multifeeder technology, inc. APPLICANT AND: BRITISH CONFECTIONARY COMPANY LIMITED FIRST RESPONDENT AND: DOMINO PRINTING SOLUTIONS, INC. SECOND RESPONDENT ___________________________________________________________________ Before: The Honourable Mr. Justice Robert M. Hall ___________________________________________________________________ Place of Hearing: St. John’s , Newfoundland v. Labrador, 2011 NLTD 111

IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR TRIAL DIVISION ( GENERAL ) Citation : Multifeeder Technology, Inc. v. British Confectionary Co. Ltd. , 2011 NLTD(G) 111 Date : 20110 816 Docket : 201101G0994 BETWEEN: multifeeder technology, inc. APPLICANT AND: BRITISH CONFECTIONARY COMPANY LIMITED FIRST RESPONDENT AND: DOMINO PRINTING SOLUTIONS, INC. SECOND RESPONDENT ___________________________________________________________________ Before: The Honourable Mr. Justice Robert M. Hall ___________________________________________________________________ Place of Hearing: St.

John’s , Newfoundland and Labrador Date of Hearing: March 9, 2011 Appearances: F. Stephen Fitzgerald Counsel for Multifeeder Technology, Inc. Daniel W. Simmons Counsel for British Confectionary Company Limited No appearance Domino Printing Solutions, Inc. J. David B. Eaton, Q.C. Atlantic Lottery Corporation Authorities Cited:

CASES CONSIDERED: Ontario Service Employees Union Pension Trust Fund v. Clark, (ON CA), [2006]O.J. No. 2475 (C.A.); R. v. Zingre, (SCC), [1981] 2 S.C.R. 392; Oticon, Inc. v. Gennum Corp., [2009] O.J. No.5478 (Sup. Crt.); AstraZeneca LP v. Wolman, (ON SC), [2009] O.J. No. 5344 (Sup. Crt.); Szeto v. Dwyer, 2010NLCA 36. STATUTES CONSIDERED: Canada Corporations Act, R.S.C. 1970, c. C-32; Canada Evidence Act, R.S.C. 1985, c. C-5.

REASONS FOR JUDGMENT ON APPLICATION RESPECTING LETTERS ROGATORY ISSUED BY THE UNITED STATES DISTRICT COURT, DISTRICT OF MINNESOTA, UNITED STATES OF AMERICA Hall, J.: [1] The Second Respondent, Domino Printing Solutions, Inc., did not participate in the hearing of this matter and a waiver ofnotice of the hearing was presented in evidence indicating that Domino Printing Solutions, Inc. would not participate in the hearing. J.David B.

Eaton, Q.C. appeared for Atlantic Lottery Corporation from which the Applicant was seeking answers to the questions posed inthe Letters Rogatory. [2] Currently, there is litigation being conducted within the jurisdiction of the United States District Court from the District ofMinnesota, wherein Multifeeder Technology, Inc., a Minnesota Corporation, is the Plaintiff and British Confectionary CompanyLimited, a Newfoundland Corporation, is the Defendant.

Also in that action Multifeeder Technology, Inc., is a Third Party-Plaintiff,against Domino Printing Solutions, Inc., a body corporate incorporated under the Canada Corporations Act, R.S.C. 1970, c. C-32,(“Domino”) with its principal place of business in Oakville, Ontario.

Dominio is a Third Party-Defendant in that action. [3] In the letters rogatory filed in this matter, the United States District Court for the District of Minnesota is requesting judicialassistance from the Supreme Court of Newfoundland and Labrador in the form of an order compelling document disclosure fromAtlantic Lottery Corporation, which is not a party to the Minnesota action. [4] The dispute in the Minnesota action arises out of a contractual agreement entered into between British ConfectionaryCompany Limited (“British”) and Multifeeder Technology, Inc. (“Multifeeder”) for the design and purchase of a high-performancefriction feeder system (the “System”) that was to be used by British to print two-sided break-open lottery tickets.

Atlantic LotteryCorporation (“ALC”) was the intended recipient or purchaser of these tickets from British. British had contracted separately with ALCregarding the provision of the tickets. [5] British initially solicited a bid from Multifeeder for the System. After several months of negotiation British acceptedMultifeeder’s proposal for the System and the contract was executed for the purchase price of $868,392.25 for construction of theSystem. Multifeeder commenced design and construction of the System. Preliminary testing of the System occurred in February 2009.

British claims that its representatives were dissatisfied with the results of the testing because the system allegedly failed to meet British’srequirements for function and lottery ticket quality. As a result, British purported to cancel the contract with Multifeeder by a letterdated April 6, 2009. [6] Following cancellation by British, Multifeeder commenced an action in the Minnesota Court for breach of contract, breach ofimplied contract and damages. British moved the Minnesota Court to dismiss the action for improper venue, but this application wasdenied by the Court.

British then asserted counterclaims against Multifeeder for breach of contract and unjust enrichment. Multifeederthen joined Domino as a Third-Party Defendant, asserting claims for indemnity and contribution. The matter is scheduled to be readyfor trial as of November 1, 2011. [7] The Minnesota Court, in the Letters Rogatory, asserts that the documents requested from ALC are both necessary and narrowin scope and are also necessary for Multifeeder’s prosecution of its case and defence against the counterclaims of British.

A key issue inthe dispute is whether there were certain specifications for the System put forward by ALC or British that needed to be met for theSystem to be accepted by British and for the lottery tickets printed by the System to be useable by ALC. Additionally, the partiesdispute whether the preliminary testing done in February 2009 demonstrated that the System could function in the manner promised byMultifeeder or required by British and ALC. Finally, Multifeeder seeks information about alleged damages of British purportedlycaused by the inability of British to supply ALC with lottery tickets by April 1, 2009.

The Letters Rogatory assert that Multifeeder hasbeen unable to procure these documents from any other source or party and that it plans to use them at trial. the documentary requests contained within the letters rogatory [8] Answers to the following requests are sought by Multifeeder from British:

Document Request No. 1: A copy of the executed contract between you and British for the supply of lottery tickets to be delivered to you on or about April 1, 2009. If there is no executed contract, please produce all documents which you contend comprise or set forth the terms of contract between you and British. Document Request No. 2: Documents containing specifications or requirements for the lottery tickets, including those relating to quality or grade, to be provided to you by British under your contract with British for the supply of lottery tickets to be delivered to you on or about April 1, 2009.

Document Request No. 3: Documents referring or relating to your receipt of test samples of lottery tickets from British on or about February and March 2009. Document Request No. 4: Documents referring or relating to the quality or grade of the test samples of lottery tickets provided to you by British in or around February and March 2009. Document Request No. 5: Documents referring or relating to your satisfaction with, or acceptance of, the test samples of lottery tickets provided to you by British in or around February and March 2009.

Document Request No. 6: Documents referring or relating to any rationale British or Multifeeder provided to you related to the quality or grade of the test samples of lottery tickets provided to you by British in or around February and March 2009. Document Request No. 7: Documents referring or relating to any instructions or requests you provided to British in response to your review of the test samples of lottery tickets provided to you by British in or around February and March 2009.

Document Request No. 8: Documents referring or relating to British’s inability to meet the deadline set in your contract with British for the provision of lottery tickets in or about April 1, 2009, including, but not limited to, documents concerning negotiations with British for extensions of time to fulfill the contract. Document Request No. 9: Documents referring or relating to British’s decision to replace Multifeeder and arrange for the supply of a replacement sheet handling system from another manufacturer.

Document Request No. 10: Documents referring or relating to the quality or grade of the lottery tickets currently being supplied to you by British. Document Request No. 11: Documents referring or relating to amounts paid to you by British as a result of delays and the failure by British to deliver lottery tickets to you in a timely basis. Document Request No. 12: Documents referring or relating to amounts you claim are owed to you by British arising out of British’s delays and the failure by British to deliver lottery tickets to you in a timely fashion.

Document Request No. 13: Documents referring or relating in any way to Multifeeder Technology, Inc. and/or the System. [ 9 ] Local counsel for Multifeeder made a request in writing directly to ALC for voluntary disclosure of the aforesaid documentation. This was made by registered mail on the 6th of October, 2010, received by ALC on the 12th of October, 2010.

Local counsel for Multifeeder asserts that neither it nor Multifeeder has received a reply to the aforesaid correspondence from ALC. the second respondent [ 10 ] The Second Respondent, through its counsel, Emily Duke, of the Bar of the State of Minnesota, has consented to the within Application and waived service of notice of hearing of the Application, as indicated in the affidavit of Emily Duke, which was filed as “Schedule E” to the Originating Application.

canada evidence act [11] This Application is made pursuant to s. 46.(1) of the Canada Evidence Act, R.S.C. 1985, c. C-5, and pursuant to a request forInternational Judicial Assistance (Letters Rogatory) issued from the United States District Court for the District of Minnesota seeking anorder compelling ALC to produce the documents by leaving true copies of same at the offices of the Applicant’s counsel in St. John’s. [12]

Section 46.(1) of the Canada Evidence Act reads as follows: If, on an application for that purpose, it is made to appear to any court or judge that any court or tribunal outside Canada, before whichany civil, commercial or criminal matter is pending, is desirous of obtaining the testimony in relation to that matter of a party or witnesswithin the jurisdiction of the first mentioned court, of the court to which the judge belongs or of the judge, the court of judge may, in itsor their discretion, order the examination on oath on interrogatories, or otherwise, before any person or persons named in the order, ofthat party or witness accordingly, and by the same or any subsequent order may command the attendance of that party or witness for thepurpose of being examined, and for the production of any writings or other documents mentioned in the order and of any other writingsor documents relating to the matter in question that are in the possession or power of that party or witness. jurisprudence [13] The Ontario Court of Appeal, in Ontario Service Employees Union Pension Trust Fund v.

Clark, (ONCA), [2006] O.J. No. 2475 (C.A.), considered an application for Letters Rogatory in an action where the plaintiffs were trustees of apublic service pension fund which had purchased shares in Nortel Networks Corp. The individual respondents, Clark and Wayland, wereemployees of Deloitte & Touche LLP, which was the independent auditor of Nortel. An action had been brought by the plaintiffs inOntario against Nortel, alleging that Nortel had made false or misleading public overstatements of its financial condition andperformance.

The plaintiffs were also plaintiffs in a parallel United States federal securities fraud class action against Nortel and certainindividuals. The plaintiffs applied to Ontario Court requesting the Court to make an order directing answers be given to LettersRogatory issued by the U.S. District Court of the Southern District of New York, requiring production of certain specified documentsfrom Deloitte & Touche LLP, and depositions of Clark and Wayland. The evidence sought was found by the Court of Appeal to berelevant, crucial and identified with reasonable specificity and was not otherwise obtainable.

Enforcement of the Letters Rogatory inCanada was consistent with Canadian public policy in that it would not be contrary to the interests of justice or infringe Canadiansovereignty to give full faith and credit to orders and judgments of U.S. courts. The allegations of improper financial reporting andaccounting practices were at the heart of the U.S. class action and Deloitte & Touche and its named employees had been directlyinvolved in the financial statements and financial restatements. The defence of Nortel put the contents of Deloitte & Touche’s workingpapers and other documents in issue.

The requested documents were relevant and of paramount evidentiary importance to the U.S. classaction and it would be unfair for the plaintiffs to proceed to trial without the requested evidence. The Court concluded that thedocuments were not overly burdensome to prepare for production and the interests of Deloitte & Touche would not be unduly prejudiced. [14] At paragraph 15 of the Court of Appeal judgment, Ontario Service Employees Union Pension Trust Fund v.

Clark, theCourt states: The application judge correctly, and succinctly, articulated the test to be applied in a proceeding for the enforcement of letters rogatory. Indeed, counsel before her agreed on the test. She said: All counsel agree on the criteria this Court should use in deciding whether or not the letters rogatory should be enforced. Theevidence sought must be relevant, not otherwise obtainable and identified with reasonable specificity.

The Canadian enforcement ordermust be consistent with Canadian public policy and must not be unduly burdensome. [15] The Court of Appeal went on, at paragraph 16, to enunciate and support the notion that: …the exercise of judicial discretion in the context of enforcing letters rogatory “requires the balancing of two broad considerations: theimpact of the proposed order on Canadian sovereignty and whether justice requires the taking of commission evidence be ordered”.

Impact on Canadian sovereignty in this sense refers to the imposition of an unfair burden on, or prejudice to, the non-party citizen of therequestee state who is the target of the request. (Citations omitted.) [16] I am satisfied that the test as enunciated by the Ontario Court of Appeal, in reliance on earlier jurisprudence, both within itsown Court and in the Supreme Court of Canada in R. v. Zingre, (SCC), [1981] 2 S.C.R. 392, supports this conclusion. [17] In a 2009 decision the Ontario Superior Court of Justice in Oticon, Inc. v. Gennum Corp., [2009] O.J. No. 5478 (Sup.

Crt.),Brown, J. was dealing with an application for an order enforcing letters rogatory issued by a New Jersey court in a patent infringementcase. While the application failed due to the applicant not demonstrating that the documents were not attainable by other means, Brown,J. repeated views which he had earlier expressed in AstraZeneca LP v. Wolman, (ON SC), [2009] O.J. No. 5344(Sup.

Crt.), describing the governing principles to be: [17] Enforcement of letters rogatory rests upon the comity of nations, so that the courts of one jurisdiction will give effect to the lawsand judicial decision of another jurisdiction, not as a matter of obligation, but out of mutual deference and respect.

A foreign request isgiven full force and effect unless it be contrary to the public policy of the jurisdiction to which the request is directed. [Citation omitted] [18] The exercise of discretion on an application to enforce letters of request requires the balancing of two broad considerations: theimpact of the proposed order on Canadian sovereignty and whether justice requires that the taking of commission evidence be ordered.[Citation omitted] Although the Ontario court does not function as an appellate court in respect of the decision of a foreign court, it is notbound to accept the language of the letters of request “as the final say”; it is entitled to go behind letters rogatory, to examine precisely

what it is the foreign Court is seeking to do, and to give effect to them only if they satisfy the requirements of the law of this jurisdiction. [Citation omitted] [ 19 ] Notwithstanding that the Ontario court is not bound by the conclusions of the requesting judge and must reach its own findings and conclusions based on the evidence filed, the observations and conclusions of the foreign court are entitled to deference and respect, and an Ontario court should give “full faith and credit” to the orders and judgments of a U.S. court unless it is of the view that to do so would be contrary to the interests of justice or would infringe Canadian sovereignty. [Citation omitted] relevancy of documents requested Document Request No. 1: [18] In this request, a copy of the executed contract between ALC and British for the supply of lottery tickets is requested.

A redacted copy of this contract has already been delivered by ALC to local counsel for Multifeeder. The Applicant, Mutifeeder, did not seek any information as to what was redacted nor did counsel for ALC provide even a general description of what portions of the contract were redacted. Presumably that information would be known by British as, of course, it was a party to the contract with ALC and it would be able to provide the redacted portions to Multifeeder.

I therefore regard Document Request No. 1 as being satisfied or capable of being satisfied and regard this request as being moot and it is therefore denied. Document Request No. 2: [19] In this request, Multifeeder requests documents containing specifications or requirements for the lottery tickets, including those relating to quality or grade, to be provided by British to ALC.

The essence of the dispute between Multifeeder and British is the claim of British that the printing System supplied by Multifeeder, pursuant to the contract, did not meet the quality requirements of British and ALC and I conclude therefore, that this request is for information relative to the Minnesota litigation. This request seeks documents relating to or referring to the receipt by ALC of test samples of lottery tickets. This request is therefore allowed. Document Request No. 3: [ 20 ] The request here is for documents relating to test samples of lottery tickets received by ALC from British.

The quality of the tickets produced by the System is at the core of this dispute. It would be unfair to Multifeeder for this matter to proceed to trial in Minnesota without evidence in the hands of ALC relating to the quality of the sample tickets. This request is therefore allowed. Document Request No. 4: [ 21 ] The issue here is a subset of Document Request No. 3. In Document Request No. 4, Multifeeder seeks documents from ALC referring to or relating to the quality or grade of the test samples of tickets provided by British to ALC.

Again, I conclude that this request is relevant for the reasons stated with respect to Document Request No. 3. This request is therefore allowed. Document Request No. 5: [ 22 ] This request seeks any documents referring to or relating to the satisfaction with or acceptance of by ALC of the test samples of lottery tickets. Again, this is a subset of Document Requests No. 3 and 4 and is a core issue to the litigation, the allegation of which is that the sample tickets were not to the requirements of ALC. This document is therefore relevant and the request is therefore allowed.

Document Request No. 6: [ 23 ] In this request, Multifeeder requests documents referring to or relating to any rationale British or Multifeeder provided to ALC related to the quality or grade of the test samples of lottery tickets provided by British. Obviously, in this request, any documents relating or referring to any rationale Multifeeder provided to ALC is within the knowledge of Multifeeder and therefore, no order is required in that regard.

Otherwise, the request, insofar as it relates to the documents provided to ALC with respect to the rationale of British regarding the quality or grade of tickets, is equally relevant as the information requested in Document Requests NO. 3, 4 and 5. This request is therefore allowed insofar as it relates to the rationale of British set out above. Document Request No. 7: [ 24 ] In Document Request No. 7, the documents requested are documents referring to or relating to any instructions or requests ALC provided to British in response to its review of the test samples of the lottery tickets.

Again, this is a subset of the issues in Document Requests No. 3, 4, 5 and 6, and in my view is relevant for the same reasons as set out with respect to those previous document requests. This request is therefore allowed. Document Request No. 8: [ 25 ] In this request, Multifeeder requests documents which refer or relate to the inability of British to meet the deadline set in its contract with ALC to deliver lottery tickets by April 1, 2009, including, but not limited to, documents concerning negotiations with British for extensions of time to fulfill the contract.

An integral part of the counterclaim of British as against Multifeeder is that the breach of the contract by Multifeeder caused British to breach its contract with ALC. While I am given to understand that no action has been commenced by ALC against British with respect to these delays, the potentiality for such a claim against British has nonetheless been raised and thus, is relevant to the counterclaim by British against Multifeeder. This request is therefore allowed. Document Request No. 9:

[ 26 ] In this request, Multifeeder requests documents relating to or referring to the decision of British to replace Multifeeder as a supplier and to arrange for the supply of a replacement sheet handling system from another manufacturer. Again, any such documents in the possession of ALC would be relevant because it goes to the core issue of the dispute between Multifeeder and British, i.e., the inability of the Multifeeder System to deliver as promised with respect to the production of the lottery tickets. This question, therefore, is relevant and the request is therefore allowed.

Document Request No. 10: [ 27 ] In this request, Multifeeder requests documents referring to or relating to the quality or grade of lottery tickets currently supplied to ALC by British. In my view, this is irrelevant to the action between the parties in Minnesota. Presumably, this request is aimed at determining whether ALC has, subsequent to the failure of British to deliver on time, agreed to accept a lesser grade of ticket quality than it has specified in its contract with British.

I am of the view that this question is in the nature of a fishing expedition and is not relevant to the application or the Minnesota action. This request is therefore denied. Document Request No. 11: [ 28 ] In this request, Multifeeder seeks documents referring to or relating to amounts paid to ALC by British as a result of delays and the failure of British to deliver lottery tickets to ALC in a timely basis. This question goes to the essence of the counterclaim by British against Multifeeder and the rationale for its termination of the contract for the supply of the ticket printing System.

It is, therefore, relevant. This request is therefore allowed. Document Request No. 12: [ 29 ] In this request, Multifeeder requests documents referring to or relating to amounts ALC claims are owed to it by British arising out of the delays and the failure by British to deliver lottery tickets on a timely basis. This issue is a subset of Document Request No. 11 and, in my view, is relevant to the counterclaim by British as against Multifeeder. This request is therefore allowed.

Document Request No. 13: [ 30 ] In this document request, Multifeeder seeks documents referring or relating in any way to Multifeeder Technology, Inc. and/or the System. In my view, this request is overly broad and would require ALC to engage in an excessive review of any information it might have with respect to Multifeeder and the System, whether relevant or not. In my view, the documentation sought is irrelevant and this request is therefore denied. documentation not otherwise obtainable [ 31 ] No affidavit was filed in this matter by British Confectionary Company Limited.

Therefore, there is no sworn evidence before the Court that the documents requested by Multifeeder are not “otherwise obtainable”. Counsel for British Confectionary Company Limited advised the Court that it has provided to Multifeeder all of the documentation in its possession relevant to the document requests made in Letters Rogatory. This assertion was not challenged by counsel for Multifeeder and, based upon that lack of challenge, I am satisfied that the documentation requested but not as yet provided to Multifeeder is not otherwise available through British.

Therefore, I am satisfied that the documentation requested in Document Requests No. 2, 3, 4, 5, 6, 7, 8, 9, 11 and 12 are not otherwise obtainable. documents identified with reasonable specificity [ 32 ] With respect to this requirement, I am satisfied that all of the documents, except those sought in Document Request No. 13, are identified with reasonable specificity. enforcement consistent with canadian public policy [ 33 ] As indicated by Justice D.M. Brown in the Oticon, Inc. v.

Gennum Corp. decision, enforcement of letters rogatory rests upon comity of nations whereby the courts of one jurisdiction give effect to the laws and judicial decisions of another, not as a matter of obligation but as a matter of mutual deference and respect. A foreign request is given full force and effect unless it is contrary to public policy of this jurisdiction. Counsel for ALC has asserted that this application and the documents requested are contrary to public policy because his client is being treated as a litigant when it is not even a party to the dispute.

Additionally, he asserts that the requests should be governed by local principles of document discovery; principally, that the documents should be known to exist or that there is good evidence of their existence. Additionally, he argues that where there are pre-trial discovery procedures in the Minnesota courts, it is incumbent upon the Applicant to show that all discoveries have been done in Minnesota to get the quality and quantity of information sought before seeking to get it from a non-party.

He points out that Multifeeder did not list what had been done in order to show the necessity of non-party disclosure. [ 34 ] With respect, I am satisfied that the issuance of the Letters Rogatory under the signature of a judge of the Court indicates that the appropriate pre-trial procedures have been completed. Of essence in the application for Letters Rogatory is the notion that the documents requested are not otherwise available.

I am not prepared to go behind the order of the Court of Minnesota seeking the documents requested. enforcement order not unduly burdensome [ 35 ] No affidavit on the part of ALC was submitted to this effect. Counsel for ALC argued that many of the document requests consist of multiple documents, and, therefore, considerable searching by ALC to locate, assemble, copy and deliver these documents is too burdensome for ALC and no such disclosure should be ordered. [ 36 ] In this regard, I have considered the decision of the Newfoundland and Labrador Court of Appeal in Szeto v. Dwyer , 2010 NLCA 36 .

This case dealt with discovery of documents and interrogatories.

[ 37 ] In paragraphs 52 to 54 of Szeto , the Court of Appeal dealt with the underlying principle of proportionality in ordering pre-trial disclosure proceedings. I would regard such judgment as being reflective of public policy applicable to this present application.

In paragraph 54, the Court of Appeal requires that a judge ought always to consider proportionality to ensure that a party invoking and applying pre-trial discovery rules does so in a sensible and reasonable manner, which means dealing with the proceeding in ways such that the time and types of processes involved, as well as the expense and convenience of the parties, are proportionate to factors such as the nature of the issues engaged, the amount of money involved, the time necessarily reasonable to resolve the issue, and the complexity of the issues and the overall cost of the litigation. [ 38 ] In my view, nothing in

section 46 of the Canada Evidence Act restricts the application of local principles applicable to pre-trial discovery processes.

Section 46 makes it clear that any order of the judge, pursuant to letters rogatory is discretionary. [ 39 ] As previously indicated, I am satisfied that Document Requests No. 2 to 9 and 11 to 12 are relevant. Request No. 1 has already been complied with and it is moot. Request No. 13 is too broad and not relevant. Were the action in question a local action, the production of these documents by ALC, which are found by me to be relevant, could be ordered.

That being the case, I see no public policy rationale to require some other pre-trial procedure such as oral discovery of representatives of ALC, as such procedure would not be any more economical, nor expeditious, and would likely be more burdensome upon the officials of ALC who would not only have to seek out the relevant documents pursuant to the discovery order but would also have to attend upon discovery. Protective Order [ 40 ] I was during the course of the hearing of this matter provided with a photocopy of a Stipulated Protective Order between the parties hereto.

If the parties and ALC are unable to agree on a Protective Order, I advise that the Minnesota Stipulated Protective Order is, in my view, a satisfactory precedent. If there is no agreement between the parties and ALC, any party or ALC may apply for further direction of the Court. conclusion [ 41 ] I am therefore satisfied that, with the exceptions listed above, namely Documents Requests No. 1, 10 and 13, all other Document Requests are relevant and their production is therefore ordered. _____________________________ Robert M. Hall Justice