2018 QCCA 606, 2018 QCCA 606

Ravary c. Fonds mutuels CI inc. 2018 QCCA 606 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-026935-171 (500-06-000256-046) DATE: April 16, 2018 CORAM: THE HONOURABLE FRANCE THIBAULT, J.A. PATRICK HEALY, J.A. CAROL COHEN, J.A. (AD HOC) CLAUDE RAVARY APPELLANT – Plaintiff v. CI MUTUAL FUNDS INC. AIC GLOBAL HOLDINGS RESPONDENTS – Defendants DECISION [ 1 ] The appellant appeals from a judgment rendered in the course of a proceeding on June 22, 2017, by the Superior Court, District of Montreal (the Honourable Louis J.

Gouin), which dismissed his application de bene esse seeking, inter alia , to amend the definition of the class for which a class action was instituted in order to limit the scope of the class to the funds managed by the respondents and to obtain disclosure of various financial documents. [ 2 ] For the reasons of Thibault J.A., with which Healy J.A. and Cohen J.A. (ad hoc) agree, THE COURT: [ 3 ] ALLOWS the appeal; [ 4 ] SETS ASIDE the first instance judgment in part to grant the appellant’s application concerning conclusions 5 and 6 of his application de bene esse and, consequently; [ 5 ] ORDERS the respondent AIC Global Holdings to provide to counsel for the appellant all the trades carried out in the accounts belonging to the investors who own the accounts identified in Table 6 of report AG-5, for the relevant period, in the AIC Global Advantage Fund, Manulife Global Advantage Fund and Manulife International Focused Fund, as well as the predecessors and successors to such funds ; [ 6 ] ORDERS the respondent CI Mutual Funds Inc. to provide to counsel for the appellant all the trades carried out in the accounts belonging to the investors who own the accounts identified in

Schedule 5 to report AG-6, for the relevant period, in the BPI Global Equity Fund, Cl Global Fund, BPI International Equity Fund, Cl Pacific Fund, Cl Pacific Corporate Class, Cl Global Balanced Corporate Class and Cl International Balanced Fund, as well as the predecessors and successors to such funds; [ 7 ] REFERS the matter back to the first instance judge to determine the time period within which the aforementioned information must be disclosed; with legal costs in both courts. FRANCE THIBAULT, J.A. PATRICK HEALY, J.A. CAROL COHEN, J.A. (AD HOC)

Mtre Vincent Blais-Fortin Mtre Normand Painchaud Sylvestre Painchaud et associés For the appellant Mtre Alexander L. De Zordo Mtre Patrick Plante Borden Ladner Gervais For AIC Global Holdings Mtre Sébastien Richemont Woods For CI Mutual Funds Inc. Date of Hearing: March 16, 2018 REASONS OF THIBAULT J.A. [ 8 ] The appellant appeals from a judgment rendered in the course of a proceeding on June 22, 2017, by the Superior Court, District of Montreal (Justice Louis J.

Gouin), which dismissed his application de bene esse seeking, inter alia , to amend the definition of the class for which a class action was instituted in order to limit its scope to the funds managed by the respondents and to obtain disclosure of various financial documents. [1] [ 9 ] On appeal, only the refusal to allow the disclosure of financial documents is in dispute. For the reasons that follow, I would allow the appeal to permit the disclosure of the requested evidence. 1.

Background [ 10 ] On October 26, 2004, seven plaintiffs, including the appellant, filed an application with the Superior Court for authorization to institute a class action against certain investment funds, including the two respondents.

An investment fund is constituted by sums of money pooled by various investors and managed on their behalf by a portfolio manager who uses these sums of money to buy stocks, bonds or other securities based on certain objectives. [2] [ 11 ] In their class action, the plaintiffs fault the investment funds in question for not having put measures in place to prevent the practice, used by some investors, of market timing. [ 12 ] The plaintiffs claim that certain investment funds are vulnerable due to the time difference between North America, where the fund units are sold and redeemed, and overseas markets, where the assets from the relevant funds are invested.

The class action claim is that this vulnerability was systematically exploited by some investors through repeated short-term trades. [ 13 ] The plaintiff s argue that the repeated short-term trades led to two types of gains which adversely affected the return on the investments of long-term holders. The first type of gain is generated by buying units of a given fund at an expired price that does not take into account a rise in North American markets on the day of purchase.

The correlation between the rise in North American markets and the rise in markets elsewhere in the world is high enough to motivate some investors to exploit this inherent vulnerability . The second type of gain is generated in the days following the purchase, when the short-term investor remains the owner of the units, though the amount paid to purchase the units has not yet been invested by the manager in the underlying markets.

This second type of gain is captured by the appreciation of the investments achieved by using the long-term investors’ money, which has already been invested by the manager in the underlying markets. [ 14 ] According to the plaintiffs , the two types of gain, which some investors appropriate to the detriment of long-term investors, dilute the return on investments for the latter. [ 15 ] The class action does not target an isolated fortuitous transaction by an investor who carries out a short-term trade in a given fund and who, by simple chance, takes advantage of this inherent vulnerability.

The class action targets the trades of investors who have systematically carried out an abnormally high number of short-term trades on the relevant funds which are intended to be long-term investments. [ 16 ] The transaction information provided subsequent to the framework judgment , as analyzed by the expert retained by the appellant, made it possible to identify the respondents’ client accounts which had an abnormally high level of repeated short-term trades. [ 17 ] This information, to which the appellant did not have access before its legal disclosure, is central to the dispute: it is the trades made in these accounts that will, perhaps, prove the exact circumstances of the market timing, including the actual investment models and patterns of the abnormally active investors and the concrete result of these trades. [ 18 ] The plaintiffs allege that their investments performed negatively following transactions carried out by some investors in the

form of repeated short-term trades between North American markets (where the mutual fund units are sold and redeemed) and overseas markets (where the assets are invested). [3] [ 19 ] The class action was authorized on September 17, 2010. [4] Claude Champagne J. identified the issues to be decided in the following manner: [ translation ] − Did the respondents know or should they have known about the practice of market timing [5] in the relevant funds? − Did the respondents know or should they have known about the impact of market timing on the performance of class members’ units? − Did the respondents allow or fail to prevent market timing in the funds in question? − Did the respondents fail in their obligations toward class members during the relevant period? [6] − What damage was caused by the market timing and suffered by the class members? [ 20 ] Following the authorization judgment, the parties engaged in a debate over the time period within which a trade contemplated by the class action must have occurred.

In 2013, the appellant suggested a 60-day period, [7] then, in 2014, he argued for a 5-day period [8] before returning to a 60-day period in 2015. [9] At this time, one of the defendants and the respondent CI Mutual Funds Inc. each filed a motion to dismiss the class action. [ 21 ] On June 30, 2015, the first instance judge rendered what he titled a framework judgment, in which he dismissed the respondents’ two motions for dismissal and limited the class action to certain trades, namely those that had occurred within five-day windows between January 1, 2000 and December 31, 2003, for an amount greater than or equal to $10,000. [10] I note that this decision was made on the basis of an expert opinion in which the expert stated that he did not have access to the financial data. [ 22 ] On November 12, 2015, at the respondents’ request, the judge split the proceedings so that the liability issue could be dealt with before the damages issue. [11] In the conclusions of that ruling, the judge specified that (

a) the issue of the existence of damages would not be dealt with at that stage; (

b) the appellant would not be required to prove that the fault alleged had caused prejudice to the class members; and (

c) the respondents could not raise the defence that the facts alleged did not cause prejudice to the class members. The judgment nonetheless reserved (

d) the right of the parties to present general evidence of the negative impact of the trades on the performance of the units of the class members: [ translation ] ALLOWS in part the Motions for Splitting of the defendants Cl and AIC; SPLITS the proceeding such that the debate will be heard and the judgment on liability rendered prior to and separately from a hearing on the damages sought on the basis of the findings of the MIP (if required); ORDERS that the following issues relating to liability be heard separately first: 1.

Did the respondents know or should they have known about the market timing operations in the relevant Funds? 2. Did the respondents know or should they have known about the impact of market timing on the performance of Class Members’ units? 3. Did the respondents allow or fail to prevent market timing in the Funds in question? 4. Did the respondents fail in their obligations toward Class Members during the relevant period? SPECIFIES that, for the purpose of the debate concerning liability: a.

The Court will not have to determine the existence of damages, as this matter will be deferred to the second stage of proceedings, if necessary; b. The plaintiff shall not be required to prove that the facts alleged did indeed cause prejudice to Class Members, resulting in damages; c. The defendants Cl and AIC may not rely on the fact that the plaintiff has not proved that the facts alleged caused prejudice to Class Members as part of their defence in the first stage; d.

The parties may nonetheless present evidence regarding whether or not, in general, the existence of market timing is capable of negatively affecting the performance of the Class Members’ units. [12] [ 23 ] Once the defences were filed in the record on January 15, 2016, the respondents sent the appellant the information concerning the trades carried out in the mutual funds in question within five-day periods between January 1, 2000 and December 31, 2003. [ 24 ] This information was analyzed by the expert François Auclair, whose services were retained by the appellant. Following the reports prepared by Mr.

Auclair, the appellant stated that the information provided was not conclusive and that he was unable to establish

the respondents’ liability in the context of the class action because, among other things, he was unable to establish that the trades had a negative impact on the performance of the class members’ units. [ 25 ] This finding led the appellant to file his application de bene esse to amend the mutual fund managed by the respondents and to obtain additional information, namely all the trades for certain identified accounts for the period contemplated in the framework judgment. The relevant conclusions in the application are set out as follows: [ translation ] 4.

AMEND the Class Definition to limit the scope of the present class action regarding the defendants AIC Global Holdings Inc. and CI Mutual Funds Inc. to the following mutual funds: AIC - AIC Global Advantage Fund - Manulife Global Advantage Fund - Manulife International Focused Fund CI - BPI Global Equity Fund - CI Global Fund - BPI International Equity Fund - CI Pacific Fund - CI Pacific Corporate Class - CI Global Balances Corporate Class and - CI International Balanced Fund; 5.

ORDER the defendant AIC Global Holdings Inc. to provide counsel for the plaintiff all the trades carried out in the accounts belonging to the investors who own the accounts identified in Table 6 of report AG-5, for the relevant period, in the AIC Global Advantage Fund, Manulife Global Advantage Fund and Manulife International Focused Fund as well as the predecessors and successors to such funds, if any; 6. ORDER the defendant CI Mutual Funds Inc. to deliver to counsel for the plaintiff all the trades carried out in the accounts belonging to the investors who own the accounts identified in

Schedule 6 of report AG-6, for the Relevant Period, in the SPI Global Equity Fund, CI Global Fund, SPI International Equity Fund, Cl Pacific Fund, Cl Pacific Corporate Class, CI Global Balanced Corporate Class and CI International Balanced Fund, as well as the predecessors and successors to such funds, if any; 7. SET the time period for sending the information [...] contemplated in conclusions 5 and 6; […] 2.

Judgment below [ 26 ] The first instance judge began with the premise that the appellant’s application sought to amend [ translation ] “the context of the financial transactions referred to as ‘market timing’ operations […] established by the judgment rendered on June 30, 2015[…]”. [ 27 ] He dismissed the appellant’s application for the reasons that appear in paragraph 16 of his judgment: [ translation ] [16] The Court shall dismiss the Application de bene esse for the following reasons, among others: (

a) During his out-of-court examination on May 26, 2017, the Plaintiff’s expert witness admitted that he did not have the skills necessary to process the transactions related to the Trades and their Framework, and he was therefore unable to distinguish, in the data analyzed, which might be incomplete, Trades from the other financial transactions carried out by the Defendants’ clients; (

b) The next stage in the Class Action is the hearing on “liability” not “damages”, as decided by the Splitting Judgment; (

c) The Plaintiff submits that this analysis of financial information in a broader framework is essential to determine the “liability” of the Defendants, in light of the analysis performed by Mr. Auclair. However, as already mentioned, Mr. Auclair is definitely not an expert in the area of Trades and their Framework, which does little to convince the Court of the appropriateness of the Application de bene esse ; (

d) The Court has the distinct impression that the Plaintiff was still at the stage of his initial, exploratory investigation, whereas 13 years have passed since the filing of the first proceedings in the Class Action! (

e) Therefore, with the hearing on the merits scheduled for November 28, 2016 to January 13, 2017, the Plaintiff cannot now seek to broaden the very basis of the Class Action: the Trades Framework;

(

f) This back-and-forth has lasted long enough, and the Court has clearly indicated this in the Framework Judgment: [ translation ] […] this matter is constituted and composed of endless proceedings and, more than ever, the parties, without exception, must show some discipline in order to ensure the fair administration of justice and that justice is done as quickly as possible, in the circumstances. It is with this in mind that the Court will set boundaries to properly limit the debate between the parties and prepare the next steps for holding a hearing on the merits of the Class Action modified in fall 2016. These boundaries affect the Trades Framework. […] (

g) The Framework Judgment is a final judgment. 3. The issues in dispute [ 28 ] The appellant maintains that the first instance judge committed several errors which resulted in his right to seek the truth being sacrificed for the sake of expediting the proceedings. He proposes four issues for the Court’s consideration. [ 29 ] The judge is alleged to have erred: (

a) in finding that a framework judgment is a final judgment; (

b) in criticizing the appellant for lack of diligence; (

c) in finding that the results of Mr. Auclair’s expert analyses were not useful, given his unfamiliarity with market timing operations; (

d) in deciding that the evidence was not useful for demonstrating the liability of the respondents. [ 30 ] The appellant asks the Court to allow the appeal for the sole purpose of granting conclusions 5 and 6 of his application so that he may obtain the information described therein. 4. Analysis [ 31 ] Before considering the issues in dispute, it is important to consider the standard of review applicable to this appeal. Is leave to appeal subject to the conditions of art. 31 C.C.P. , or is it subject to art. 32 C.C.P. ? [ 32 ] I note that the parties have taken for granted that art. 32 C.C.P. applied here.

The application for leave to appeal invokes this provision, the appeal briefs are also based on it, and a judge sitting alone granted leave to appeal on this basis. . . For this reason, the Court has requested additional comments from the parties on the issue. [ 33 ] The appellant now argues that art. 31 C.C.P. applies because the impugned decision is not a case management measure and causes him irremediable injury.

Alternatively, he asserts that if the decision rendered is a case management decision, its unreasonableness would also allow the Court to grant the appeal under art. 32 C.C.P. [ 34 ] Conversely, the respondents are of the opinion that the impugned decision is a case management decision governed by art. 32 C.C.P. , as the parties recognized in requesting, notably, that the judge rule on the application by case management notice.

Alternatively, they argue that even if the decision were subject to art. 31 C.C.P. because, being a matter of judicial discretion, it is not subject to review . [ 35 ] Leave to appeal was granted, thereby conferring jurisdiction on the Court to decide the appeal. [13] I note that the judge sitting alone undertook a prima facie assessment of the issue and that it is the role of the Court to rule on the merits. [14] [ 36 ] The difference between the two provisions is significant. [ 37 ] A judgment rendered in the course of a proceeding is appealable only in certain circumstances, notably if it determines part of the dispute or causes irremediable injury to a party:

31. A judgment of the Superior Court or the Court of Québec rendered in the course of a proceeding, including during a trial, is appealable as of right if it disallows an objection to evidence based on the duty of discretion of public servants or on professional secrecy. Such a judgment may be appealed with leave of a judge of the Court of Appeal if the judge considers that it determines part of the dispute or causes irremediable injury to a party, including if it allows an objection to evidence. The judgment must be appealed without delay.

The appeal does not stay the proceeding unless a judge of the Court of Appeal so orders. If the judgment was rendered in the course of the trial, the appeal does not stay the trial; however, judgment on the merits cannot be rendered nor, if applicable, the evidence concerned heard until the decision on the appeal is rendered. Any other judgment rendered in the course of a trial, except one that allows an objection to evidence, may only be challenged on an appeal against the judgment on the merits. 31.

Le jugement de la Cour supérieure ou de la Cour du Québec rendu en cours d’instance, y compris pendant l’instruction, peut faire l’objet d’un appel de plein droit s’il rejette une objection à la preuve fondée sur le devoir de discrétion du fonctionnaire de l’État ou sur le respect du secret professionnel. Il peut également faire l’objet d’un appel sur permission d’un juge de la Cour d’appel, si ce dernier estime que ce jugement décide en

partie du litige ou cause un préjudice irrémédiable à une partie, y compris s’il accueille une objection à la preuve. Le jugement doit être porté en appel sans délai. L’appel ne suspend pas l’instance à moins qu’un juge d’appel ne l’ordonne; cependant, si le jugement est rendu en cours d’instruction, l’appel ne suspend pas celle-ci; le jugement au fond ne peut toutefois être rendu ou, le cas échéant, la preuve concernée entendue avant la décision de la cour.

Tout autre jugement rendu en cours d’instruction, à l’exception de celui qui accueille une objection à la preuve, ne peut être mis en question que sur l’appel du jugement au fond. [ 38 ] A case management judgment is not appealable, except in exceptional circumstances. Intervention is possible only if it is unreasonable in light of the guiding principles of procedure: 32.

Case management measures relating to the conduct of a proceeding and rulings on incidental applications concerning the continuance of a proceeding, the joinder or severance of proceedings, the stay of a trial, the splitting of a proceeding or pre-trial discovery cannot be appealed. However, if a measure or a ruling appears unreasonable in light of the guiding principles of procedure, a judge of the Court of Appeal may grant leave to appeal. 32.

Ne peuvent faire l’objet d’un appel les mesures de gestion relatives au déroulement de l’instance et les décisions sur les incidents concernant la reprise d’instance, la jonction ou la disjonction des instances, la suspension de l’instruction ou la scission d’une instance ou encore la constitution préalable de la preuve.

Toutefois, si la mesure ou la décision paraît déraisonnable au regard des principes directeurs de la procédure, un juge de la Cour d’appel peut accorder la permission d’en appeler. [ 39 ] The guiding principles of civil procedure are found in arts. 17 through 24 C.C.P. and provide for the right to be heard and the adversarial principle (art. 17); the principle of proportionality (art. 18); proper case management and the orderly conduct of proceedings (art. 19); the duties of cooperation and information (art. 20); the rights and duties of witnesses and experts (arts. 21-22); the right of natural persons to self-represent before the courts (art. 23); and the taking of an oath (art. 24).

These principles illustrate arts. 9 and 10 C.C.P. , which govern the mission of the courts. [15] [ 40 ] As stated by the Court in Lavigne c. 6040993 Canada inc . , [ translation ] “these guiding principles of procedure must themselves be interpreted and implemented in light of the Preliminary Provision of the C.C.P. , in particular its second paragraph.” [16] [ 41 ] In accordance with the Preliminary Provision of the Code , the guiding principles must be applied as a means to resolve disputes through appropriate, efficient and fair-minded processes that encourage the persons involved to play an active role.

The Preliminary Provision also provides that the guiding principles ensure the accessibility, quality and promptness of justice, as well as the fair, simple, proportionate and economical application of procedural rules and the exercise of the parties’ rights, all in a spirit of co-operation and balance, and respect for those involved in the administration of justice. [ 42 ] Is a judgment authorizing or refusing the disclosure of exhibits or other evidence a case management decision? Here are the relevant provisions of the Code of Civil Procedure :

For case management purposes, at any stage of a proceeding, the court may decide, on its own initiative or on request, to (1) take measures to simplify or expedite the proceeding and shorten the trial by ruling, among other things, on the advisability of ordering the consolidation or separation of proceedings or the splitting of the proceeding, of better defining the issues in dispute, of amending the pleadings, of limiting the length of the trial, of admitting facts or documents, of authorizing affidavits in lieu of testimony or of determining the procedure and time limit for the disclosure of exhibits and other evidence between the parties, or by convening the parties to a case management conference or a settlement conference, or encouraging them to use mediation; 158.

À tout moment de l’instance, le tribunal peut, à

titre de mesures de gestion, prendre, d’office ou sur demande, l’une ou l’autre des décisions suivantes: 1° prendre des mesures propres à simplifier ou à accélérer la procédure et à abréger l’instruction, en se prononçant notamment sur l’opportunité de joindre, disjoindre ou scinder l’instance, de préciser les questions en litige, de modifier les actes de procédure, de limiter la durée de l’instruction, d’admettre des faits ou des documents, d’autoriser des déclarations pour valoir témoignage ou de fixer les modalités et le délai de communication des pièces et des autres éléments de preuve entre les parties, ou encore en invitant les parties à participer soit à une conférence de gestion, soit à une conférence de règlement à l’amiable ou à recourir elles-mêmes à la médiation; 246.

Unless otherwise determined by the court, the procedure and the time limit for the disclosure of exhibits and other evidence between the parties must be set out in the case protocol in compliance with the rules of this chapter. If the case protocol sets out no such procedure or time limit or if no case protocol is required, a party, on being informed that another party intends to use an exhibit or other evidence, may, without formality, request a copy of, or some other form of access to, the exhibit or other evidence.

If the request is not complied with within 10 days, the court issues such orders as are appropriate. 246. Les modalités et le délai de communication des pièces et des autres éléments de preuve entre les parties doivent être indiqués dans le protocole de l’instance en conformité avec les règles du présent chapitre, à moins qu’ils n’aient été autrement fixés par le tribunal. Si le protocole ne prévoit ni modalités ni délai ou lorsqu’aucun protocole n’est requis, une

partie peut, sans formalités, dès qu’elle est informée qu’une autre

partie entend invoquer une pièce ou un autre élément de preuve, demander d’en obtenir copie ou d’y avoir autrement accès. Si sa demande n’est pas satisfaite dans les 10 jours, le tribunal peut rendre les ordonnances appropriées. 251. A party in possession of real evidence is required, on request, to present it to the other parties or, subject to the conditions agreed with them, to submit it to an expert; the party is also required to preserve, until the end of the trial, the real evidence or, if applicable, a suitable representation that shows its current state.

A third person holding a document relating to a dispute or in possession of real evidence is required, if so ordered by the court, to disclose it, present it to the parties, submit it to an expert or preserve it. 251. La

partie en possession d’un élément matériel de preuve est tenue, sur demande, de le présenter aux autres parties ou de le soumettre à une expertise dans les conditions convenues avec celles-ci; elle est aussi tenue de préserver l’élément matériel de preuve ou, le cas échéant, une représentation adéquate de celui-ci qui permette d’en constater l’état jusqu’à la fin de l’instruction.

Le tiers qui détient un document se rapportant au litige ou est en possession d’un élément matériel de preuve est tenu, si le tribunal l’ordonne, d’en donner communication, de le présenter aux parties, de le soumettre à une expertise ou de le préserver. [ 43 ] With respect, I am of the view that the judge made several errors. His judgment deprived the appellant of evidence relevant to

establishing the truth of the allegations in his proceeding. This caused him irremediable injury, which the final judgment is not likely to remedy. The right of appeal is therefore subject to the conditions set out in art. 31 C.C.P. [ 44 ] I see a distinction between a decision that affects a party’s “right” to obtain evidence and one that determines the “procedure and time limits” for the disclosure of evidence. A decision that determines procedure and time limits is, as a general rule, a case management decision.

Conversely, a decision concerning a party’s right to obtain disclosure of evidence is not in itself a case management decision because it is not [translation] “in the nature of a decision relating to only the conduct of a proceeding, in the strict sense of the term, to the extent that, [if it] subsists, [it] will directly and significantly affect the substantive issues,” [17] as I will explain more fully in the

section concerning the utility of the evidence. A party’s characterization of the measure does not change its nature. For this reason, the respondents’ argument – according to which the measure constitutes a case management measure because it was sought by way of a notice of management – must be rejected. [ 45 ] The work of authors André Rochon and Frédérique Le Colletter concerning motions before a judge of the Court sitting alone is useful. Based on Imperial Tobacco Canada Ltd. c.

Létourneau , [18] the authors liken a judgment preventing the disclosure of documents to a judgment allowing an objection to evidence (former art. 29, para. 2 C.C.P. ) due to the similar consequences the decision will have. [19] [ 46 ] The authors are also of the opinion that a judgment limiting the disclosure of documents is analogous to a judgment allowing an objection to evidence. These are also judgments that cannot be remedied by the final judgment (former art. 29, para. 1(2) C.C.P. ) [20] .

The authors state as follows: [translation] […] Principle – A judgment allowing an evidentiary objection is one that orders something which cannot be remedied by the final judgment. Evidence that a party intended to file is permanently excluded from the record . The judge on the merits cannot remedy the absence of this evidence and the final outcome of the case risks being flawed as a result. […] Analogous judgments – Judgments having the effect of precluding parties from proving the facts in support of their claims include judgments allowing an evidentiary objection .

By excluding evidence or limiting allegations, such judgments prevent parties, directly or indirectly, from adducing evidence. [21] [Emphasis added; footnotes omitted] [ 47 ] I digress one last time on this subject to say, in obiter dictum, that had art. 32 C.C.P. been applicable, I would also have proposed to allow the appeal. The trial judgment disregards the guiding principles of procedure.

Contrary to the objectives of the Code , it deprives the appellant of the right to establish the truth of the facts he alleges, breaches his right to be heard, and prevents him from agreeing to a transaction, including a discontinuance of his proceeding. [ 48 ] I will now consider the four reasons set forth in the trial judgment for refusing to authorize disclosure of the requested information. (

a) A final judgment [ 49 ] A framework judgment is not necessarily a final judgment, but is in some respects, an interlocutory judgment that may be varied when circumstances so warrant. Indeed, the judgment arises from the context in which it was rendered. This rapidly changing context is particularly ill-suited to inflexible decisions.

On the contrary, it calls for an open and flexible approach allowing parties to present their points of view and prove the basis of their allegations. [ 50 ] The appellant’s application required review of new circumstances so as to then determine whether they justified exceeding the parameters fixed by the framework judgment. [ 51 ] First, the appellant established the existence of new circumstances, that is, the identification of the client accounts of the investors who systematically exploited the vulnerability of the funds in question and the resulting abnormal deficit of the trades identified by the framework judgment. [ 52 ] Second ‒ and this is the most important point ‒ the appellant’s application does not seek to vary the framework judgment regarding the five-day windows in which the trades had to be made to qualify as trading market timing strategies; rather, it seeks exclusively to obtain the disclosure of additional information to establish the liability of the respondents.

It is from this perspective that the appellant’s application must be considered. (

b) Appellant’s diligence [ 53 ] It is true that a long period of time elapsed between the filing of the class action in October 2004 and the authorization judgment in September 2010. It should be noted, however, that the appellant’s application was timely served and that the appellant was not the only cause of the delay. [ 54 ] Indeed, I note that: (

a) the defences were submitted only in January 2016; (

b) the data relating to trading within the five-day window were disclosed to the appellant between June and October 2016; (

c) the report of the expert Auclair is dated March 29, 2017; and (

d) the appellant’s application de bene esse was filed on March 31, 2017 and then amended on May 29, 2017.

(

c) Scope of the expert’s knowledge [55] Mr. Auclair acknowledges that he is not a trading market timing strategies expert, but this fact does not justify setting aside thefindings of his report. The information about the trades – which constituted the trading market timing operations, as defined by theframework judgment – was provided to him and he has the accounting skills to calculate the profits and losses made on every trade andto establish the impact of the trading market timing operations on the performance of the units owned by the class members. (

d) Utility of the evidence [56] With respect, in my view, the first instance judge began from a false premise when he wrote that the appellant’s applicationseeks to vary [translation] “the framework of the so-called market timing financial operations […] established in the judgment renderedon June 30, 2015 […]”. [57] In his application, the appellant certainly seeks to limit the class definition contemplated by the class action – by reducing thescope of the class action to certain funds only – but, as I already stated, he does not seek to amend the framework of the financialoperations in question by increasing the window to more than five days.

That does not mean that he may not do so. Should that occur,the application will be assessed on its own merits. [58] On appeal, the appellant seeks to obtain additional data on “all” the trades made by some investors during the relevant period toestablish the respondents’ liability, not to establish the damages incurred. [59] During pre-trial discovery, parties are entitled to obtain disclosure of relevant evidence, relevancy being understood in a broadsense.

As this Court has said, relevance in this context means evidence that is useful, appropriate and likely to help advance the debate: [translation] To summarize all these decisions, I am of the view that the following principles can be inferred therefrom: 1. During examination on discovery, both before and after defence, the fullest possible disclosure of evidence should be favoured; 2. Since the evidence is disclosed only at that stage, it will be adduced at trial only if the parties so choose; 3.

The defendant must satisfy the court not that the evidence is relevant in the traditional sense of the word in the trial context, but thatdisclosure of the document will be useful, appropriate, likely to contribute to furthering the debate, based on an acceptable objective thatthe defendant seeks to attain in the case, and that the document to be disclosed is related to the dispute; 4. Such disclosure may not constitute a “fishing expedition”; 5.

The document is likely to constitute evidence in itself.[22] [Footnote omitted] [60] The teachings of this Court were cited with approval by the Supreme Court in Imperial Oil v. Jacques.[23] The Supreme Courtnoted the importance of disclosure during the exploratory stage in the following terms: [26] The pre-trial “exploratory” stage, which is a key time for this search in court for the truth, facilitates the disclosure of evidencethat might enable the parties to establish the truth of the facts they allege (J.-C. Royer and S. Lavallée, La preuve civile (4th ed. 2008), atpp. 485 and 493; J.-L.

Baudouin, Secret professionnel et droit au secret dans le droit de la preuve: Étude de Droit Québécois comparéau Droit Français et à la Common-Law (1965), at p. 173; see also Blaikie v. Commission des valeurs mobilières du Québec, (QC CA), [1990] R.D.J. 473, at pp. 476-477). This stage enables each of the parties [translation] “to be better informed ofthe facts of the case and, more specifically, of the opposite party’s evidence” (Ducharme and Panaccio, at p. 365).

In the early 2000s, thecommittee established to reform Quebec civil procedure gave a more precise description of the “communication of exhibits” stage,stating that it [translation] “favours the transparency of proceedings and the accountability of parties and counsel. It also favoursadmissions, allows the issues to be defined quickly and facilitates transactions” (Civil Procedure Review Committee, D.

Ferland(Chair), Rapport du Comité de révision de la procédure civile : une nouvelle culture judiciaire (2001), at p. 138; see also Frenette, atpp. 679-680; Glegg, at para. 22).[24] [61] The first instance judge found that the information requested was not useful because the parties were at the “liability” and notthe “damages” stage (see para. 16, subparagraph (

b) of his judgment). [62] As we know, the liability requires proof of fault, injury and a causal connection between the two.[25] In the present case, theseverance judgment does not require the parties to establish the existence of the injury or to rebut any such evidence, but the parties wereexpressly shown to have reserved the right to present [translation] “evidence relating to the fact that, in general, the existence of markettiming trades may or may not have a negative impact on the performance of the units owned by the class members.”[26] [63] In his application, the appellant asserts that the evidence sought consists of all the trading data on accounts that he hadidentified as being abnormally active.

Below, he explains why this evidence is useful in establishing the respondents’ liability: [translation] 42. To determine whether the Respondents should have prevented market timing strategies in accordance with their duty of prudence anddiligence in taking care of class members’ assets, the Court must compare the Respondents’ behaviour with that of a prudent and diligentmutual funds manager in the same circumstances. 43. This evidence will make it possible to establish the concrete circumstances in which the Respondents allowed or failed to prevent

market timing operations, including the investment patterns and habits of the abnormally active investors identified by the appellant, the scope of their operations and the concrete result and impact of market timing trades (average holding period, qualitative and quantitative size of market timing trades in the specifically identified accounts, and size of the monetary amounts traded in the accounts, etc.) . 44. The evidence presented and rejected concerned the profits of abnormally active investors calculated in Auclair’s expert reports.

This evidence was proof of the impact of trading market timing strategies on the performance of units owned by class members . [Emphasis added] [ 64 ] I understand that the documents requested concerning all the trades will be used to prove (

a) the respondents’ fault – the departure from the conduct of a prudent and diligent investment fund in having permitted or tolerated the alleged operations – and (

b) the causal connection – the impact on the performance of units – between this fault and the damage. [ 65 ] The appellant’s theory of the case for the hearing of the “civil liability” portion of the class action may be summarized as follows: (

a) to the detriment of the class members, the respondents tolerated or allowed some investors to exploit the vulnerability of the relevant mutual funds through trading market timing strategies, which constitutes their fault; (

b) this fault had a negative impact on the units owned by the class members, thereby constituting the causal connection. [ 66 ] At this stage, I am of the opinion that the information requested is useful and likely to further the debate, in particular by allowing the appellant to establish the actual circumstances of the case, including the investment models and patterns of the abnormally active investors as well as the concrete impact of this trading on the value of the units owned by the class members, but without giving a figure for the loss, which will be done during the consideration of the damages.

With the information currently in his possession, the appellant cannot establish that the actions of some investors had a negative impact on the performance of the units owned by the class members, an element that the appellant was authorized to prove in the severance judgment. [ 67 ] Refusing to disclose this additional information to the appellant would have two consequences. First, it would deprive the appellant of the right to prove the truth of the facts he alleges, breaching his right to be heard.

Second, it would prevent him from agreeing to a transaction, including discontinuance of his proceeding, if there is no negative impact on the performance of the class members’ units, frustrating the objective of dispute resolution.

The resulting injury is irremediable. [ 68 ] Finally, I note that, with regard to the principle of proportionality, the appellant’s application hardly imposes hardship on the respondents because the information already provided was excerpted from the information that is now being requested. [ 69 ] For these reasons, I would allow the appeal, reverse the trial judgment in part, allow the appellant’s application concerning conclusions 5 and 6 of his application de bene esse and, consequently, order the respondent AIC Global Holdings to provide to counsel for the appellant all the trades carried out in the accounts belonging to the investors who owned the accounts identified in Table 6 of report AG-5 for the relevant period, in the AIC Global Advantage Fund, Manulife Global Advantage Fund and Manulife International Focused Fund, as well as the predecessors and successors to these funds; order the respondent CI Mutual Funds Inc. to provide to counsel for the appellant all the trades carried out in the accounts belonging to the investors who owned the accounts identified in

Schedule 5 of report AG-6 for the relevant period, in the BPI Global Equity Fund, Cl Global Fund, BPI International Equity Fund, Cl Pacific Fund, Cl Pacific Corporate Class, Cl Global Balanced Corporate Class and Cl International Balanced Fund, as well as the predecessors and successors to these funds; and to refer the matter back to the first instance judge to determine the time period within which the aforementioned information must be disclosed; with legal costs in both courts. FRANCE THIBAULT, J.A.