United Food and Commercial Workers v. Simard, 2012 ABQB 615

Court of Queen ’ s Bench of Alberta Citation: United Food and Commercial Workers v. Simard, 2012 ABQB 615 Date: 20121004 Docket: 1201 11061 Registry: Calgary IN THE MATTER OF A LETTER OF REQUEST FROM THE UNITED STATES DISTRICT COURT, WESTERN DISTRICT OF OKLAHOMA TO OBTAIN DEPOSITION TESTIMONY AND DOCUMENTARY EVIDENCE Between: United Food and Commercial Workers Union Local 880 - Retail Food Employers Joint Pension Fund Applicant - and - Timothy Simard, James Wallace, and National Bank of Canada Inc. Respondents _______________________________________________________ Reasons for Judgment of the Honourable Chief Justice Neil Wittmann _______________________________________________________

Introduction [ 1 ] A letter of request for International Judicial Assistance (“the LOR”) from the United States District Court for the Western District of Oklahoma was sent to the Court of Queen’s Bench of Alberta, in Calgary, requesting that this Court direct and order the Respondent, Timothy Simard (“Simard”) to appear to answer questions upon oral examination and for the National Bank of Canada Inc. (“National Bank”) to produce certain documents. [ 2 ] The proceedings in Oklahoma are brought directly or indirectly on behalf of the Applicant as lead Plaintiff in a class action against Chesapeake Energy Corporation (“Chesapeake”) and Officers and Directors of Chesapeake. [ 3 ] The details of the Amended Complaint, for violation of United States Federal Securities Laws, include allegations that Chesapeake, in a July 2008 public offering of 25 million shares of its common stock at $57.25 per share, negligently prepared its prospectus, resulting in untrue statements of material fact or omissions which mislead shareholders and caused them damage. [ 4 ] Further details of the Amended Complaint indicate that through hedge contracts made between Chesapeake and counter- parties, to protect itself against fluctuations in the price of its natural gas production, one of the material omissions was the failure to disclose the nature and extent of the “knock-out” or “kick-out” provisions in the hedging agreements.

A kick-out provision is stated to be the elimination of the counter-party’s exposure if the price of natural gas falls below a specified price, thus eliminating the hedge protection. It is alleged the value of Chesapeake shares purchased by the Plaintiff and others in the class declined substantially when the nature and extent of the kick out provisions became known to the market. Damages are claimed. The nature and purpose of the proceedings in the United States District Court and a

summary of the facts are detailed in the LOR. Contents of the LOR [ 5 ] The LOR refers to allegations that when the particulars of the false or misleading statements and omissions were revealed to the market, Chesapeake stock price declined markedly. Reference is made to the nature and extent of Chesapeake’s natural gas derivative contracts containing the “knock-out” provisions referred to above, also known as “kick-out” provisions.

It is stated that at times surrounding the offering, analysts researched and commented on these matters, among them Simard and James Wallace of National Bank Financial. [ 6 ] In evidence is Appendix 1, dated August 20 th , 2008, to a National Bank Financial Daily Bulletin (“the Report”) authored by Simard and James Wallace (”Wallace”)on behalf of National Bank Financial. The LOR states that the evidence sought is “highly relevant” to the action because the Report concerns “what the market knew about Chesapeake and what it found significant is central to this action”.

The LOR states, that the Applicant reasonably believes that this evidence and the foundation for its admission is in the exclusive possession of National Bank Financial, Simard and Wallace.

The LOR also states, that the Applicant attempted to obtain the evidence without the assistance of this Court and was refused by General Counsel for National Bank Financial. [ 7 ] Although the LOR indicates that the United States District Court requests that sworn deposition testimony of Simard and Wallace be made available, the Applicant, through counsel, advised the Court that only the sworn deposition testimony of Simard and documentary evidence from National Bank, if available, is sought. National Bank is the parent of the National Bank Financial.

It is stated in the LOR that the evidence sought is for use in the trial of the action and is necessary for the just and proper disposal of the proceedings. [ 8 ] In addition to the Report, also contained in the application record is the Affidavit of James Caputo, United States counsel for the Applicant. Filed also is the Affidavit of Timothy Simard opposing the application and the Affidavit of Rohan Haté, student at law with the Applicant’s Canadian law firm, in support of it. The Report

[ 9 ] The central document that the Applicant is seeking appears to be Appendix 1 to a Report entitled “The NBF Daily Bulletin Industry Comment” published by the National Bank Energy Derivatives Group on August 20 th , 2008. Appendix 1 relates to a comment at page 8 of the commodity update with respect to natural gas which says: Noteworthy is a recent move by Chesapeake Energy, a major producer in the Haynesville shale gas play, to shut-in 100 mmcf/d of production and curtail $3.2 billion or 17% of its estimating drilling capex budget through to year-end 2010.

It cited unusually weak wellhead gas prices as its reason – something which could motivate other producers to follow suit. However, as we show in the Appendix to this comment, there is something that suggests that this may be an isolated move by Chesapeake – i.e., a function of its knock-out hedging program. [ 10 ] Appendix 1 is entitled “Analysis of Chesapeake Energy (CHK) hedging activity”.

The appendix indicates that it is not a normal practice to “dissect” an individual energy company’s hedging activities but in the case of Chesapeake, there are three reasons why Chesapeake’s hedging program is of interest to the clients of National Bank Financial.

They are: • [Chesapeake] is arguably the poster child in the US marketplace with respect to the explosion in production from natural gas resource plays, evidenced by the fact that their US domestic gas production was up 26% year-over-year in Q2; • [Chesapeake] employs a very bold hedging strategy, from a volume, term and instrument perspective; • The nature of some of the instruments used by [Chesapeake] may at some point have an impact on gas market price behaviour. [ 11 ] Appendix 1 then goes on to note that the information contained “below” is extracted from the company’s 2 nd quarter “2008 SEC 10Q filing” and their “Corporate Outlook document as of July 31, 2008.” There follows a description of a knockout swap as follows: A knockout swap can be described as an aggressive instrument within a producer’s risk management portfolio (some might even call this an understatement).

In return for being able to enter into a fixed price swap at an above-market price, the producer runs the risk that all of the price protection disappears for each month of the swap if the index price underlying the swap settles below the knockout level. For example, assume that the NYMEX HH calendar 2009 swap is currently trading at $9.00. A producer might be able to enter into a fixed price swap through 2009 at a fixed price of $9.60 with a “knockout” at $6.00. If the monthly index price in any given month settles at or below $6.00, the swap counterparty’s obligation to the producer disappears for that month.

If the NYMEX settlement price for a given month is $6.05, the counterparty owes the producer $3.55 per MMBtu ($9.60 - $6.05). However, if the NYMEX price settles at or below $6.00, the counterparty owes nothing to the producer – all the downside protection disappears. The loss of the protective value of the swap occurs at a time when the producer arguably is most in need of the protection. None of our producer clients currently employs this hedging mechanism.

However, [Chesapeake] has very significant volumes tied to this structure – as much as 36% of their forecast gross output in 2009 is hedged using these knockout swaps. Their disclosure statements indicate that the knockout strikes range between $5.45 to $7.50 – no further detail is given with respect to specific knockout levels and the volume affected at these points (although one might think investors would be interested in this information). The average swap prices (although not broken out between generic swaps and knockout swaps) are $8.98 for the last six months of 2008, $9.71 for 2009 and $10.02 for 2010.

Position of the Parties [ 12 ] At the hearing, each party presented the Court with a Draft Order and the Applicant narrowed the scope of the LOR. The Respondent opposed the granting of any Order by this Court for either an oral deposition or the production of documents. The positions are as follows:

a) The Applicant The Applicant’s argument is that the Efficient Market Theory, a doctrine said to be recognised in the United States, but not in Canada, is central to the Plaintiffs’ case. This theory, asserted by Mr. Caputo as being necessary to the Plaintiffs’ allegation, is that the market

reacts to all available information. It goes to the phraseology in the LOR as to “what the market knew”.

It is asserted that Simard knew the market and can give evidence about what the market knew. [ 13 ] The Applicant also argues that Simard cannot be qualified as an expert pursuant to the United States Federal Rules of Civil Procedure; that the oral deposition of Simard would be limited to 2½ hours; that Simard would be asked questions as to his own educational background and experience, be required to state what documents he relied on in order to prepare Appendix 1, and whether he has any notes or documents in addition to those publicly available, as referred to in the appendix.

The Applicant does not wish to examine Wallace, having satisfied itself that Wallace did not take

part in the preparation of Appendix 1. The Applicant does wish to know why Simard commented as he did and states that in order to admit the Report into evidence, it would be necessary to comply with Rule 803(6) of the United States Rules of Federal Procedure, set forth in Rohan Haté’s Affidavit, which states as follows: Rule 803. Exceptions to the Rule Against Hearsay – Regardless of Whether the Declarant Is Available as a Witness The following are not excluded by the rule against hearsay, regardless of whether the declarant is available as a witness:

(6) Records of a Regularly Conducted Activity. A record of

an act, event, condition, opinion, or diagnosis if: (

A) the record was made at or near the time by – or from information transmitted by – someone with knowledge; (

B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit; (

C) making the record was a regular practice of that activity; (

D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and (

E) neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness. [ 14 ] In the Applicant’s proposed Order, requested to be produced is the Report and Appendix 1 and all documents used or reviewed by Simard in the preparation of Appendix 1.

Further, the oral examination is to be limited to Simard’s educational background, training and work experience up to and including his work with National Bank Energy Derivatives Group on August 20 th , 2008; the circumstances under which Appendix 1 was written and whether it was written in the ordinary course of Simard’s business; why it was written; the information and documents used; the basis for the statements made including questions necessary to clarify the terms used and confirmation that Simard reasonably believed the statements in the Report were accurate at the time it was made.

Other administrative matters are dealt with in the proposed Order. (

b) Simard and National Bank [ 15 ] Simard and National Bank take the position that this is not a proper case to honour the LOR at all. Their argument proceeds on the basis that Simard has no personal knowledge of the July 2008 Chesapeake public offering that is the subject of the Oklahoma litigation, nor does Simard have any non public information concerning Chesapeake that could not otherwise be obtained from public sources.

Simard’s Affidavit, filed in opposition to the application, also indicates Chesapeake was not a client of National Bank in 2008, that he is not an employee of National Bank as a research analyst, has no position with the research department of National Bank or National Bank Financial and has no personal knowledge of Chesapeake’s offering in July 2008. He also deposes that he has no copies of any records used in the preparation of Appendix 1 nor any personal knowledge of Chesapeake’s counter-party exposure to Lehman Bros.

[16] Simard and National Bank acknowledge the statutory framework for the application, which is common ground to both parties.They emphasize the lack of any connection between National Bank and Simard on the one hand and the parties to the litigation on theother. They also acknowledge that the comity of nations principle is an active consideration, as is the discretion of the receiving Court. [17] Both parties detail the relevant factors this Court is obliged to consider in almost identical terms as follows: (

a) whether the evidence sought to be obtained is relevant; (

b) whether the evidence sought to be obtained is necessary for a trial or for discovery; (

c) whether the evidence is otherwise available through some other source; (

d) whether any documents requested have been identified with reasonable precision; (

e) whether there is any public policy reason to refuse the request; and (

f) whether the LOR requests an activity which would place an undue burden on a proposed witness or witnesses, having regard tothe nature of the testimony requested. [18] At the oral hearing, the Court noted that there seemed to be no disagreement between the parties on the statutory frameworknor on the factors to consider derived from the case authority. The Statutory Framework and Authorities [19] The case authorities cited by the parties included: AstraZeneca LP v. Wolman, (ON SC), [2009] O.J. 5344(Ont. S.C.J.); Connecticut Retirement Plants & Trust Funds v. Buchan, 2007 ONCA 462 , [2007] O.J.

No. 2492 (C.A.); CSIWireless LLC v. Harris Canada Inc. [2003] A.J. No. 931 (Alta. Q.B.); District Court (United States of American) v. Royal AmericanShows, Inc., (SCC), [1982] 1 S.C.R. 414 (S.C.C.); Lafarge Canada Inc. v. Khan, [2008] O.J. No. 701 (Ont. S.C.J.);Ontario Public Service Employees Union Pension Trust Fund (Trustees of) v. Clark, (ON SC), [2005] O.J. No. 3515(Ont. S.C.J.), aff’d, (ON CA), [2006] O.J. No. 2475 (Ont. C.A.); Presbyterian Church of Sudan v. Talisman EnergyInc., 2005 ABQB 920 , [2005] A.J. No. 1808 (Alta. Q.B.); R. v. Zingre, (SCC), [1981] 2 S.C.R. 392 (S.C.C.);Richardson v.

Shell Canada Ltd., [2012] A.J. No. 280 (Alta. Q.B.); Scienton Technologies Inc. v. Canadian Imperial Bank of Commerce,2009 CarswellOnt. 3267 (Ont. S.C.). The statutes cited by the parties were: Canada Evidence Act, R.S.C. 1985, c.C-5; Alberta EvidenceAct, R.S.A. 2000 c.A-18; The Alberta Rules of Court (“A.R.C.”) Alta. Reg. 124-2010. [20] These statutory provisions as indicated, include the Canada Evidence Act and the Alberta Evidence Act. The CanadaEvidence Act,

section 43 states as follows: Foreign courts 43. This Part applies to the taking of evidence relating to proceedings in courts out of Canada. Order for examination of witness in Canada 46.

(1) If, on an application for that purpose, it is made to appear to any court or judge that any court or tribunal outside Canada, beforewhich any civil, commercial or criminal matter is pending, is desirous of obtaining the testimony in relation to that matter of a party orwitness within the jurisdiction of the first mentioned court, of the court to which the judge belongs or of the judge, the court or judgemay, in its or their discretion, order the examination on oath on interrogatories, or otherwise, before any person or persons named in theorder, of that party or witness accordingly, and by the same or any subsequent order may command the attendance of that party orwitness for the purpose of being examined, and for the production of any writings or other documents mentioned in the order and of anyother writings or documents relating to the matter in question that are in the possession or power of that party or witness. [21] Similarly, the provisions of the Alberta Evidence Act include the following:

56(1) When, on application to the Court of Queen’s Bench, it is made to appear that a court or tribunal of competent jurisdiction in a foreign country has by commission, order or other process authorized the obtaining of the testimony, in or in relation to any action, suit, proceeding or inquiry pending in or before the foreign court or tribunal of a witness out of its jurisdiction and within the jurisdiction of the Court of Queen’s Bench, the Court may order the questioning of the witness before the person appointed and in the manner and form directed by the commission, order or other process.

(2) The Court by that order or by a subsequent order, (

a) may command (

i) the attendance of a person named in the order for the purpose of being questioned, or (ii) the production of any writing, document or thing mentioned in the order, and (

b) may give all directions with regard to the time and place of the questioning and all other matters connected with it that seem proper.

(3) The order may be enforced and any disobedience to it punished in like manner as the case of an order made by the Court of Queen’s Bench in an action pending in the Court.

(4) A person whose attendance is so ordered is entitled to the same allowances and payment for expenses and loss of time as on attendance at a trial in the Court of Queen's Bench.

(5) A person questioned under the commission, order or other process (

a) may object to answer and may refuse to answer any questions that the person would be entitled to object to or refuse to answer in an action pending in the Court of Queen's Bench, and (

b) shall not be compelled to produce at the questioning any writing, document or thing that the person could not be compelled to produce at the trial of such an action.

(6) When the commission, order or other process or the instruction of the court accompanying it directs that the person to be questioned affirm or be sworn, the person appointed to question him or her has the authority to administer the oath to him or her or take his or her affirmation. [ 22 ] ARC 6.24 states as follows: Assistance to judicial authorities outside Alberta 6.24 If a judicial authority in another jurisdiction requests or authorizes a request to be made to the Court for the Court’s assistance in obtaining evidence from a person in Alberta for use in a court or other proceeding outside Alberta, the Court may make any order that it considers appropriate, including any one or more of the following: (

a) requiring a person to attend for questioning, under oath, which may take the form of cross-examination; (

b) requiring a person to produce records; (

c) requiring a transcript of the questioning to be prepared; (

d) specifying the manner in which questioning is to be conducted.

[ 23 ] The Court agrees with the factors enumerated in paragraph 17 as the proper basis for analysis. [ 24 ] The arguments of the parties will be detailed according to the factors and application of the statutory framework and case authorities in the analysis that follows. Analysis 1. Relevance [ 25 ] The concept of relevance in this Court is a criterion for admissibility of evidence. To be admissible, evidence must be relevant. Evidence is relevant if it tends to prove a fact in issue.

The Applicant submits evidence is relevant if a person has “unique and specific knowledge” relating to the complaint: Ontario Public Service Employees Union Pension Trust Fund , para. 71. The Applicant says that the nature and extent of Chesapeake’s hedging with kick-out / knock-out provisions is “plainly relevant” both to a trial and

summary judgment motion. The Applicant says that Simard, according to Appendix 1, undertook a significant commentary, whether he is called a research analyst or analyst, or otherwise; that they do not seek to examine him for his expertise but merely what he did as a matter of fact, when he did it and on what basis it was done. Simard and National Bank state that Simard’s opinion is of no relevance to the United States action unless Simard is qualified as an expert to give expert evidence at the trial.

The Applicant also cites Connecticut Retirement Plans for the proposition that the evidence only need be “likely relevant”. That is not what Connecticut Retirement Plans stands for. It stands for the proposition that the evidence must be relevant and that the standard of proof is balance of probabilities: para. 10. [ 26 ] During the oral hearing Mr. Caputo and Mr. McPhadden argued that the Applicant would rely on the Efficient Market Theory to establish its case. Aside from the fact that the Efficient Market Theory seems to be the subject of some controversy in the United States.

See: “Proving Markets Inefficient: The Variability of Federal Court Decisions on Market Efficiency in Cammer v. Bloom and Its Progeny”: 10 U. Miami Bus.L.Rev. 303 2002.

The definition and theory seems to have arisen from case authority relieving a Plaintiff from proving fraud on the market by suggesting that the price of a marketable security is the product of all information about it, including false information. [ 27 ] As I understand the Applicant’s position, when material omissions on the kick-out provisions of Chesapeake’s hedging contracts were revealed to the market, including the volumes that may be affected, the market price fell and the Plaintiffs suffered damages.

Thus, under the Efficient Market Theory, the price of the stock was higher because it contained false information about the nature and extent of the kick out provisions and when that was corrected, the price fell. [ 28 ] In addition, the LOR itself states that the evidence sought is relevant. To the extent that some deference is owed by this Court to the foreign Court’s determination, this Court ought not to parse the definition of relevancy. The kick-out or knock-out provisions and the relationship to the lower price of Chesapeake stock and its non-disclosure or disclosure is relevant if it affected the market.

That is the Efficient Market Theory and it is not for this Court to say that that theory cannot be relied on in this case. This Court, however, is aware that there is controversy about the theory. Nonetheless, the evidence sought is relevant. 2. Necessity [ 29 ] The Applicant, relying on Presbyterian Church, para. 46, argues that Simard, in Appendix 1, noted that Chesapeake did not divulge detailed information with respect to specific knock-out levels and the volume involved.

Accordingly, the Applicant says Simard’s report is a logical nexus between the dispute underlying the United States litigation, that is whether Chesapeake failed to disclose the nature and extent of the particulars of the hedge contracts and whether this failure caused class members to suffer damages. [ 30 ] Against this, Simard and National Bank say that there is no logical nexus between the information Simard has and the litigation being pursued, that it is nothing more than “an ephemeral anchorage” as described in Royal American Shows at page 6.

The same sentence in Royal American Shows, referring to “an ephemeral anchorage” contains a statement that comity dictates that a liberal approach ought to be taken to a response to a letter of request for judicial assistance. To suggest that this evidence is subject to a temporary or transitory anchorage, does not, in my view, give enough weight to the fact that Simard’s commentary, expert or not, arguably affected the market for Chesapeake shares. Simard and National Bank say that any number of experts are available to give an opinion, as did Simard and that they should be qualified.

Therefore his evidence is not necessary.

[ 31 ] Without demeaning expert testimony in our Courts, or for that matter American Courts, it is well known that some experts are colloquially known as “hired guns” because they are partisan. Simard gave an opinion on the issue at a time relevant to the changing market price for the shares of Chesapeake, not after the event. Moreover, if his evidence is admitted, it bears the imprimatur of an “analysis ... courtesy of the National Bank Energy Derivatives Group”. As deposed to by and in fact, as argued by, Simard and National Bank, Simard had no interest in the United States litigation and is not a party.

His evidence, if admitted, may therefore be regarded as more objective than an expert hired by one party or another to the litigation. In that sense, I find that the evidence sought is necessary for the trial. 3. Evidence Available Through Some Other Source [ 32 ] The Applicant argues that for evidence to be not otherwise available means that it must be found that there is other evidence “of the same value”: Connecticut Retirement at para. 19. Nothing before me indicates that there were other analysts giving commentary or opinion of the kick-out / knock-out provisions in Chesapeake hedge contracts in August 2008.

It is also stated in Connecticut Retirement that this criterion cannot be applied narrowly. [ 33 ] Simard and National Bank, in dealing with this factor, simply state that the Report and Appendix 1 is available and that what the Applicant seeks, goes beyond authentication and is intended to obtain opinion evidence from Simard, which in turn can be obtained from any number of experts. [ 34 ] I accept the argument of the Applicant in this regard. There is nothing before me that indicates that there is other evidence of “the same value” available. 4.

Reasonable Precision [ 35 ] This criterion is argued by the Applicant in terms of the oral evidence sought from Simard to have been “precisely identified” in terms of Simard’s “evidence” in relation to the Report and Appendix 1. That is neither precise nor reasonable. I will deal further with the scope of the LOR including its alleged reasonable precision later in these Reasons. Simard and National Bank references this criterion to documents and indicates that Simard says he has no copies of records: para. 4 of Simard’s Affidavit.

Further, they say that what is sought is an extensive examination of Simard in relation to “the basis for the respective statements made”. They simply state this would be overly broad and extensive and would be opinion evidence. 5.

Public Policy [ 36 ] Cited by the Applicant is Zingre at page 401, where the Supreme Court of Canada stated “...[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.” The public policy reason to refuse the request asserted by Simard and National Bank is that to allow the request would allow any Canadian citizen that is “a true stranger to litigation in a foreign court” to be examined merely because they happened to have expressed an opinion on a matter later litigated in a foreign court, that it would expose every writer of an opinion in any discipline to be exposed to examination where there is no connection with the foreign proceedings. [ 37 ] I am not of the view that that is what “contrary to public policy” means as referenced in the authorities.

It is a floodgates argument. The examples cited in Zingre by the Supreme Court of Canada referenced to the interests of sovereignty of a Canadian citizen have come into conflict with the principle of judicial comity.

A number of situations and cases are cited at page 401 of Zingre include: where a document production request was vague and general; when discovery was sought against an individual, not a party to the litigation, in violation of local laws of civil procedure; when the main purpose of the examination was a “fishing expedition”; where the granting of the Order would place the person to be examined in the position of having to commit an offence such as a violation of the Criminal Code ; or where the person whose attendance for examination is sought is an accused in pending criminal proceedings in the requesting court.

[38] Zingre was decided in 1981. In Connecticut Retirement there is a general reference to a public policy concern when “theconstitutional fundamental rights of the proposed witness” are affected. [39] This is not 1981. We are now some 31 years later. There is now a world economy, world trade and many examples of UnitedStates/Canada cross-border professional activities, including those involved in capital markets.

No evidence was tendered in thisapplication as to the extent of National Bank or National Bank Financial’s activities in the United States or the audience that the Reportand Appendix 1 received. [40] It is to be remembered that the primary document in issue, Appendix I to the Q4 2008 commodity update, is attached to areport detailing oil and gas commodity prices. Forecast US GPD growth and GPD versus crude product consumption in the US, UScommercial crude and product inventories, global heavy oil differentials, Nymex gas price, regional gas price, total US gas storage, USgas rig counts, are referred to.

The point is that the tenor of the document, including Appendix 1, in no way suggests that it is beingprepared solely for a Canadian or Alberta audience. If the Report was intended for broad circulation that is industry wide, its focus couldbe said to be North America and so too its audience.

I see nothing that would contravene public policy simply on the basis Simard andNational Bank are “strangers to the litigation.” [41] Beyond this, I am persuaded by the Applicant that it must lay a foundation for the admission into evidence of Appendix 1 inthe United States litigation, pursuant to the terms of Rule 803 referred to above. It was argued that laying the foundation foradmissibility is quite different from authentication. It would seem that the Simard and National Bank are not opposed to that conceptshould an oral examination and document production be granted.

Rather, their main concern is that if granted, it ought to be granted on anarrow basis. In fact, the brief submitted by Simard and National Bank contains a Draft Order, if the court were inclined to grant theLOR, which in effect substantially narrows the scope of Simard’s questioning.

It is suggested that it be limited to questions concerning his educational background and work experience up to and including August 20th, 2008 and questions as to what information Simard hadavailable to him about Chesapeake’s hedge contract when he completed Appendix I and confirmation that Simard wrote the report. [42] That Draft Order also states that if objectionable questions are asked, they be returned to this Court for determination as towhether they are to be answered, rather than following the practice in the United States where the objection is lodged but the questionmust be answered in any event. [43] Also requested is reimbursement for copying or scanning and expenses associated with complying with the terms of theOrder, a direction that the documents produced and evidence given by Simard shall be used only for the purpose of the United StatesDistrict Court litigation and shall otherwise be subject to confidentiality and the deemed undertaking extant in a Questioning (oraldiscovery) in litigation in Alberta: Wirth Ltd. v.

Acadia Pipe & Supply Corp., (AB KB), [1991] A.J. No. 342 (Q.B.). Decision [44] Having regard to all the factors to be considered by this Court and the statutory framework, I am convinced that a limitedresponse to the LOR is appropriate. Most, if not all, of the factors weigh in favour of granting the LOR. The scope of the examination isanother matter. Of note, is the reference in the Caputo Affidavit itself, that states in para. 20: The scope of discovery identified in the letter of request is broadly worded, in that it is drafted in boiler plate language commonly used inlitigation in the United States.

In reality, the scope of discovery that is being sought is considerably narrower. [45] Courts in this country ought not to have to deal with “boiler plate” language in an LOR unless it is intended to be acted on. Inmy view, that demeans the respect that international comity between Courts is intended to bestow. It also puts the receiving Court in aposition of having to narrow or limit the scope in some cases, such as this, where the Applicant itself agrees to do so. That is the positionthis Court is in, having determined that the LOR ought to be respected, but it’s scope narrowed.

Having considered the arguments withrespect to the scope of the LOR and what is requested, including the draft Orders presented by both the Applicant and Simard andNational Bank, this Court Orders: 1. That Simard appear at the offices of Fraser Milner Casgrain in the City of Calgary, 15th Floor, Bankers Court, 850 - 2nd StreetS.W., on a date to be agreed upon by counsel.

2. That the examination of Simard be conducted by video conference before an Official Court Reporter. 3. That Simard and National Bank produce the following documents, if in their power or possession: a. The Report and Appendix 1 dated August 20 th , 2008, entitled “Analysis of Chesapeake Energy (CHK) Hedging Activity” published by National Bank Financial; b. All documents used or reviewed by Simard in the preparation and drafting of Appendix 1, which may be redacted to the extent that any parts of any documents disclose any confidential information with respect to National Bank or National Bank Financial, or its clients. 4. The scope of the examination of Simard shall be limited to: (

a) Questions concerning his educational background and work experience up to and including August 20 th , 2008 as it relates to his occupation; (

b) Questions with respect to what information Simard had available to him about the hedging contracts of Chesapeake when he completed Appendix 1 to the Report; (

c) Confirmation that Simard wrote the Report; (

d) Questions as to whether he believed his commentary or opinion to be accurate at the time he wrote it; (

e) Questions as to Simard’s knowledge as to the nature and extent of the dissemination of Appendix 1 at the time he wrote it. 5. The examination will be conducted according to the United States Federal Rules of Civil Procedure, except as modified by this Order. A material modification will be that any objection to a question asked will be referred to this Court for a determination as to whether the question is to be answered. 6. Any documents produced by Simard or National Bank shall be subject to the provisions of the deemed undertaking that applies to evidence obtained in Questioning in the Province of Alberta.

That is to say, the information contained in the evidence including a transcript, video or audio reproduction of the same is to be treated as confidential by counsel and the parties until made public at a trial or other proceeding before the United States District Court or by a further Order of this Court. 7. The oral examination of Simard shall not exceed 2½ hours of on the record time and counsel shall agree in advance that a reasonable time for any counsel entitled to examine will be afforded. 8.

If Simard is not currently an employee of National Bank or any of its subsidiaries, or is not otherwise being reimbursed for his preparation for an attendance at his oral examination, he shall be paid in accordance with his reasonable fee for professional services for both his preparation and attendance, which account will be paid by the Applicant. In the event a dispute over the reasonableness of the account, if submitted, arises, this Court shall determine its reasonableness, not the United States District Court.

9. In addition to Simard’s reasonable account, the Applicant shall reimburse Simard and National Bank for all reasonable disbursements including copying or scanning expenses for the examination and document production. If a dispute arises as to the reasonableness of these charges, it may be referred to this Court for determination. 10.

The Questioning or oral examination shall be conducted before an Official Court Reporter pursuant to the Recording of Evidence Act , R.S.A. c.R-7.5 and that person shall be obliged to perform the duties required under the Alberta Rules of Court assigned by the Court, pursuant to Rule 13.46(1). 11.

The Applicant shall, in addition, pay Simard and National Bank for the reasonable legal and paralegal fees for conducting the document review, receiving advice in relation of the application for preparation for and attendance of the hearing of this application and for the preparation and attendance of Simard of the oral examination. If any dispute arises as to these fees and disbursements, the issue may be referred to this Court for determination.

All references to fees and disbursements in this Order to be paid by the Applicant, shall be done prior to the release of a transcript or a video or audio reproduction of the Simard oral examination. Heard on the 24 th day of September, 2012. Dated at the City of Calgary, Alberta this 4 th day of October, 2012. Neil Wittmann C.J.C.Q.B.A. Appearances: B. McPhadden, I. Erez, J. Caputo for the Applicant D. Brian Foster, Q.C. For the Respondents