Source: https://www.osc.gov.on.ca/en/10646.htm
Timestamp: 2019-04-19 11:19:11+00:00

Document:
Decision and Reasons: In the Matter of YBM Magnex International Inc. et al.
A Notice of Hearing, dated November 1, 1999 was issued to the following 13 partiespursuant to s.127 of the Securities Act (the "Act"): YBM Magnex International Inc. (YBM),Harry W. Antes, Jacob G. Bogatin, Kenneth E. Davies, Igor Fisherman, Daniel E. Gatti,Frank S. Greenwald, R. Owen Mitchell, David R. Peterson (the "Applicant"), Michael D.Schmidt, Lawrence D. Wilder, Griffiths McBurney & Partners, and National Bank FinancialCorp, formerly known as First Marathon Securities Limited.
f) that Wilder made statements to Staff of the Commission during the course ofStaff's review of YBM's preliminary prospectus that, in a material respect andat the time and in the light of the circumstances under which the statementswere made, were misleading or untrue or did not state a fact that wasrequired to be stated or that was necessary to make the statements notmisleading; specifically, statements contained in a letter from Wilder to Staffdated July 4, 1997 concerning the results of due diligence conducted inrespect of YBM.
A Notice of Motion filed by Mr. Lenczner on behalf of Mr. Peterson, dated November 22,1999, seeks orders compelling extensive production of documents and other materials, aswell as the removal of Mr. Naster as litigation counsel for Staff due to his role in thedetermination to receipt the final prospectus dated November 20, 1997. Mr. Lencznerstated in his factum that the basis for recusal is that Mr. Naster will be a witness in thehearing.
Mr. Lenczner did not argue Mr. Naster's partiality as a basis for recusal. Our review of themotion record and law does not substantiate that the Applicant should succeed on this basisin any event. At the conclusion of his reply argument on the motions, Mr. Lencznersuggested that it was doubtful that he would subpoena Mr. Naster. However, should hesubpoena Mr. Naster, Mr. Lenczner indicated that he did not want to be held accountablefor the disruption of the hearing. Mr. Code submitted that counsel for Staff would notsubpoena Mr. Naster.
A number of other respondents brought motions for production and particulars. OnlyMr. Peterson seeks to have Mr. Naster recused. This decision and reasons for decisiononly pertain to the motion for removal, not to any other matter.
(m) The circumstances surrounding the issuance of the Notice of Hearing,including considerable public criticism of Staff's decision to issue areceipt for the 1997 prospectus, create a reasonable apprehension ofbias on the part of the Commission in the outcome of this proceeding.For that reason, the Commission should be prohibited from proceeding.
(n) The conduct of the Commission Staff's investigation of this matter hasnot been fair and impartial.
Despite the timing and breadth of this court application, we felt it necessary to proceed withour decision and reasons regarding the recusal motion at this time.
It is not surprising that the Courts have resisted motions where counsel seeks to callopposing counsel as a witness and have, accordingly, discouraged the practice of counseltestifying; Essa Township v. Cuergis (1993) 15 O.R. (3d) 573 at 583 (Ont. Ct. Div. Ct.); R.v. St. Laurent (1984), 11 C.C.C. (3d) 74 at 76 (Que. C.A.); R. v. Baxter 1975 C.C.C. (2d)96 at 117 (Ont. C.A.). While such motions appear more regularly in civil or criminal matters,it would seem to us that similar principles apply in an administrative law context.
(iii) It must not be premature that counsel be recused. That is, counsel should notbe removed at the early pre-trial stages when the case is still undevelopedand it cannot be foreseen with certainty whether the high standards ofrelevance and necessity will emerge or not at the hearing; Essa Township,supra at 582.
Counsel for Staff, Mr. Code, submitted that there is apparently no reported case, nor a casethat has not been reversed on appeal, where the defence has ever succeeded in removingCrown counsel on the basis of being a witness. Counsel for the Applicant did not direct usto any contrary authority.
While Mr. Code and Mr. Lenczner have very different views regarding what is the essentiallis between the parties, we are not persuaded, at this time, that it is probable that Mr.Naster has relevant evidence to give in connection with this matter. In this context, we viewrelevance to mean evidence that tends to make the existence of any fact in issue moreprobable or less probable than without the evidence. Consequently, the Applicant fails tomeet the test of probable relevance.
There is a persuasive burden on the lawyer who seeks to force opposingcounsel to go into the witness box and relinquish his role as counsel. Thepersuasive burden is to show relevance and necessity.
More recently, in R. v. Brown et al (No. 1), supra, at 44-45, Trafford J. held that there wasno necessity to call the Crown as a witness where other individuals could testify as to thesame matter.
Lastly, although Ms. Kingston has relevant evidence to offer to the court asa result of the interviews of November 15 and 28, 1994, there is nocompelling or legitimate need to call her as a witness. Both DetectiveSneddon and Robert Charley are available to testify at trial. Both of themcan give evidence of the critical aspect of those meetings, namely, theidentification of Francis and the reason for the change since April 22, 1994.If, contrary to the evidence called on this application, other aspects ofthose interviews become material, those witnesses may, in somecircumstances, be able to refresh their memories from the notes of Ms.Kingston. See R. v. Carosella (1995), 102 C.C.C. (3d) 28 (Ont. C.A.) andR. v. Buxbaum (1989), 70 C.R. (3d) 20 (Ont. C.A.). Alternatively, theCrown may make admissions of fact to obviate any necessity to call her totestify.
We are not persuaded that Mr. Naster's knowledge concerning YBM is not shared by otherswho can testify, should the circumstances require it. If Staff's knowledge becomes a factin issue in this matter, the director, being the decision maker under s. 61 of the Act, andother Staff, past and present, have significant knowledge of the facts associated with theissuance of receipt to YBM. In addition, we are not persuaded that Mr. Naster's state ofknowledge could not be stipulated or admitted based on the materials disclosed in the sixAffidavits filed in the Divisional Court. Consequently, the Applicant has not met this test.
As discussed in the Carlson decision, an application to remove counsel canbe made to the trial judge when it is certain there is a problem. In this caseMr. Green may, or may not be, subpoenaed to testify. Concessions oradmissions may be made which will obviate the need to call him as awitness. The evidence he could give may be readily obtainable from otherwitnesses. As issues are developed, or resolved during trial, his evidencemay not be required at all. A trial judge will be in a much better position todetermine if his firm should be disqualified.
We see no reason why this finding should not be applied herein. Staff counsel should beremoved only in clear cases. Mr. Code indicated that he will not subpoena Mr. Naster andMr. Lenczner indicated that it is doubtful that he will subpoena Mr. Naster. Further, thereis an insufficient basis for us to make a determination as to relevance at this time.Accordingly, it is only at the hearing that the necessity of Mr. Naster's evidence can betested. We are of the opinion that this motion is premature.
Mr. Naster did have a role in the pre-allegation stage and has been involved in this matteras a member of the enforcement branch. Such a Staff role emanates from theresponsibilities of the Commission in the administration and enforcement of the Act. AsMadame Justice L'Heureux-Dubé stated in Brosseau v. Alberta Securities Commission, 1 S.C.R. 301 at 310, "In assessing the activities of administrative tribunals, the courtsmust be sensitive to the nature of the body created by the legislator."
For the above reasons, the motion to remove Mr. Naster as senior litigation counsel in thismatter is dismissed.

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