Avoid Them

Last Updated: January 24 2018
Article by Caleb Edwards

The Basics

You have a small proceeding going forward in the Southern District of New York. Unfortunately, one of the main witnesses lives in Toronto, along with her papers. You would like to depose her and get copies of her papers. She takes your first phone call, but politely declines to help. What's next?

If you are looking to compel evidence from an Ontarian witness in support of an American proceeding, you must obtain letters rogatory and then enforce those orders through the Ontario courts. The basics are relatively simple:

  • you must apply to the court where your proceeding is for an order issuing letters rogatory to the Ontario court and
  • you must engage local Ontario counsel to bring an application (a shortened proceeding) to enforce the letters in the jurisdiction where the witness is.1

These first steps are relatively straightforward and often the mere threat of bringing an action can compel cooperation.

However, the extra court procedures and the fact that Ontario counsel is necessary mean that obtaining evidence or documents from an Ontario witness will be more expensive than obtaining evidence from an American witness. This additional expense is compounded by two differences between the American and Canadian legal system.

Apart from the expected costs of enforcing a contested application, you may also be liable to the witness for: 1) costs on the application and 2) costs of the discovery.

2. Costs on the Application

a. Costs on a Failed Application to Enforce Letters Rogatory

You hired local counsel in Toronto, who brought an application to enforce your letters rogatory. Unfortunately, the Judge ruled against you. What's next?

In Canada, unlike in the US, the losing side is generally required to pay a significant portion of the other side's legal costs.2 This portion generally varies depending on the complexity and length of the proceedings, but, as a rule of thumb, the losing side pays something close to half of the winning side's costs. In the specific case of letters rogatory, however, case law suggests that the winning responding party – the witness you are seeking evidence from – should receive even more protection in the amount of full indemnity.3 Full indemnity, in Ontario courts, means roughly 85% – 90% of actual legal costs (although in some cases, it may be as high as 100%).4

In other words, if your local counsel loses their application, you (and ultimately your client) will most likely be responsible for paying your prospective witness's lawyer for his or her successful opposition to your application.

This level of costs, however, is not set in stone. In Oticon,5 the court reviewed a number of cases before concluding that "the appropriate award of costs on an unsuccessful application to enforce letters rogatory will depend upon the particular circumstances of each application." Similarly, in Aker,6 the court concluded that the "scale of costs to be awarded in such a case, (if any), ultimately remains a matter of discretion for the presiding judge, having regard to all the circumstances of the case." In Intelsat,7 the court denied a successful respondent's claim for substantial indemnity costs and awarded her less than half of what she had asked for as costs because the applicant's "conduct has not been reprehensible."

b. Costs on a Successful Application to Enforce Letters Rogatory

This time, imagine your local counsel won the application. Now you can enforce the letters rogatory. Are you entitled to costs from the respondent who opposed your application?

Unfortunately, in Ontario, that is not the case. No case has been found in Ontario, in which applicants who successfully enforce letters rogatory have been awarded their costs.

In fact, in some cases, even when they win, applicants seeking to enforce letters rogatory are compelled to pay the prospective witness's legal fees. A line of cases, beginning with GST Telecommunications,8 holds that the respondents of applications to enforce letters rogatory are entitled to full indemnity for their legal costs in opposing the motion. This led an Ontario court to declare:

It is well established in the case law that the costs of witnesses examined pursuant to Letters Rogatory, as strangers to the litigation, should be paid to them on a full indemnity basis.9

In a related case, j2 Global v. Protus, a different justice came to the same conclusion.10 So, just for the pleasure of taking an Ontario witness's evidence, your client may be compelled to subsidize that witness's attempt to avoid having to give evidence.

This is not always the case, however. In Neuwirth,11 the court declined to award substantial indemnity costs in favour of the two respondents who were compelled to testify because they were "coy about whether or not they actually possess documents." Similarly, in CIN-Q Automobiles,12 Justice Parayeski ordered that the parties bear their own costs where the applicant was successful.

The field was most recently surveyed by Justice Spies in Scoular.13 In that case, applicants had proposed a cap on the "reasonable costs" of the respondents in preparing for and attending their examinations for discovery. The respondents opposed the cap, but not the order. In doing so, they also asked for their costs in opposing the application.

After surveying the cases, Justice Spies distinguished both j2 Global cases and Oticon by noting that in those cases, the respondents had succeeded in having the application dismissed.14 Justice Spies noted that GST Communications involved an award of full indemnity costs despite a successful application, but noted that there was no analysis in that case.

Justice Spies' ultimate decision was based on the fact that the respondents lost, and on how they lost:

If I had concluded that the Respondents were truly strangers to the Minnesota Action then I would have been inclined to award them full indemnity costs for the application as was done in Neuwirth and GST Telecommunications. However, none of these cases alter my view, that given the Respondents were unsuccessful in resisting the Application and having concluded that they are not strangers to the Minnesota Action, that they ought not to be reimbursed any of their costs in resisting the Application. Having secured the indemnification agreements the only aspect of the Letters Rogatory that they contested was the issue of costs and they have been wholly unsuccessful on that issue.15

In other words, when a respondent is unsuccessful in opposing the application, the question of costs is one of their relationship to the foreign litigation. Where they are not 'strangers,' costs may not be appropriate.

3. Costs of Giving Evidence

Now imagine you were successful in the application. The respondent has been ordered to produce documents and show up for examination. Before they do so, however, the respondent asks that your client pay the costs of producing the documents and for a lawyer to prepare them to be deposed. Does your client have to pay?

Under the Ontario precedents, a respondent to an application to enforce letters rogatory can ask the court to ensure that their expenses in testifying or producing documents are covered by the applicant. In AstraZeneca,16 the court held that, "[a]s a general rule, the applicant must bear the reasonable costs of the respondent witness' counsel for preparation and attendance at the examination."

Some courts have ordered limits on costs incurred in this manner. The court in AstraZeneca based its statement on an earlier decision, Advance/Newhouse Partnership, where the court ordered that the applicants pay the costs of the respondent's counsel in preparing for and attending the examination for discovery "up to a maximum amount of $6,000."17 In Scoular, Justice Spies upheld a proposed limit of $20,000 on the respondents' costs in providing evidence.18

What this means for you is that even after winning an application to enforce letters rogatory, you (and your client) are potentially on the hook for the further costs of obtaining the evidence from the witness. Just as with the costs on the application, however, it is possible to reduce these costs.

4. Reducing Potential Costs

a. Make Sure the Respondent is Not a "Stranger to the Litigation"

Justice Spies' concern with the question of whether the respondents were true 'strangers to the litigation' points to the best way to combat costs in enforcing litigation; ensure that the application and any supporting materials highlight the ways in which the respondent is implicated in the US litigation.

The case law which supports awarding costs is built on the premise that the respondent is a poor individual who was unfairly hauled into court on a matter that he or she had nothing to do with. If you can show that this is not the case, you are better positioned to avoid costs.

Courts focus on the position of the respondent vis-à-vis the litigation in doing their analysis. In Triexe,19 the court found that an 'innocent' third party should be compensated for time spent reviewing its documents. In DVD v. Collens,20 the court found that, although the applicant was successful, the respondent "as a Canadian citizen, had the right to have a Canadian court rule on the California court's request that he be examined for the purposes of a US court case...."

In Four Seasons,21 the court noted that the respondent was 'not a neutral party' before ruling in favour of the applicant.

In Scoular, Justice Spies' decision turned on the finding that the respondents were not strangers to the litigation. Because of this fact, the limit on their attendance costs was appropriate and they were not entitled to costs in opposing the motion.22

This focus on the status of the respondent allows a creative applicant an avenue to hold down costs. If the respondent is a true stranger to the litigation, then his or her costs should be limited to the costs of copying or reproducing any requested documents. There should be no need for lawyers to prepare the witness or attend the examinations for discovery.

On the other hand, if the respondent is asking to have a lawyer prepare them for their examination for discovery and attend the examinations, then it suggests that the respondents are not disinterested third parties. This was part of Justice Spies' reasoning in Scoular:

In my view Mr. Staley takes to[o] narrow a view of what is meant by "stranger to the action". On the evidence I conclude that the Respondents are not "strangers" to the Minnesota Action because in the circumstances of this case it cannot be said that they are neutral non-parties with no interest whatsoever in the outcome of the action or the parties to the action. In my opinion it is the very nature of the relationship between the Respondents and Ceres with respect to the litigation that requires that a reasonable cap of costs be set. It is clear from the affidavit of Detlefsen that I have referred to, that the Respondents intend to cooperate with Ceres in connection with the Minnesota Action. This has been confirmed by their actions since this Application was first brought by their production to Ceres of considerable documentation and the fact they have settled the terms of indemnification agreements with Ceres. I agree with Mr. Edwards that the Respondents are closer to defence witnesses than disinterested third parties. Regardless of the significance of the indemnification agreements, Detlefsen and Muir are clearly important witnesses for the Minnesota Action and the evidence is clear that they have aligned themselves with Ceres. To provide the Respondents with a blank cheque to retain counsel to respond to the Letters Rogatory would indirectly permit Ceres to prepare two important witnesses for trial, who are cooperating with Ceres, at the cost of the Applicant.23

In other words, either the respondent is a stranger, with fewer legitimate costs, or the respondent is implicated in the foreign proceeding, and therefore not entitled to have the applicant pay their (otherwise legitimate) costs.

b. Emphasize the Capacity of the Respondent

One of the considerations in granting applications to enforce letters rogatory is whether the request is unduly burdensome on respondents.24 This is explicitly measured against what a respondent would be required to do, if the action were tried locally.

The 'unfair burden' case law also invites an analysis of the capabilities of the respondent. If your respondent is a large corporation or group with significant capabilities, it should be possible to reduce your own costs.

In Grace, the applicant was seeking discovery of thirty-four areas of documents from Brookfield Corporation's Canadian parent company. In his analysis, Justice Conant wrote:

On burdensome, I am not persuaded the large commercial complex of the Plaintiff with its affiliates, parent and many companies would be put to that much more extra clerical and research work. Nor would there be extra cost to it and business interruption that would seriously prejudice its ordinary activities. I am also mindful many of the documents required are readily available from other matters.25

The court in Grace did not mention which party was responsible for the costs of the production.

In OPSEU, the applicants sought discovery from Deloitte. Deloitte opposed the discovery on the basis that it was unduly burdensome. The applicant's request would require Deloitte to undertake thousands of hours of work, reviewing up to one million specified documents and reproducing the relevant ones. Recognizing this fact, the applicants had agreed to pay up to US$100,000 of Deloitte's costs in responding to the application.26

The court took this into account when deciding to grant the application.27 On appeal, the Court of Appeal upheld the lower ruling, finding that:

...Deloitte is a major financial audit and consulting firm, worldwide. The application judge noted that it is obliged by professional standards to compile and secure its working papers in a manner in which they can be made available to regulatory entities and successor auditors. It should follow that the documentation is not impossible to prepare for production. Requests for the production of voluminous documentation, in electronic and hard copy form, are hardly unknown in today's world of complex general and class action litigation. In that sense, there is a certain 'cost of doing business' element in the call for Deloitte to respond to the letters rogatory – an offset to the undoubtedly considerable revenues that the appellant earns from providing high level and complex auditing services to companies such as Nortel.28

To the extent that the requests of the respondent can be characterized as part of the costs of doing business, or routine, the burden on the respondent is less. Where the burden is less, there is less need for financial compensation.

c. Offer to Pay Expenses up to a Cap

It may also be wise to offer some amount of money as a cap on expenses. The amounts offered vary widely, from $100,000 in the OPSEU case to $6,000 in Advance/Newhouse Partnership. The key here is to pick a number that reflects the work involved for the respondent. Once a number is before the court, the respondent will have to argue why his or her case involves special circumstances that demand a higher number. This is a difficult argument to make. In Scoular, the respondents argued that their costs would be higher than the cap, which led to this response from Justice Spies:29

Mr. Staley argues that at this stage it is not possible to know whether the Respondents' full indemnity costs will be less than the cap proposed by Scoular of $20,000. I disagree. In my view just as some of my colleagues have done in other cases the reasonable cost, on a full indemnity basis, to respond to the Letters Rogatory can be determined now.

The Respondents have already produced a large number of documents to Ceres and there is no indication that there are further documents to produce. These costs were incurred voluntarily and were presumably covered by the Respondents' indemnification agreements with Ceres. I agree with Mr. Edwards that these costs should not be retroactively passed on to the Applicant. The Applicant is not seeking any documents from the Respondents that they have already produced to Ceres, since Ceres has an obligation to produce those documents in the Minnesota Action.

The Respondents have already invoiced Ceres 52 hours for producing documentation and given their stated cooperation with Ceres I expect it is unlikely that there are any further relevant documents to be produced. In any event it is unlikely there would be many. I accept that the Respondents might need the assistance of counsel to ensure they are in compliance with the documentary production requirement of the Letters Rogatory but I cannot imagine that this would be a substantial expense for reasons already stated. If the Respondents find further documents, that may well benefit Ceres in the action as well since the documents were created in the course of the Respondents' work for Ceres.

As for the examinations of Detlefsen and Muir, the time for testimony is capped at 7 hours for each examination. Even assuming 14 hours to prepare for each examination, for a total of 21 hours for each of Detlefsen and Muir, assuming $17,000 is available from the $20,000, they can be served by a lawyer charging about $400 per hour. More hours can obviously be spent at a lower hourly rate. The proposed cap in my view is reasonable. Compared to the caps in the cases I have referred to, it is very generous.

d. Limit the Ask to Reduce the Burden on Respondents

The other way to reduce the burden on the respondent is by restricting the scope of the requests. By paring down exactly what is requested of the respondent to the absolute minimum or naming the documents sought as precisely as possible, applicants can reduce costs at their source.

For example, the applicant in Scoular expressly excluded any documents which the respondents had already produced to the defendant in the US action. The court remarked on this as a limitation on the respondents' costs when approving the proposed cap on reasonable expenses.30

Although it can be tempting to ask for everything, in these circumstances a narrow request will make the entire application more palatable to the court and reduce expenses.

5. Conclusion

Like many areas of the law, courts can been seen as applying a 'smell test' to applications to enforce letters rogatory. The standard narrative is of the poor, harassed Canadian witness being hauled into a giant American proceeding against their will. As is often the case with standard narratives, this is usually far from the truth. By emphasizing the connection of the respondent with the American litigation and by limiting the scope of the respondents' eventual participation, you can change this narrative and, ultimately, reduce the cost of obtaining evidence from a Canadian witness.


1 There is a six factor test, set out in Connecticut Retirement Plans and Trust Funds v. Buchan, 2007 ONCA 462 (CanLII) at para. 7. Applicants must also satisfy the statutory preconditions, which are found in the relevant Evidence Act. Applications in Ontario would be governed by the Ontario Evidence Act, RS0 1990, c E-23 at s. 60 and the Canada Evidence Act, RSC 1985, c C-5 at s. 46-47. For a useful background on enforcing letters rogatory, see A Compelling Situation: Enforcing American Letters Rogatory in Ontario, Pamella D. Pengelley, Canadian Bar Review, Vol. 85, No. 2, pp. 345-372, 2006.

2 Trustees of the Ontario Public Service Employees Union Pension Trust Fund v. Clark, 2005 CanLII 38895 (ON SC) at para 2 (partial indemnity).

3 j2 Global Communications Inc. v. Protus IP Solutions Inc., 2009 CanLII 75632 (ON SC) at paras. 5 and 6.

4 Stetson Oil & Gas Ltd. v. Stifel Nicolaus Canada Inc, 2013 ONSC 5213 (CanLII).

5 Oticon v. Gennum Corp., 2010 ONSC 1638 (CanLII) at para. 3 (emphasis added).

6 Aker Biomarine AS et al. v. KGK Synergize Inc., 2014 ONSC 1401 (CanLII) at para. 28.

7 Intelsat USA Sales LLC v. Hyde and Majic, 2015 ONSC 5680 (CanLII) at para. 57.

8 GST Telecommunications, Inc. et al v. Michael Provenzano, 2000 BCSC 72 (CanLII).

9 j2 Global v. B.C. et al, 2010 ONSC 3868 (CanLII) at para. 3.

10 j2 Global v. Protus, supra note 3 at para . 5.

11 Neuwirth v. DaCosta et al., 2014 ONSC 527 (CanLII) at para. 51.

12 CIN-Q Automobiles Inc. v. Fleming and Pelowich, 2014 ONSC 4319 (CanLII) and CIN-Q Automobiles v. Fleming and Pelowich, 2014 ONSC 5763 (CanLII).

13 The Scoular Company v. Detlefsen, 2016 ONSC 4001.

14 Ibid. at paras 47-48.

15 Ibid. at para. 51.

16 AstraZeneca LP v. Wolman, 2009 CanLII 69793 (ON SC) at para. 65.

17 Advance/Newhouse Partnership and Bright House Networks, LLC v. Brighthouse Inc., 2005 CanLII 3461 (ON SC) at para. 15.

18 Scoular, supra note 13 at para. 41.

19 Triexe Management Group Inc. v. FieldTurf International Inc., 2005 CanLII 36470 (ON SC) at paras. 28, 38-39.

20 DVD v. Collens, 2011 ONSC 4978 at para. 21.

21 Four Seasons Hotel Ltd. v. Legacy Hotels Real Estate Investment Trust, 2003 CanLII 25063 (ON SC) at paras. 16.

22 Scoular, supra note 13 at paras. 35, 43, 51.

23 Ibid. at para. 35 (emphasis in original).

24 Ontario Public Service Employees Union Pension Trust Fund v. Clark, 2005 CanLII 51027 (ON SC) at para. 24.

25 W.R. Grace Co. v. Brookfield Development Corp., 1995 CarswellOnt 1005, at para 8.

26 OPSEU, supra note 24 at paras. 46-51.

27 OPSEU, supra note 24 at paras. 89-93, 96-97.

28 Ontario Service Employees Union Pension Trust Fund v. Clark, 2006 CanLII 20839 (ON CA) at para. 23.

29 Scoular, supra note 13 at paras. 36-39.

30 Scoular, supra note 13 at paras. 36-41.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Caleb Edwards
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