Proceedings

IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, C. S.5, AS AMENDED
AND
IN THE MATTER OF
BELTECO HOLDINGS INC., TORVALON CORPORATION,
GARY SALTER, ELAINE SALTER, PETER ARTHUR MITCHELL,
RODIKA FLORIKA, GLEN ERIKSON, CHRISTINE ERIKSON,
KAI HOESSLIN, HARCOURT WILSHIRE,
921159 ONTARIO INC., 918211 ONTARIO INC.

HEARING:
April 23, 1997
PANEL:
J.F. Howard, Q.C., Chair
G. Patrick H. Vernon, Q.C. Commissioner
COUNSEL:
Lawrence E. Ritchie, Esq. - OSC Special Counsel
Darryl T. Mann, Esq. - Peter Arthur Mitchell
Allan Sternberg, Esq. - Glen Erikson and Christine Erikson
R. Nairn Waterman, Esq. - Hellen Siwanowicz

 

DECISION AND REASONS(Orally, April 24, 1997)

We propose to give our oral reasons, as we promised yesterday, on the motion to quash the summons to Hellen Siwanowicz. The summons in question (Exhibit50) was dated the 28th of February 1, 1997 and required Ms. Siwanowicz to attend "... at the hearing of this proceeding on March 6, 1997 ..." and to bring withher "... all documents of any kind relating to your affidavit sworn February 18, 1997 ..."

 

That affidavit is before us as part of document 8A, which is Staff's Responding Motion Record and, therefore, part of the Motion Record. That Motion Recordis characterized as being "Response To The Motions Brought By The Respondents, Glen Erikson, Christine Erikson, and Peter Mitchell / March Motions", andis dated March 5, 1997.

Preliminary motions were set to be heard March 6 and 7. Ms. Siwanowicz and her counsel were present, but it was apparent that Staff's motion to quash thatsummons would not be reached. So, as recorded in our decision of March 10, 1997, she was excused and the motion to quash was adjourned to April 2nd whenall remaining preliminary motions were to be dealt with.

We spent April 2nd, 3rd, and 4th on motions for production of documents and requests for viva voce evidence in support of preliminary motions. A differentpreliminary motion was heard by a different Panel of the Commission on April the 8th, 1997, and the decision of that Panel was given April 15, 1997. We haveheard viva voce evidence on one of the preliminary motions relating to the limitation period issue, as directed in our decision of April 4, on April 9, 10, 11, 14,15, and 17, but we have not heard the argument on that motion because counsel wanted transcripts of the evidence. We heard argument on what we have calledthe "rule-making motion" on April 21st, 22nd, and 23rd, and finally yesterday, we also heard argument on the motion to quash the summons to Ms. Siwanowicz,requiring her to give evidence on yet another preliminary motion on which, of course, we have yet to hear argument, but which we have fallen into calling the"systemic bias motion".

Briefly, Mr. Sternberg argues that his cross-examination on the affidavit of Ms. Siwanowicz was not completed and her evidence needs to be completed vivavoce in support of his systemic bias motion. Mr. Ritchie and Mr. Waterman argue that this should not be allowed and they refer to Sections 10(1), 12(6), 15(1)and 23 of the Statutory Powers Procedure Act ("SPPA") and by analogy to Rule 39 of the Rules of Civil Procedure dealing with evidence on motions andapplications.

Under the SPPA, Section 23, the Commission may make orders or give directions as it considers proper to prevent abuse of its processes and may reasonablylimit further examination or cross-examination of a witness where it is satisfied that the examination or cross-examination has been sufficient to disclose fully andfairly all matters relevant to the issues in the proceedings.

Under Rule 39.03, which applies to a person who is not a party to a motion in the civil courts, a person may be examined at the hearing of a motion with leave ofthe presiding judge or officer and attendance may be compelled as for a witness at trial. No leave was sought before the summons in question was issued,although we would not be inclined to find this a fatal defect in the absence of any other consideration.

We have considered the motion to quash having regard to the three cases cited by Mr. Sternberg; namely, Stewart v. Waterloo Mutual Insurance Company, a1977 decision of Mr. Justice Maloney in the Ontario High Court of Justice. A copy was provided to us with no clue as to where it was reported and we have notlooked up the cite. The Xerox machine failed. The second case was Re General Hospital Corporation, a 1986 decision of Mr. Justice Steele in the SupremeCourt of Newfoundland Trial Division, which is produced, "unedited" by some computer system somewhere, but which may be reported at 1986 NJ 262 or 1986St.J. (TD) 553, whatever that may mean. Finally, the third case is Re Babineau, a 1988 decision of Mr. Justice Creaghan of the New Brunswick Court ofQueen's Bench Trial Division, which comes from the same mysterious computer, "unedited", but is identified as New Brunswick Judgments (1988) NBJ 1066,Action M/M/288/88.

Stewart was an appeal from a decision of a County Court Judge in an action between a plaintiff insured and the defendant, his insurer, in which the plaintiff hadissued a subpoena to the president of the insurer to give evidence at the trial. Although he was suspicious that the subpoena might "just possibly have beenissued with the thought in mind that some advantage might be gained by inconveniencing the officers" of the insurer, Mr. Justice Maloney refused to set aside thesubpoena, and I quote:

"... in the absence of material on which I can firmly find that the subpoena was issued for an improper purpose ..."

He pointed out that if the witness attended and added no value, the Trial Judge could penalize the plaintiff for engaging in tactics of harassment. We have nosuch power, I understand, which may or may not be a good thing.

In the General Hospital case, there was an application to the Court to set aside a summons directing the hospital's executive director to appear at a hearingbefore the Labour Relations Board of Newfoundland. The Board had confirmed the summons and counsel requested the Board to set it aside, but this requestwas refused. While confirming that every Court has inherent power to set aside a summons which is an abuse of process, Mr. Justice Steele held that the issue,as argued, was really the admissibility of the evidence sought to be led and refused to reverse the decision of the Board.

Re Babineau involved a summons to the Solicitor General of New Brunswick to attend at a criminal trial of Babineau before a Provincial Court Judge. Mr.Justice Creaghan confirmed the authority of the Court to quash if it appears the person summoned has no evidence material to the issues before the Tribunal, butemphasized that the jurisdiction should be exercised cautiously. That is, it must be clear that any testimony which might be given would in no way be material tothe defence of the accused. Not being satisfied that this had been established, he refused to quash the subpoena.

Mr. Ritchie referred us to Canada Metal Co. Ltd. v. Heap, (1975) 7 O.R. (2d) 185. That is a decision of the Court of Appeal of Ontario, a judgment of ArnupJA for himself and Schroeder and Martin JJA. The case dealt with the predecessors of Rule 39 dealing with examination of witnesses on a motion viva voce withleave of the Court. The Rules, as they then were, are set out at page 186, and if I may say so, are much simpler than the current Rule 39.

The motion concerned had been launched before the Divisional Court seeking prohibition of a proceeding before the local Board of Health on the ground of biasor apprehension of bias of three named members of the Board. Subpoenas had been issued to newspaper and television employees and also to members of theBoard to attend both before a Special Examiner and before the Divisional Court on the hearing of the motion on the merits. The Divisional Court set aside thesubpoenas for viva voce evidence and the subpoenas to non-parties, requiring the applicant to first examine the Board members and then, but only then, if theapplicants, and I quote from page 191:

"... had not elicited to their satisfaction the evidence that they seek ..."

they can move on to the process of examining witnesses who are not parties. In coming to that decision, Mr. Justice Arnup said, at page 191:

"... We think that in the absence of evidence indicating that the attempt to examine representatives of the various media was in itself an abuse of the process ofthe Court, or that the substantive motion was such an abuse the appellants ought not to have been required to try to establish bias or apprehension of bias out ofthe mouths of the very persons whom they allege to have made the statements giving rise to the inference of such bias. Without passing any opinion upon themerits of the appellants' motion for prohibition, we think there is sufficient in the material to indicate that that motion is not frivolous and vexatious. If the resortby the appellants to Rule 230 ..."

And that is the Rule that then applied to parties:

"... subsequently appears to have reached the stage of being vexatious, the Divisional Court always has the power to control the process of the Court and preventthe use of Rule 230 or Rule 231 ..."

That being the Rule that then dealt with non-parties and required leave of the Court for such an examination viva voce on the application. Mr. Justice Arnupcontinues:

"... prevent the use of Rule 230 or Rule 231 in such a manner as to constitute an abuse. The position under Rule 231 is somewhat different from that under Rule230 in that the witnesses may only be examined before the Court which is hearing a motion by leave of that Court. In considering whether leave will be granted,such a Court will always consider whether the evidence sought to be obtained from the proposed examination of witnesses is relevant to the issue raised by themain motion and whether, having regard to the range and number of examinations proposed, the granting of leave would be vexatious to the respondents or anunwarranted imposition upon the proposed witness ..."

We do not find the cases referred to are particularly helpful in the issue before us, except to the extent that any tribunal should exercise caution before exercisingits undoubted jurisdiction to quash a summons issued as part of its own process. We agree with that and we proceed with caution.

Each of the cases referred to us relate to a hearing which was to proceed to deal with the merits of the matters involved. The motion before us, on the otherhand, is a preliminary motion to stay the hearing on the merits and the summons relates to that preliminary motion.

In the motion heard April 2nd and 3rd, and in our decision of April 4, we dealt with our view as to what evidence might be compelled on a preliminary motion.We directed that evidence be tendered as requested on the limitation period motion and rejected a request for evidence from eleven persons viva voce on the biasmotions. Having set out the general test to be applied and the desirability that hearings not become fragmented, we said at (1997) 20 OSCB 1835, at 1836, and Iquote:

"... On the other hand, if it appears that the determination of a matter raised by a preliminary motion may conclude the whole matter expeditiously on relativelynarrow grounds and thus avoid delay and the costs both in dollars and inconvenience of a very long hearing into all the issues, then that is a proper case for thereception of evidence related to that narrow issue which has been raised.

As Mr. Sternberg quite properly said, however, to determine the matter finally on a preliminary motion the evidence must be such as to establish that no triableissue remains to be dealt with or, as Mr. Mann put it, at the end of the evidence on the preliminary hearing or motion, the respondents must be in a position tomove for summary judgment ..."

Then what is the evidence sought to be led on this preliminary motion? Mr. Sternberg has filed an affidavit of Mr. Erikson, some 26 pages in length, containing81 paragraphs and annexing 25 exhibits, the whole measuring three centimetres or one and a quarter inches. Paragraph 37 reads, and I quote:

"... My sister, Hellen Siwanowicz, is a member of the Law Society of Upper Canada and a partner at the firm of Lang Michener. In or about 1990, my sister wasseconded to work in the Corporate Finance Branch of the Commission. I am advised by my sister that the Commission Staff maintains a list of individuals anddealers whom they perceive to be a 'problem' and that my name is on that list. The list is referred to as the 'Shit List'. My sister further advised me that allfilings by my offices to the Commission are flagged for and received special scrutiny and investigation as they are filed and are put to the bottom of the pilewhenever administrative action is requested. The hostility exhibited to me is also exhibited to other solicitors employed by me ..."

Mr. Ritchie has filed an affidavit of Ms. Siwanowicz, which states in paragraph 3, and I quote:

"... While the statements in the first sentence of paragraph 37 of the affidavit [referring to Mr. Erikson's affidavit] are true, the remaining statements as theyrelate to me are not true. I was seconded to the Ontario Securities Commission ('OSC') from my law firm from July 1993 to June 1994 where I worked in theCorporate Finance Branch and in the office of the General Counsel of the OSC. I had not been seconded to or otherwise employed by the OSC prior to thattime. Further, I did not make the statements attributed to me in paragraph 37 and did not then know and currently do not know or believe them to be true ..."

Ms. Siwanowicz has been cross-examined on her affidavit for about one hour and that transcript is also filed.

There was some discussion during argument as to the admissibility of hearsay evidence. Whatever our authority to receive or accept hearsay and whatever itsweight, I observe that Mr. Erikson's paragraph 37 is the purest of hearsay, while Ms. Siwanowicz' paragraph 3 is not. It is tendered to disprove the truth of thehearsay tendered by Mr. Erikson.

We find it unnecessary to determine at this stage, as required by Section 23.2 of the SPPA, whether the cross-examination of Ms. Siwanowicz:

"... has been sufficient to disclose fully and fairly all matters relevant to the issues in the proceeding ..."

because in our view, the proposed evidence does not meet the tests which are applicable in exercising our discretion as to whether a witness should be compelledto appear to give viva voce evidence on a preliminary motion. To the extent that Ms. Siwanowicz' evidence is or may be relevant at the hearing, it clearly raisesserious issues as to the credibility of Mr. Erikson. That issue, in our view, cannot be determined without hearing Mr. Erikson viva voce.

The evidence does not relate to a narrow issue where delay and costs, both in dollars and inconvenience of a long hearing, may be avoided. Nor can we conceivethat the evidence proposed can establish that no triable issue remains. On the other hand, reception of the evidence at this stage can only lead to fragmentationof the hearing and further delay.

For the reasons which I have expressed, we have, therefore, quashed the summons to Ms. Siwanowicz to give evidence on these preliminary motions. It will beapparent from what has been said, however, that this is without prejudice to the right of any party to call Ms. Siwanowicz as a witness at the haring on themerits, if so advised.

Text of oral decision released April 30, 1997.

"J.F. Howard"

"G.P.H. Vernon"