IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, c. S.5, as amended
YBM MAGNEX INTERNATIONAL INC.
HARRY W. ANTES
JACOB G. BOGATIN
KENNETH E. DAVIES
DANIEL E. GATTI
FRANK S. GREENWALD
R. OWEN MITCHELL
DAVID R. PETERSON
MICHAEL D. SCHMIDT
LAWRENCE D. WILDER
GRIFFITHS MCBURNEY & PARTNERS
NATIONAL BANK FINANCIAL CORPORATION
(Formerly known as First Marathon Securities Limited)
HEARING: March 7, 2001
PANEL: Howard I. Wetston, Q.C. - Vice-Chair
Robert W. Davis, FCA - Commissioner
M. Theresa McLeod - Commissioner
COUNSEL: Michael Code - For Staff of the Ontario Securities
Kathryn Daniels Commission
James D.C. Douglas - For R. Owen Mitchell
J.L. McDougall - Deloitte & Touche
ORDER AND REASONS FOR ORDER
R. Owen Mitchell ("Mitchell") has brought a motion for an order directing staff ("Staff") of the Ontario Securities Commission (the "Commission") to apply, pursuant to S. 152 of the Securities Act (the "Act"), to the Ontario Superior Court of Justice for an order: (i) appointing the members of the panel to take the evidence outside of Ontario of George Parker ("Parker") for use in this proceeding before the Commission; and (ii) providing for the issuance of a letter of request directed to the judicial authorities of the jurisdiction in the United States in which Parker is to be found, requesting the issuance of such process as is necessary to compel Parker to attend and give testimony and produce documents and things relevant to the subject matter of this proceeding.
Deloitte & Touche LLP ("Deloitte") conducted a high risk audit for the year ended December 31, 1996 and Parker was the audit manager.
In response to an earlier motion by Staff on January 23, 2001 before the Commission, Deloitte provided an undertaking that it would have two of its audit partners, Stephen Coulter and Michael Purcell, attend to give evidence in this proceeding. At this time Staff intends to call these two witnesses.
Leave was granted to Deloitte to make submissions in respect of this motion.
Deloitte submitted that it was prepared to undertake to produce Parker to give evidence in these proceedings, after the evidence of Coulter and Purcell has been tendered, if, at that time, the Commission determines that Parker's evidence is necessary, thus avoiding the necessity for an application to the court pursuant to S. 152 of the Act.
Staff supported Deloitte's position principally on the basis that the motion was premature and could be brought at a later date on a without prejudice basis after the evidence of Coulter and Purcell has been taken.
Mitchell acknowledged that if the order was issued it was his intention not to take the evidence of Parker until after the evidence of Coulter and Purcell was taken.
We are satisfied that, at this preliminary stage for directions concerning an application pursuant to S. 152, we only need determine whether the prospective application to the court has sufficient merit to be permitted to proceed.
It would appear upon reviewing the motion record that Parker, as audit manager, may have relevant evidence to provide to this Commission, but his attendance has been made conditional by Deloitte.
We have considered the proposed undertaking by Deloitte, and the manner in which it is provided; however, we are mindful of the fact that the application to take Commission evidence relates to the right of a party to call its case at the hearing. Moreover, for the most part, it is the role of the parties to call and examine witnesses.
Accordingly, the motion is granted. The order of Commissioner Howard dated April 24, 2000 is varied to permit the motion herein to proceed on March 7, 2001. Staff is directed to make an application, pursuant to S. 152 of the Securities Act, to the Ontario Superior Court of Justice for an order:
(i) appointing the members of the hearing panel to take the evidence outside Ontario of George Parker for use in this proceeding before the Commission;
(ii) providing for the issuance of a letter of request directed to the judicial authorities of the jurisdiction in which Parker is to be found, requesting the issuance of such process as is necessary to compel Parker to attend before the persons appointed under clause (i) to give testimony on oath or otherwise and to produce documents and things relevant to the subject matter of this proceeding;
(iii) prescribing that the procedural and evidentiary rules of Ontario will apply to the examination of Parker, to the extent permissible by the laws of the jurisdiction in which Parker is to be found; and
(iv) providing that the evidence of Parker shall not be taken until after the evidence of Coulter and Purcell have been taken in these proceedings.
March 8, 2001.
Howard I. Wetston, Robert W. Davis, M. Theresa McLeod