



COURT OF APPEAL FOR ONTARIO

CITATION: Actava TV, Inc. v. Matvil Corp.,
    2021 ONCA 105

DATE: 202102019

DOCKET: C68521

Fairburn A.C.J.O., Pepall and
    Roberts JJ.A.

BETWEEN

Actava TV, Inc., Master Call
    Communications, Inc., Master Call Corporation and Rouslan Tsoutiev

Applicants (Respondents)

and

Matvil Corp.

Respondent (Appellant)

Clifford Cole and Alex D. Zavaglia for
    the appellant

Kevin OBrien, Lauren Harper
    and Carla Breadon for the respondents

Heard: November 10, 2020 by
    video conference

On appeal from the
    order of Justice Barbara A. Conway of the Superior Court of Justice, dated July
    6, 2020.

Pepall J.A.:


Introduction

[1]

This appeal addresses the enforcement of a letter of request (LoR).
    The enforcement order compels a non-party to produce its confidential and
    proprietary financial and valuation documents for one purpose: to assist the
    expert of parties to an action in the United States calculate their damages
    using comparative industry data.

[2]

The application judge in the case under appeal granted such an order to
    the respondents, Actava TV, Inc. (Actava) and other Actava-related parties,
    the plaintiffs in the U.S. action, against the appellant, Matvil Corp.
    (Matvil), an Ontario company that is a non-party in that action. One of the
    defendants in the U.S. action, Kartina Digital GmbH (Kartina), is Matvils
    main competitor.

[3]

For the reasons that follow, I would allow the appeal.

Facts

(1)

Russian TV Channels First U.S. Lawsuit

[4]

On February 19, 2016, various Russian owners, operators, and producers
    of television channels that are broadcast in Russian (the Russian TV
    Channels) sued Actava, the other Actava-related respondents in this appeal,
    and Matvil in the
United States District Court, Southern
    District of New York
, for allegedly broadcasting content without proper
    licences.

[5]

Although its business has now changed, at the time of the lawsuit,
    Actava was in the business of streaming Russian-language TV channels to
    customers in North America. The other Actava respondents,
Rouslan
    Tsoutiev, Master Call Communications, Inc. and Master Call Corporation, are the
    Chief Executive Officer of Actava and two other companies he controls.

[6]

Matvil is a private, Ontario-based global streaming service that
    broadcasts television content, predominantly from Russia, Ukraine, and former
    Commonwealth of Independent States countries, to customers around the world. It
    re-transmits content from the Russian TV Channels to subscribers. It has
    operated for two decades and has approximately 32 employees in Canada.

[7]

Shortly after the commencement of the Russian TV Channels U.S. action,
    Matvil established that it did have the necessary licences, and the Russian TV
    Channels withdrew their claims against it. In contrast, Actava did not have the
    necessary licences and, together with the other Actava respondents, entered
    into a settlement of the lawsuit. As part of that settlement, Actava and the
    other Actava respondents agreed to be bound by injunctions that prohibited
    certain broadcasting absent consent of the Russian TV Channels.

(2)

Referral Agreement

[8]

In September of 2016, Actava and Matvil entered into a 24-month referral
    agreement, whereby Actava was to provide Matvil with marketing services and
    refer customers to Matvil from five states in the northeastern U.S. From
    September 2016 to August 2018, Actava referred some customers to Matvil.
    Actavas referrals represented a very small percentage of Matvils customers.
    Matvil terminated the referral agreement in August 2018.

(3)

Russian TV Channels Second U.S. Lawsuit Against Actava

[9]

On December 13, 2016, the Russian TV Channels sued Actava and the other
    Actava respondents for contempt, alleging that they had breached the
    injunctions entered into as part of the parties settlement of the first
    action. This second action was dismissed in the fall of 2017. During the
    lifespan of this lawsuit, Actava continued to refer new clients to Matvil but
    placed its advertising services on pause.

(4)

Actavas U.S. Lawsuit Against Russian TV Channels and Kartina

[10]

On
    July 23, 2018, Actava and the other Actava respondents sued the Russian TV
    Channels in the United States District Court, Southern District of New York.
    They later added Kartina as a defendant.

[11]

In
    their lawsuit, Actava and the other Actava respondents allege that the Russian
    TV Channels and Kartina engaged in an unlawful campaign to interfere with
    Actavas business. They assert that the Russian TV Channels and Kartinas
    actions prevented Actava from performing its referral agreement with Matvil for
    approximately 10 months and that they pressured Matvil to terminate the
    referral agreement. Actava and the other Actava respondents claim damages for
    tortious interference, malicious prosecution, breach of contract, and unfair
    and deceptive business practices in violation of s. 349 of the New York General
    Business Law. The damages requested include Actavas lost revenue and profits
    arising from the termination of the referral agreement.

[12]

Matvil
    is not a party to Actavas U.S. action nor do any of the parties to that action
    make any allegations of wrongdoing against it. Its conduct is not in issue and
    it has no interest in the U.S. action.

[13]

Actava
    has in its possession all documents concerning Actava that were exchanged
    between any Russian TV Channel and Matvil between June 1, 2016 and December 31,
    2018 and all documents concerning Matvils termination or prospective
    termination of the referral agreement.
[1]

(5)

The LoR

(a)

The Request for Matvils Financial Information

[14]

To
    calculate Actavas damages in the U.S. action, Actavas U.S. damages expert,
    Sidney Blum, was of the view that he would like to calculate Actavas damages
    using the yardstick method of assessment. This looks at Actavas actual
    growth during the subject period and compares it to the financial results of
    other comparable companies in the same industry.
[2]
There are no publicly-traded companies that carry on business similar to that
    of Actava and, although there is illegal activity, only two other companies
    legally provide Russian broadcasting services in North America: Kartina and
    Matvil.

[15]

Actava
    hypothesizes that its own revenues would have followed an upward trajectory
    similar to Matvils. That said, there is no evidence that Matvils profits were
    on an upward trajectory, a fact acknowledged by Actavas counsel in oral
    submissions before us. Indeed, the affidavit of Actavas general counsel
    speculates that [i]f Matvils market share in the United States and Canada grew,
    Actavas position is that its profits would have followed a similar upward
    trajectory.

[16]

Actava
    attempted unsuccessfully to get the documents it desired from Matvil some
    months before it commenced its action against the Russian TV Channels and
    Kartina. Later, Actava and the other respondents moved before the U.S. court
    for an LoR. The proceeding was in writing and summary in nature. The only
    evidence filed in support was a declaration from the Actava respondents U.S.
    litigation counsel. He described the U.S. action and stated that it was
    Actavas intention to argue at trial a theory of damages that linked Actavas
    growth (but for the tortfeasors) to the growth of other streaming entertainment
    services. In the recitals, the LoR repeats Actavas allegation that its
    business would have grown at a trajectory similar to that of other providers,
    including but not limited to Matvil. Actava advised Matvil that it would be
    bringing a motion and provided a copy of the draft request, however no consent
    was forthcoming from Matvil. Matvil was not given notice of the motion or
    served with the motion material, nor did it participate in the motion.

(b)

The Issuance of the LoR

[17]

The
    U.S court granted Actavas motion and issued the LoR. The LoR originally sought
    the production by Matvil of all documents, including communications, between
    the Russian TV Channels and Matvil concerning either Actava or Mr. Tsoutiev
    between June 1, 2016 and December 31, 2018; and all documents, excluding
    communications, concerning Matvils termination or prospective termination of
    the referral agreement, including correspondence between Matvil, on the one
    hand, and either Actava or Mr. Tsoutiev on the other. Matvil agreed to provide
    this information and, as mentioned, has done so. This information is not in
    issue.
[3]

[18]

Before
    the application judge and on appeal, only two categories of documentation
    sought in the LoR are in issue. The LoR seeks: (i) yearly reports, from 2015 to
    present, of the revenue and/or profits derived by Matvil; and (ii) all documents,
    from 2015 to present, containing or constituting an appraisal of Matvils
    valuation.

[19]

Thus,
    the contested production sought both pre-dates and post-dates the period of
    time (2016 to 2018) during which the referral agreement was in effect; it is
    not limited to business carried on under the referral agreement but extends to
    Matvils entire global business; and it includes not just raw data but also
    Matvils work product, that is, documents that summarize, review, analyze,
    value, or comment on Matvils financial performance, including, for example,
    financial statements and valuation reports prepared by external advisors. It
    would also require disclosure of operating expenses, including the licensing
    fees Matvil paid for content with different licensors, including the Russian TV
    Channels. The information sought is private, proprietary, and not publicly
    available. Other than the subset of information relating to Actavas referrals
    which Matvil has already provided and which is not in issue, there is no
    factual nexus between Matvils materials and the alleged wrongful conduct on
    the part of the defendants to the U.S. action.

[20]

In
    summary, the information in issue is sought not because of Matvils involvement
    in the factual matrix but because it is a comparator company. Put differently,
    the documents are desired to assist the expert in his calculation of Actavas
    damages, nothing more.

(6)

Actavas Application to Enforce the LoR

[21]

Actava
    and the other Actava respondents then brought an application in the Ontario
    Superior Court of Justice to enforce the LoR. Matvil contested the application,
    asserting that it has a legitimate interest in protecting the information
    sought from competitors. In an affidavit sworn November 27, 2019, Matvils
    Chief Executive Officer explained some of its concerns:

Even if Kartina is excluded from the parties who are provided
    access to the disclosure, Kartina has a close relationship with many of the
    Channels. The Channels operate primarily in Russia. Even with a confidentiality
    order in place, I believe there is a real risk of persons sharing Matvils
    financial information with Kartina and the Channels which can prove to be
    detrimental to the future operation of Matvil. I believe based on my
    experiences Canadian or US confidentiality orders are not a sufficient
    deterrent because of the difficulty in enforcing such orders in Russia and the
    importance placed there on personal relationships in business over legal
    obligations.

I am also concerned that Actava may attempt to resume its
    former business of broadcasting foreign language programming in the future, and
    thus may resume being one of Matvils main competitors. Disclosing our
    confidential financial information to Actava may put us at a significant
    competitive disadvantage if, for example, Actava settles the litigation with
    the Channels and the injunction is lifted.

[22]

Actava
    had obtained the LoR prior to completing its discovery process in the U.S.
    action and before it had sought comparable information from Kartina who, as
    mentioned, carries on a business comparable to that of Matvil. Actava admitted
    that it is impossible and simply not believable that Kartina, a party to
    the U.S. action, does not have the sort of information Actava is seeking. It
    did not conduct an oral examination of Kartina. The application judge gave
    Actava an opportunity to seek equivalent information from Kartina, which it
    did. Actavas expert then said that the productions he received were
    insufficient for him to opine on the damages. For its part, Matvil continued to
    express concern about producing the information sought and protecting its
    financial information.

[23]

On
    May 17, 2019, a generic protective order was issued in the U.S. action
    independent of the LoR. Among other things, the order provides that a producing
    party may designate material as confidential, attorneys eyes only (AEO)
    or experts eyes only (EEO). Where the material is designated confidential,
    other persons subject to the order may disclose the information to various
    persons, including the parties, various counsel, various witnesses, and
    stenographers. Where the information is designated for AEO or EEO, other
    persons subject to the order may disclose such information only to experts and
    various persons, including various counsel and stenographers. A party can
    object to the designation. Although the order is generic in nature, it would
    encompass Matvils productions.

[24]

The
    protective order further provides that it applies only to the pretrial phase of
    the action. Moreover, the parties may refer to documents marked confidential,
    AEO or EEO in support of written or oral argument, subject to certain
    requirements. To the extent any designated material is contained or reflected
    in any filing, counsel must make a motion to file the submission under seal. If
    the motion is granted, a redacted version of the sealed submission must be
    filed together with the sealed submission so that the public may access the
    redacted version. The protective order can also be amended or modified.

[25]

Unchallenged
    expert evidence from a U.S. attorney filed by Matvil on Actavas application to
    enforce the LoR stated that the protective order falls short of adequately
    protecting Matvils financial information. He noted that the confidentiality
    designation may be challenged by a party and left to the discretion of the U.S.
    court. It does not apply to oral testimony or oral submissions. It does not
    preclude publication by anyone reporting on the trial.

[26]

Significantly,
    as Actavas expert seeks to use Matvils information as a single-source
    comparator analysis, the identity of Matvil as the comparator will be
    self-evident despite the terms of any protective order. As the U.S. attorney
    opined, redacting or anonymizing Matvil in public filings would do little to
    protect Matvils sensitive business information.

[27]

On
    July 6, 2020, the application judge granted Actavas application to enforce the
    LoR.

The Application Judges Reasons for Decision

[28]

The
    application judge noted that the parties were satisfied that the statutory
    preconditions for enforcing the LoR had been met. She also observed that the
    U.S. courts decision is entitled to considerable deference and she was not
    sitting on appeal from that decision. She considered the six factors identified
    in
Presbyterian
Church of Sudan v. Taylor
(2006),
    215 O.A.C. 140 (C.A.), at para. 20.

[29]

She
    discussed the issue of relevance, the first factor from
Presbyterian
    Church
, noting that Actavas expert considered Matvils financial
    information to be highly relevant to his calculation of damages as it is to be
    used as a comparator to Actavas actual performance under the yardstick
    approach. Matvil did not dispute that it would be relevant for these purposes,
    but its expert suggested that different valuation methods, such as the
    before-and-after method or the sales projection method, could be used. The
    application judge stated that Actavas financial prospects were tied to
    Matvils through the referral agreement and hence the documents were relevant
    to the calculation of damages.

[30]

She
    also concluded that the second factor in
Presbyterian
Church
was met. The evidence was necessary for and would be used at trial, if
    admissible.

[31]

Turning
    to the third
Presbyterian Church
factor as to
    whether the evidence was otherwise obtainable, Matvil had argued before the
    application judge that Kartina, whom Actava had named as a defendant in the
    U.S. action, operated in the same industry as Matvil and Actava, and that the
    necessary information could be obtained from Kartina. The application judge
    concluded, at para. 39, that the evidence sought from Matvil is of greater
    value to Actava in preparing its damages calculation than the productions
    obtained or sought from Kartina. Even if Actava pursues Kartina for further and
    better productions, Actavas damages expert, Mr. Blum, makes it clear that the
    nexus between Matvil and Actava provides an additional dimension that does not
    exist with the Kartina financial information.

[32]

The
    application judge then turned to the issue of public policy, the fourth factor
    from
Presbyterian Church
. Matvil submitted
    that requiring a non-party to disclose confidential financial information for purposes
    of a single-source comparator analysis was contrary to public policy. Its
    concern was heightened by the fact that Kartina was a competitor and Actava
    could be too. The application judge stated that Matvil was part of the factual
    matrix, and that concerns about confidentiality could be addressed by the terms
    of the U.S. protective order and additional conditions proposed by Actava.
    These were that the order would be conditional on the U.S. court ordering that:
Actavas general counsel would not receive or review the
    financial data; the financial data would not be provided to Actava, Kartina, or
    the other U.S. defendants, but only to their experts and external legal counsel
    subject to the terms of the protective order; and the financial data would be treated
    as for attorneys and experts eyes only throughout the entirety of the
    proceeding.

[33]

She
    considered Matvils concern that the use of its confidential information would
    necessarily be revealed in a single-source comparator damages calculation. She
    dismissed this risk as speculative and overstated.

[34]

Lastly,
    she was satisfied that the information sought was specified and identifiable,
    and that the order sought was not unduly burdensome.
[4]


[35]

The
    application judge accordingly granted the order requested.

The Appeal

[36]

Matvil
    appealed from the application judges order. The order has been stayed pending
    disposition of the appeal.

[37]

Matvil
    advances numerous grounds of appeal, but in oral argument focused its
    submissions on relevance and public policy within the construct of principles
    of sovereignty and the applicable case law. At its most fundamental, Matvil
    submits that the order under appeal is the first and only order in any
    commonwealth jurisdiction, including Ontario, to direct a non-party to produce
    documentation and information for the sole purpose of informing an expert to
    assist a party in calculating damages. It argues that the order failed to
    satisfy the test for enforcement of an LoR and that the application judge erred
    in her application of the test and in her relevance and public policy analyses.

[38]

To
    place the dispute in context, I will first address the evolution of LoRs and
    the governing legal principles. I will then turn to how those principles apply
    to this case.

(1)

Legal Principles

(a)

Definition of an LoR

[39]

An
    LoR (sometimes also known as a letter rogatory) is the medium whereby one
    country, speaking through its court, seeks foreign judicial assistance that
    allows for the taking of evidence for use in legal proceedings:
The Signe
, 37 F. Supp. 819 (E.D. La. 1941), at p. 820.
    In Ontario, evidence may be provided voluntarily, in which case an LoR is not
    required. However, absent agreement, an order from an Ontario court is required
    to compel the production of evidence. Put differently, an LoR is unenforceable
    standing on its own and an Ontario court must give effect to the request by
    granting an order enforcing the LoR.

(b)

Statutory Requirements

[40]

The
    authority to enforce an LoR is found in both s. 46 of the
Canada
    Evidence Act
, R.S.C. 1985, c. C-5 and s. 60 of the
Ontario Evidence Act
, R.S.O. 1990, c. E.23. Although
    there is some debate on whether the authority is the subject matter of federal
    or provincial jurisdiction, as a practical matter, this is of no moment, as the
    statutory requirements are the same. The statutory preconditions to enforcement
    of an LoR are: (i) a foreign court has authorized the obtaining of evidence;
    (ii) the witness whose evidence is sought is within Ontarios jurisdiction;
    (iii) the evidence sought relates to a proceeding pending before the foreign
    court; and (iv) the foreign court is a court of competent jurisdiction. The
    decision to grant or refuse enforcement is a discretionary one and a court may
    refuse to enforce LoRs even if the statutory conditions have been met.

(c)

Supreme Court Jurisprudence

[41]

The
    statutory requirements for enforcing LoRs have been augmented by jurisprudence.
    The leading decision on LoRs in Canada is the 1981 decision of the Supreme
    Court in
R. v. Zingre
, [1981] 2 S.C.R. 392, a
    case involving a request for assistance from Switzerland. There, at pp. 400-1,
    Dickson J. (as he then was), wrote:

As that great jurist, U.S. Chief Justice Marshall, observed in
The Schooner Exchange v. MFaddon & Others
[(1812),
    7 Cranchs Reports 116] , at pp. 136-37, the jurisdiction of a nation within
    its own territory is necessarily exclusive and absolute, susceptible of no
    limitation not imposed by itself, but common interest impels sovereigns to
    mutual intercourse and an interchange of good offices with each other.

It is upon this comity of nations that international legal
    assistance rests. Thus the courts of one jurisdiction will give effect to the
    laws and judicial decisions of another jurisdiction, not as a matter of
    obligation but out of mutual deference and respect. A foreign request is given
    full force and effect unless it be contrary to the public policy of the
    jurisdiction to which the request is directed (see
Gulf
    Oil Corporation v. Gulf Canada Limited et al.
[[1980] 2 S.C.R. 39])
    or otherwise prejudicial to the sovereignty or the citizens of the latter
    jurisdiction.

[42]

Thus,
    three elements were said to animate the enforcement of an LoR: comity, public
    policy of the jurisdiction to which the request is directed, and absence of
    prejudice to the sovereignty or the citizens of that jurisdiction.

[43]

The
    first element, comity, is a flexible concept that must be adjusted in light of
    a changing world order:
Morguard Investments Ltd. v. De
    Savoye
, [1990] 3 S.C.R. 1077, at p. 1097. In
Morguard
,
    a case about the recognition by the courts of one province of a judgment of the
    courts of another province, the Supreme Court of Canada adopted, at p. 1097,
    the Supreme Court of the United States definition of comity from
Hilton v. Guyot
, 159 U.S. 113 (1895), at pp. 163-64:

Comity in the legal sense, is neither a matter of absolute
    obligation, on the one hand, nor of mere courtesy and good will, upon the
    other. But it is the recognition which one nation allows within its territory
    to the legislative, executive or judicial acts of another nation,
having due
    regard both to international duty and convenience,
and to the rights of its own citizens or of other persons who are
    under the protection of its laws
[.] [Emphasis added.]

[44]

In
    doing so, the court in
Morguard
, at p. 1097,
    suggested that the modern system of private international law is grounded in
    principles of order and fairness, and that the content of comity must adapt to
    a changing world order.

[45]

An
    example of such adaptation is found in
Pro Swing Inc. v.
    Elta Golf Inc.
, 2006 SCC 52, [2006] 2 S.C.R. 612, a case that
    involved a request to enforce a U.S. non-monetary award. The whole court agreed
    that an appropriate understanding of comity suggested revising the traditional
    common law rule against enforcing non-monetary judgments.
[5]
At para. 27, Deschamps J., for the majority, wrote: Comity is a balancing
    exercise. The relevant considerations are respect for a nations acts,
    international duty, convenience and protection of a nations citizens. She
    noted that courts must take care not to emphasize the factor of respect for a
    nations acts to the point of imbalance.
[6]


[46]

In
Club Resorts Ltd. v. Van Breda
, 2012 SCC 17, [2012] 1
    S.C.R. 572, the Supreme Court noted, at para. 74, that comity is a very
    flexible concept and that while fairness and justice were necessary
    characteristics of a legal system, they could not be divorced from the
    requirement of predictability and stability which assure order in the conflicts
    system.

[47]

Of course, although each of
Van Breda
,
Pro Swing
,
and
Morguard
addressed the concept of comity, none of them involved enforcement of an LoR.
    In any event, I do not conclude from a reading of those cases that there has
    been a retreat from the principles espoused by the court in
Zingre
.

[48]

Importantly, in
Zingre
, the Supreme
    Court recognized that the principles underlying the enforcement of LoRs may at
    times come into conflict. Notably, Dickson J. explained, at p. 401, that where
    sovereignty has conflicted with comity, Canadian courts have refused to order
    testimony for use in foreign proceedings in a number of situations. Examples
    given included where: (i) a request for production of documents was vague and
    general; (ii) discovery was sought against a non-party to the litigation, in
    violation of local laws of civil procedure; and (iii) the main purpose of the
    examination was to serve as a fishing expedition, a procedure which was not
    allowed in Canadian courts.

[49]

I
    take from these examples the need for Canadian courts to carefully consider the
    principles underlying the enforcement of LoRs. There is no doubt that, with
    globalization, the worlds community of nations, and Canadas relationships
    within that community, look very different in 2021 than they did 40 years
    earlier in 1981 when
Zingre

was decided. Moreover, it must be remembered that the
    process for enforcement of an LoR in Canada is the same regardless of the
    identity of the foreign court. In my view, these considerations further
    reinforce the need to apply the
Zingre
principles rigorously.

(d)

Ontario Jurisprudence

[50]

Following
Zingre
, courts in Ontario have applied and
    supplemented the principles espoused by Dickson J. concerning the enforcement
    of LoRs. In 1986, in
Re Friction Division Products, Inc.
    and E.I. Du Pont de Nemours & Co. Inc. et al. (No. 2)
(1986),
    56 O.R. (2d) 722 (H.C.), at p. 732, Osborne J. (as he then was) stated that for
    enforcement, the evidence (including the LoR) had to establish that: (i) the
    evidence sought is relevant; (ii) the evidence sought is necessary for trial
    and will be adduced at trial, if admissible; (iii) the evidence is not
    otherwise obtainable; (iv) the order sought is not contrary to public policy;
    (v) the documents sought are identified with reasonable specificity; and (vi)
    the order sought is not unduly burdensome, having in mind what the relevant
    witnesses would be required to do, and produce, were the action to be tried
    here. In
Fecht v. Deloitte & Touche
(1996), 28 O.R. (3d) 188 (Gen. Div.) (
Fecht (Gen. Div.)
),
    affd (1997), 32 O.R. (3d) 417 (C.A.)
(Fecht (C.A.)
),
    Blair J. (as he then was) adopted these factors. So did this court in
Presbyterian Church
, at para. 20, and in
Connecticut Retirement Plans and Trust Funds v. Buchan
,
    2007 ONCA 462, 225 O.A.C. 106, at para. 7. In
Lantheus
    Medical Imaging Inc. v. Atomic Energy of Canada Ltd.
, 2013 ONCA
    264, 115 O.R. (3d) 161, at para. 61, and most recently in
Glegg
    v. Glass
, 2020 ONCA 833, at para. 51, this court described the
    factors, with the exception of public policy, as useful guideposts.

[51]

In
Connecticut Retirement Plans
, having listed the six
    factors, Weiler J.A. for this court stated, at para. 7, that [i]n addition,
    the court is required to balance two broad considerations in deciding whether
    to exercise its discretion to enforce the Letter Rogatory. Those considerations
    are the impact on Canadian sovereignty and whether justice requires the taking
    of commission evidence. In
Lantheus
, at para.
    59, Hoy J.A. for this court quoted from Doherty J.A. in
France
    (Republic) v. De Havilland Aircraft of Canada Ltd.
(1991), 3 O.R.
    (3d) 705 (C.A.), at para. 37, stating:

The test requires that the court,

consider whether the request imposes any limitation or
    infringement on Canadian sovereignty, and whether justice requires an order for
    the taking of commission evidence. The considerations encompassed by the phrase
    Canadian sovereignty include a[n] assessment of whether the request would
    give extra-territorial authority to foreign laws which violate relevant
    Canadian or provincial laws;
whether granting the
    request would infringe on recognized Canadian moral or legal principles; and
    whether the request would impose an undue burden on, or do prejudice to, the
    individual whose evidence is requested.

See also
Glegg
, at
    para. 49. Thus Canadian sovereignty was framed as including a consideration
    of whether the LoR would: (i) violate relevant Canadian or provincial law; (ii)
    infringe on recognized Canadian moral or legal principles; (iii) impose an
    undue burden on the entity of whom the request is made; or (iv) do prejudice to
    that entity. In addition, the justice of the enforcement request must be
    weighed in the balance.

[52]

To
    sum up, the principles of comity, public policy, and the absence of prejudice
    to the sovereignty or the citizens of Canada described by Dickson J. in
Zingre
are elements that continue to animate the
    enforcement of LoRs. In applying these principles, courts have developed a
    number of factors to help guide their decisions. The six non-exclusive
    guideposts first identified in
Friction Division
assist in making that determination.
[7]
They are not rigid preconditions:
Lantheus
, at
    para. 61;
Perlmutter v. Smith
, 2020 ONCA 570,
    152 O.R. (3d) 185, at para. 25; and a court is not required to systematically
    examine each.
De Havilland

is
    an example where the court did not systematically examine each
Friction Division
factor. However, a court must not lose
    sight of the principles described in
Zingre
.
    Ultimately, this requires a court to step back and balance Canadian sovereignty
    considerations with the justice of the enforcement request:
Connecticut Retirement Plans
, at para. 7;
Glegg
, at para. 49. The six
Friction
    Division
guideposts are not mere proxies for those considerations.

(e)

Distinctions Between U.S. and Ontario

[53]

As
    mentioned, the law on LoRs in Canada applies to LoRs from all foreign
    jurisdictions. Given that the U.S. is Canadas largest trading partner and
    neighbour, the opportunity for engagement in each others courts is high. As
    Bradley J. Freedman and Gregory N. Harney stated in their oft-quoted 1987
    article Obtaining Evidence from Canada: The Enforcement of Letters Rogatory by
    Canadian Courts (1987) 21 UBC L. Rev. 351, at p. 351, [t]he increasingly
    extensive business and social interaction between Canadian and foreign
    individuals and business entities, especially those of the United States of
    America, has resulted in Canadian residents becoming involved with increasing
    frequency in foreign civil and criminal proceedings. Further, a liberal
    approach by Canadian courts to the enforcement of foreign letters rogatory
    serves  to maintain harmonious international relations in general: at p. 353.
    The authors noted the foundational principle of international comity and that
    [i]mplicit in a request for international judicial assistance is a pledge of
    reciprocity: a promise that the courts of the requesting state will, in the
    future, provide similar assistance to the courts of the state to which the request
    is directed: at p. 353.

[54]

Similar
    assistance is a laudable objective. That said, as the parties acknowledged on
    this appeal, while the U.S. and Canada have somewhat comparable justice
    systems, the rules relating to discovery are significantly dissimilar. This is
    highlighted in the Sedona Canada Commentary on Enforcing Letters Rogatory
    Issued by an American Court in Canada: Best Practices & Key Points to
    Consider, a June 2011 publication of The Sedona Conference. As the title
    suggests, the commentary reviews discovery in Canada and the U.S. The points
    raised include the following:



The rules
    governing discovery in the two countries differ including the scope of
    discovery, the ability to obtain discovery from non-parties, subsequent use of
    the evidence, objections to questions on discovery, and the availability of any
    implied undertaking rule. (Differences were also noted by the Supreme Court in
Zingre
, at p. 402.)



The U.S.
    court issuing the LoR may have done so in a perfunctory manner without
    consideration of the matters at issue or testing the evidence relied on in
    support of the request and without notice to a non-party. (I do not read this
    observation as a criticism; rather, it reflects the very broad discovery rules
    that exist in the U.S.)



Blocking
    statutes or legal issues such as privilege may prevent the Canadian court from
    enforcing an LoR.

[55]

On
    the issue of scope of discovery in the U.S., the Sedona authors point out, at
    p. 5, that if there is 
any possibility
the
    information sought
may be
relevant (emphasis
    in original), it is discoverable. Ontarios regime is very different. On
    January 1, 2010, the
Ontario
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194, were amended to limit the scope of relevance to evidence
    that is relevant to a matter in issue from the former broader test of
    semblance of relevance that had developed in the jurisprudence in Ontario:
    The Sedona Conference, at pp. 5-6; see O. Reg. 438/08, ss. 26, 27, and 30; O.
    Reg. 453/09, ss. 1, 2. As the Sedona authors state, at p. 6, [t]he evidence
    must be relevant to matters actually in issue, and does not include evidence
    that is only sought because it could lead to other matters, or may be
    relevant, or may be relevant to other matters that
could
be in issue (emphasis in original). Similarly, as Pamela D. Pengelley wrote in
    A Compelling Situation: Enforcing American Letters Rogatory in Ontario (2006)
    85 Can. Bar. Rev. 345, at p. 353, [c]ourts may be extremely reluctant to
    enforce letters rogatory that prove only that the evidence is marginally
    relevant or potentially relevant (footnotes omitted).

[56]

In
    addition, as stated in
Riverview-Trenton Railroad Company
    v. Michigan Department of Transportation
, 2018 ONSC 2124, 13 L.C.R.
    (2d) 95, at para. 35, discovery from non-parties is the norm in U.S. civil
    litigation. This is not the case in Ontario. Indeed, unlike in the U.S., in
    Ontario, an order of the court is required to examine a non-party
[8]
or to compel a non-party to produce documents: see
Rules
    of Civil Procedure
, rr. 31.10, 30.10. Thus, examination of, and
    production from, a non-party is the exception, not the rule, in Ontario.

[57]

Given
    the vastly more permissive rules governing discovery in the U.S., it is fair to
    conclude that reciprocity is not an even balance. However, as this court
    observed in
Appeal Enterprises Ltd. v. First National Bank
    of Chicago
(1984), 10 D.L.R. (4th) 317 (Ont. C.A.), at p. 319, 
the comity of nations upon which international legal assistance
    rests does not require precise reciprocity between the laws of Canada and the
    laws of the requesting state: see also
Perlmutter
, at para. 63
.
That said, differences in discovery between Canada and the
    U.S. highlight the need to be attentive to all of the elements in the LoR
    analysis including sovereignty and the justice of the request.

[58]

Finally,
    in the interest of comprehensiveness, I will briefly touch upon the issue of
    blocking statutes identified by the Sedona authors. The relevant statute in
    Ontario is the
Business Records Protection Act
,
    R.S.O. 1990, c. B.19. It is a very short statute concerning the sending and
    removal of certain business records out of the province. It consists of only
    two provisions. Section 1 states:

No person shall, under or under the authority of or
    in a manner that would be consistent with compliance with any requirement,
    order, direction or summons of any legislative, administrative or judicial
    authority in any jurisdiction outside Ontario, take or cause to be taken, send
    or cause to be sent or remove or cause to be removed from a point in Ontario to
    a point outside Ontario, any account, balance sheet, profit and loss statement
    or inventory or any resume or digest thereof or any other record, statement,
    report, or material in any way relating to any business carried on in Ontario,
    unless such taking, sending or removal,

(a) is consistent with and forms part of a regular
    practice of furnishing to a head office or parent company or organization
    outside Ontario material relating to a branch or subsidiary company or
    organization carrying on business in Ontario;

(b) is done by or on behalf of a company or person
    as defined in the
Securities Act
, carrying on
    business in Ontario and as to a jurisdiction outside Ontario in which the
    securities of the company or person have been qualified for sale with the
    consent of the company or person;

(c) is done by or on behalf of a company or person
    as defined in the
Securities Act
, carrying on
    business in Ontario as a dealer or salesperson as defined in the
Securities Act
, and as to a jurisdiction outside Ontario
    in which the company or person has been registered or is otherwise qualified to
    carry on business as a dealer or salesperson, as the case may be; or

(d) is provided for by or under any law of Ontario
    or of the Parliament of Canada.

[59]

In
De Havilland
, in
obiter
,
    Doherty J.A. reasoned that an order enforcing an LoR did not fall within the
    parameters of s. 1 and in any event, s. 46 of the
Canada
    Evidence Act
triggered the exception set out in s. 1(d). This
obiter
was adopted by Lax J. and affirmed by this court
    in
Local Court of Stuttgart of the Federal Republic of
    Germany v. Canadian Imperial Bank of Commerce
(1997), 31 O.R. (3d)
    684 (Gen. Div.), affd 1998 CarswellOnt 1999 (C.A.).

[60]

For
    the purposes of this appeal, I would add that it is of note that business records
    receive express legislative protection, no doubt in recognition of the
    sensitivity of the nature of such information and its vulnerability to misuse
    or misappropriation.

[61]

This
    then is the legal context within which the present appeal is to be decided.

(2)

Standard of Review

[62]

Given
    the discretionary nature of the decision to grant or refuse an application to
    enforce an LoR, absent reviewable error, this court will give deference to the
    lower courts decision:
Perlmutter
, at para.
    26;
Presbyterian Church
, at paras. 19, 30. As
    the Supreme Court noted in
British Columbia (Minister of
    Forests) v. Okanagan Indian Band
, 2003 SCC 71, [2003] 3 S.C.R. 371,
    at para. 43, the definition and misapplication of the criteria for the exercise
    of a judicial discretion raise questions of law which are subject to appellate
    review.

[63]

The
    Supreme Court cases involving LoRs have not expressly addressed the standard
    for appellate intervention. Other cases involving discretionary decisions
    suggest that an appellate court will defer to a discretionary decision absent
    an error in principle, a misapprehension of or failure to take into account the
    evidence, or a clearly wrong or unreasonable result. See for example:
Éditions
    Écosociété Inc. v. Banro Corp.
, 2012 SCC 18, [2012] 1 S.C.R. 636, at para.
    41;
Cowper Smith v. Morgan
, 2017 SCC 61,
    [2017] 2 S.C.R. 754, at para.
46;
Bessette v. British
    Columbia (Attorney General)
, 2019 SCC 31, 433 D.L.R. (4th) 631, at
    para. 35;
Penner v. Niagara (Regional Police Services
    Board)
, 2013 SCC 19, [2013] 2 S.C.R. 125, at para. 27; and
Elsom v. Elsom
, [1989] 1 S.C.R. 1367, at p. 1375. This
    would include the wrongful exercise of discretion arising from a failure to
    give any or insufficient weight to a relevant consideration: see
Penner
, at para. 27;
Friends of the
    Oldman River Society v. Canada (Minister of Transport)
, at pp.
    76-77; and
Harelkin v. University of Regina
,
    [1979] 2 S.C.R. 561, at p. 588.

[64]

There
    are numerous examples of the application of the appropriate standard of review
    for the discretionary decision to enforce LoRs. In
Presbyterian
    Church
, at para. 30, the court held that the failure to
    meaningfully address the
Friction Division
factors
    constituted an error in principle. See also
Liu v. Zhi
,
    2019 BCCA 427, at para. 22. In
Lantheus
, this
    court reversed a lower court decision in circumstances where the application
    judge set out the
Friction Division
factors
    but treated the factors as preconditions and misapplied them: at paras. 67-71,
    revg 2012 ONSC 3582, 25 C.P.C. (7th) 256. Further, appellate intervention may
    be warranted where the application judge fails to give sufficient consideration
    to sovereignty as a factor in the exercise of discretion. As the Supreme Court
    observed in
Zingre
, at p. 403, courts must
    balance the possible infringement of Canadian sovereignty with the natural
    desire to assist the courts of justice of a foreign land.

(3)

Analysis

[65]

Applying
    the principles I have discussed, I would allow the appeal. Following the
    parties submissions, the application judge identified the
Friction Division
factors but failed to keep in mind the principles underlying the enforcement of
    LoRs. Below, I discuss how considerations of relevance, public policy, and
    sovereignty lead me to conclude that the application judge fell into error and
    that appellate intervention is therefore warranted.

(a)

Relevance

[66]

As
    mentioned, Matvil submits that the application judge erred in her relevance
    analysis particularly given that the financial data that is the subject matter
    of the LoR merely serves to inform an expert about the business in which the
    parties to the U.S. action are engaged. Actava states that Matvils financial
    performance is relevant to Actavas damages due to Matvils and Actavas
    contractual relationship and common industry.

[67]

Evidence
    is relevant if, as a matter of logic and human experience, it renders the
    existence or absence of a material fact in issue more or less likely:
R. v. Truscott
(2006), 216 O.A.C. 217 (C.A.), at para.
    22; see also
R. v. J.-L.J.
, 2000 SCC 51,
    [2000] 2 S.C.R. 600, at para. 47;
Girao v. Cunningham
,
    2020 ONCA 260, 2 C.C.L.I. (6th) 15, at para. 94. As a result, in assessing the
    relevance of evidence sought through an LoR, the issues in the underlying
    litigation should be examined: see
Presbyterian Church
,
    at para. 34. Pengelleys observation, at p. 353, bears repeating:

The evidence sought by letters rogatory should be directly
    relevant to issues raised in the foreign proceedings. Courts may be extremely
    reluctant to enforce letters rogatory that prove only that the evidence is
    marginally relevant [citing
Pecarsky v. Lipton Wiseman
    Altbaum & Partners
(1999), 38 C.P.C. (4th) 170 (Ont. S.C.)] or
    potentially relevant, [citing
Fecht
(C.A.),
    affg
Fecht (Gen. Div.)
] and may narrow their
    orders accordingly. [Footnotes omitted.]

[68]

In
    considering whether to enforce an LoR from a U.S. court, the broader scope of
    discovery permitted in the U.S. compared to Canada may be a relevant consideration:
Aker Biomarine AS et al. v. KGK Synergize Inc.
,
    2013 ONSC 4897, 47 C.P.C. (7th) 284, at para. 27; The Sedona Conference, at pp.
    5-6. And, as we have seen, not only is the term relevant in the context of
    discovery interpreted more narrowly in Canada than in the U.S., discovery of
    non-parties is more limited:
Aker Biomarine AS
,
    at para. 27; The Sedona Conference, at pp. 5-6. The broader scope of discovery
    in the U.S. is not
per se
a bar to the
    enforcement of LoRs, but to give effect to the request, the Ontario court must
    be satisfied that the requirements of Ontario law are met: see
Presbyterian Church
, at para. 32. If the request seeks
    evidence in terms so wide that they go well beyond the issues in the
    litigation, the relevance requirement will not have been met:
Presbyterian Church
, at para. 35.

[69]

The
    parameters of relevance are determined by the U.S. pleadings. To recap, in the
    underlying U.S. action, Actava and the other respondents claim that the
    defendants  various owners, operators, and producers of TV channels that are
    broadcast in Russia and elsewhere, and Kartina, a licensed distributor of these
    channels  engaged in an unlawful campaign to interfere with Actavas business
    by initiating frivolous contempt proceedings against it, which were ultimately
    dismissed but which resulted in losses to Actavas business, including the
    termination of the referral agreement with Matvil. Actava and the Actava
    respondents seek financial information from Matvil not to establish that the
    Russian TV Channels and Kartina interfered with Actavas business, but rather
    to assist its expert to calculate damages.

[70]

In
    my view, the application judge erred in her relevance analysis for several
    reasons.

[71]

First,
    even though it is the case that Actava and Matvil had a short-term referral
    agreement, the documents requested have nothing to do with the referral
    agreement. Actava has all the documents, including all financial documents, in
    Matvils possession that concern that relationship. These documents have
    already been produced and were not the subject matter of the issues before the
    application judge. Actava does not suggest otherwise.

[72]

Second,
    the scope of the request in the LoR is extraordinarily broad. Actava seeks
    production of yearly reports, from 2015 to present, of Matvils revenues and
    profits as well as all documents, from 2015 to present, containing or
    constituting an appraisal of Matvils valuation. Notably, the request
    encompasses all of Matvils global business, not simply the small part that
    relates to Actava or the business lines in which Actava operates. Moreover, it
    extends to the work product of Matvil personnel and external service providers
    on the companys valuation. It is difficult to see how financial statements and
    valuation reports, prepared by Matvil for its own internal purposes and
    involving parts of its business unrelated to Actava, could possibly be relevant
    to the U.S. action. The application judge did not address the relevance of the
    requested information as it related to the breadth of the request.

[73]

Third,
    the relevance of the requested evidence is entirely speculative. In oral
    argument, counsel confirmed that Actava has no knowledge of what the evidence
    will reveal. There is no evidence that Matvils revenues, profits, and value
    increased during the time period requested, and it is hard to imagine that
    evidence showing a decrease would be advanced in support of Actavas claim for
    substantial damages. Evidence anchored in speculation is incompatible with a
    characterization of relevance.

[74]

Fourth,
    the purpose of the production request also undercuts the request. The existence
    of damages and the calculation of those damages are separate matters. Actava
    does not seek production of the evidence to establish that it suffered damages.
    Nor does it plead that its damages are linked to Matvils financial
    performance, profitability or valuation. The production is sought for the sole
    purpose of potentially assisting the damages expert with his preferred
    methodology so as to quantify the extent of any loss.

[75]

Relevance
    is not simply a matter of determining whether there is any possibility that the
    financial information sought from Matvil will assist Actava in calculating its
    damages. As Matvils valuation expert, Andrew Freedman, explained, it is
    important to distinguish between want and need, and that in essentially any
    loss quantification and business valuation engagement, the incumbent financial
    expert will want to obtain data on the financial performance of comparable
    businesses and/or industry information. Often, such comparable industry data is
    not publicly available. This does not render it relevant for the purposes of
    obtaining its production from a disinterested non-party such as Matvil.
    Although the financial performance of unrelated comparable companies may be
    useful to an expert, this does not mean that the documentation is both relevant
    to the issues in dispute in the U.S. action and producible. If it were
    otherwise, an argument could be made that proprietary financial performance and
    valuation evidence be produced by an innocent corporate bystander in every case
    involving a claim for loss of profits by a player in a comparable industry.
    This is not, and ought not to be, the law.

[76]

In
    sum, the application judge was not alive to the issues of breadth and purpose,
    the absence of any true linkage between the referral agreement and the
    productions sought, the relevance to the material issues in the U.S. pleadings,
    and the speculative nature of the request. The application judge erred in her
    determination of relevance. The failure to meaningfully address the relevance
    of the evidence sought constitutes an error in principle warranting appellate
    intervention.

(b)

Public Policy

[77]

Matvil
    also argues that the application judge erred in not finding that public policy
    precluded enforcement of the LoR. Actava and the other Actava respondents
    reject the argument that public policy prohibited production of Matvils
    financial information.

[78]

The
    court will decline to enforce an LoR if enforcement is contrary to public policy:
Perlmutter
, at para. 25;
Treat
    America Limited v. Nestlé Canada Inc.
, 2011 ONCA 560, 282 O.A.C.
    311, at para. 12. There is no defined list of the various public policy
    considerations that may lead a court to refuse to enforce an LoR. That said,
    the focus is on whether granting the request, not the underlying foreign proceeding,
    contravenes Canadian public policy:
Presbyterian Church
,
    at para. 23.

[79]

As
    recognized by this court in
Glegg
, public
    policy considerations include interference with solicitor-client privilege and
    confidentiality concerns. See also
De Havilland
on business confidentiality concerns,
[9]

Westinghouse Electric Corp. v. Duquesne
    Light Co.
(1977), 16 O.R. (2d) 273 (H.C.) on Crown privilege, and
Optimight Communications Inc. v. Innovance Inc.
(2002),
    155 O.A.C. 202 (C.A.), on trade secrets.
[10]

[80]

Accordingly,
    confidentiality concerns may be considered as part of the public policy
    analysis.

[81]

As a
    starting proposition it is contrary to public policy in the circumstances of
    this case to require Matvil to disclose the information sought given its
    sensitive nature. Matvil is a privately-held corporation. According to the
    affidavit filed by Matvils Chief Executive Officer in opposition to the
    application to enforce the LoR, the financial documents and records Actava
    seeks are highly sensitive. They include information about the value of the
    company, its profitability, and the licensing fees paid for content with
    different licensors, information that Matvil has not ever knowingly or
    voluntarily made public.

[82]

It
    is important to stress the nature of the information sought from Matvil.
    Financial performance and valuation evidence strike at the heart of a
    corporation. Nothing could be more confidential and open to abusive use.

[83]

Although
    there is a protective order in the U.S. action, it falls short of effectively
    protecting Matvils financial information. As mentioned, the order, which was
    issued prior to and independently of the LoR, allows Matvil to mark the
    confidential documents or information it produces so that it is accessible only
    to the lawyers and experts in the U.S. action. In addition, Actava agreed to
    additional conditions to limit the sharing of Matvils financial information,
    including that: (i) Actavas general counsel not receive or review it; (ii) it
    not be provided to Actava, Kartina, or any of the other defendants in the
    action, except for their experts and external legal counsel, and (iii) it be
    treated as for attorneys and experts eyes only throughout the entirety of the
    action. The application judge granted Actavas application to enforce the LoR
    subject to the U.S. court making an order incorporating these additional
    conditions, which it now has.

[84]

Nevertheless,
    notwithstanding the expanded protections, the protective order and additional
    conditions do not really address the confidentiality concerns that arise in
    this case. First, while Matvil may mark materials as confidential, its
    designation is not necessarily controlling, as the protective order provides a
    mechanism for parties in the U.S. action to challenge a producing partys
    confidentiality designation. Of course, Matvil is not a party and at best would
    have to attend in the U.S. and attorn to the jurisdiction of the U.S. court to
    even attempt to seek relief.

[85]

Second,
    because Actava seeks to use Matvils financial information as part of a
    single-source comparator analysis, redacting or anonymizing the information in
    public filings or court proceedings will not protect Matvils sensitive
    business information. The application judge stated that this risk was
    speculative and overstated. However, anyone viewing the filings or proceedings
    and the experts opinion will readily identify Matvil as the source of the
    information. The fact that Kartina already knows that Matvil is the comparator
    does not alleviate this concern as suggested by the application judge; on the
    contrary, it exacerbates it.

[86]

Third,
    the protective and additional orders do not relieve Matvil from the prospect of
    overly broad, irrelevant, and unduly burdensome production. See
Optimight
, at para. 31.

[87]

Lastly,
    although not determinative, such production by a non-party would be
    unparalleled in Ontario. Actava cites no case in which LoRs have been enforced
    requiring a non-party to disclose confidential and proprietary information for
    the sole purpose of assisting a party to calculate damages. Indeed, even with
    the broader discovery rules in the U.S., counsel for Actava was unable to refer
    this court to any U.S. authority to that effect either.

[88]

It
    must also be recalled that, at a minimum, Kartina is a competitor of Matvil.
    The risks associated with any such order for Matvil, a non-party to the U.S.
    litigation, far outweigh any hypothetical benefit to Actava. In my view, this
    incursion into Matvils confidential proprietary financial performance and
    valuation information is clearly wrong and contrary to public policy.

(c)

Sovereignty

[89]

This
    brings me to the issue of sovereignty. As the Supreme Court observed in
Pro Swing
, at para. 27, [c]omity is a balancing
    exercise. As explained, comity requires the court to engage in an analysis
    that takes into account the impact of the proposed order on Canadian
    sovereignty and whether justice requires that the LoR be enforced and the
    evidence requested be produced:
Zingre
, at p.
    403;
Connecticut Retirement Plans
, at para. 7;
    and
Lantheus
, at para. 59.

[90]

Here,
    with respect, the application judge did not engage in any real balancing
    exercise and gave no consideration to Canadian sovereignty or whether justice
    required that the LoR be enforced and the evidence requested be produced.
    Indeed, the application judges reasons do not mention sovereignty or justice
    at all, and they fail to focus on the prejudice to Matvil  apart from, without
    any true explanation, summarily dismissing its concerns as overstated and
    speculative. In fairness, although sovereignty and the justice of the request
    permeate the case law relied upon by the parties, they were not the dominant
    focus of the parties submissions. However, LoRs are not simply an enabling
    mechanism for the requesting party; there must be some balancing and
    consideration of whether the order is prejudicial to the sovereignty or the
    citizens of the receiving state:
Zingre
, at
    p. 401.

[91]

As
    we have seen from
De Havilland
and

Lantheus
,
the phrase Canadian
    sovereignty encompasses: whether the LoR gives extra-territorial authority to
    foreign laws that violate Canadian or provincial laws; whether granting the
    request would infringe on recognized Canadian moral or legal principles;
whether the order would impose an undue burden on the
    individual whose evidence is requested; and whether the order would do
    prejudice to that individual
.

[92]

Although
    the
Business Records Protection Act
, a
    blocking statute, highlights the importance of confidential financial records
    to corporations in Ontario, based on the
De Havilland
and
Canadian Imperial Bank of Commerce
decisions, enforcing the LoR in this case does not expressly violate a Canadian
    or provincial law. Rule 30.10 of the
Rules of Civil
    Procedure
, which addresses the need for an order
    for the production of documents from non-parties in proceedings in Ontario,
also
    does not contain an outright prohibition.

[93]

However,
    r. 30.10 can provide guidance on whether the other examples, identified in
De Havilland
and

Lantheus
as being encompassed by the term Canadian sovereignty, have been met.
[11]
Indeed, it is reasonable to consider r. 30.10 in addressing the impact of the
    requested order on Canadian sovereignty:
Pecarsky
,
    at para. 21, citing
Fecht (C.A.)
, at p. 420.
    The application of the rule is not determinative but provides assistance in the
    assessment of whether the requested order is prejudicial to Canadian
    sovereignty.

[94]

As
    noted, r. 30.10 provides that an order of the court is required for an order
    for production from a non-party. The moving party must establish that the
    documents requested are relevant to a material issue in the action and that it
    would be unfair to require the moving party to proceed to trial without having
    discovery of them.

[95]

In
Morse Shoe (Canada) Ltd. v. Zellers Inc.

(1997), 100 O.A.C. 116 (C.A.), at para.
19,
    this court stated that orders under r. 30.10 should not be made as a matter of
    course but only in exceptional cases. And in
Ontario
    (Attorney General) v. Ballard Estate
(1995), 129 D.L.R. (4th) 52
    (Ont. C.A.), at p. 56, this court affirmed that [s]ave in the circumstances
    specifically addressed by the rules, non-parties are immune from the
    potentially intrusive, costly and time-consuming process of discovery and
    production. As the court observed, [b]y its terms, rule 30.10 assumes that
    requiring a party to go to trial without the forced production of relevant
    documents in the hands of non-parties is not
per se
unfair:
Ballard Estate
, at p. 56.

[96]

In
Castel & Walker: Canadian Conflict of Laws
, loose-leaf
    (2020-Rel. 4), 6th ed. (Markham, Ont.: LexisNexis Canada, 2004), Professor
    Walker writes, at para. 6.2(c): Particularly in the case of non-parties, the
    court will be guided by the principle of proportionality, and will be
    disinclined to permit an order that does not reflect the local standards for
    examining non-parties (footnote omitted). See also
Optimight
,
    at paras. 28-31.

[97]

In
    this case, I have no hesitation in concluding that had a comparable request for
    production been made in a proceeding in Ontario under r. 30.10, the order would
    not have been granted. As mentioned, the LoR is extraordinarily broad,
    capturing, among other things, the yearly reports of Matvils revenues and
    profits and all documents on Matvils valuation since 2015.

[98]

The
    application judge did not properly distinguish between evidence relevant to the
    issues in dispute, which Actava already possesses, and evidence for
    quantification of damages using a comparative indicator. The request is
    speculative in nature and the risks associated with Matvil being the obvious
    single-source comparator are significant. Although the application judge
    offered recourse to the U.S. court as a mechanism available to Matvil to
    protect its interests, that would involve Matvil, a non-party against whom no
    allegations of wrongdoing are asserted, having to attorn to the jurisdiction of
    a foreign court in a foreign land. The application judge failed to recognize
    Matvils sovereignty interest and neglected to consider the justice of the
    case. She was not alive to the breadth and purpose of the request, its
    speculative nature, and the absence of linkage between the referral agreement
    and the productions sought. Sanctioning an order of this nature constitutes a
    reviewable error.

(d)

Other

[99]

In
    light of my proposed disposition, there is no need to address the two
    procedural and evidentiary arguments raised in Matvils factum, neither of
    which was pressed in oral submissions.

Disposition

[100]

For these reasons, I
    would allow the appeal.

[101]

As agreed by the
    parties, Actava and the other Actava respondents shall pay Matvil its costs of
    the appeal and the stay motion, fixed in the amounts of $15,000 and $10,000
    respectively, each inclusive of disbursements and applicable tax, and the costs
    below of $90,000 in favour of the respondents are reversed and made in favour
    of the appellant.

Released: February 19, 2021 (J.M.F.)

S.E. Pepall J.A.

I agree. Fairburn A.C.J.O.

I agree. L.B. Roberts J.A.





[1]

This was confirmed in oral argument.



[2]
In contrast,
Matvils expert opines that both the sales
    projection and the before-and-after methodologies could be used to calculate
    Actavas damages and that neither methodology requires Matvils documents to do
    so.



[3]
The issue in dispute is production of documents although the LoR
    also
requested that a representative from Matvil attend a deposition.



[4]

At para. 57 of her reasons, the application judge stated
    that Actava had already received the data from Matvil in the course of their
    previous business relationship. However, counsel for Actava candidly advised
    the panel on appeal that this was a misstatement. It may be that the
    application judge was confusing the documentation relating to Matvils and
    Actavas short-term relationship that had been produced with Matvils financial
    and valuation data that was unrelated to Actava and that was in dispute.



[5]

The court split on whether the judgment in the case ought to
    be enforced, with Deschamps J. writing for the majority holding that it ought
    not to and McLachlin C.J. writing to the contrary.



[6]

Deschamps J. was referring to equitable orders. Presumably,
    her comment would apply to an order made against a non-party.



[7]

I will discuss in more detail later in these reasons the
    factors of relevance and public policy.



[8]

Rule 31.10 of the
Rules of Civil Procedure
was
    enacted in 1985 to permit such an examination.



[9]

Although the court in
De Havilland

could not
    conclude that legitimate confidentiality concerns would be compromised by the
    request in issue in the LoR in that case, it did not conclude that it was an
    error to consider them as part of the public policy analysis.



[10]
Although public policy was not explicitly referred to, the court in
Optimight

recognized that a
    non-party had a privacy interest in its trade secrets.



[11]
These examples are
whether granting the request would
    infringe on recognized Canadian moral or legal principles, and whether the
    request would impose an undue burden on, or do prejudice to, the individual
    whose evidence is requested.


