An Ontario court has denied a hedge fund’s request that it be allowed to examine a second Royal Bank of Canada executive as part of the discovery process in its suit against the bank.
In Silvercreek v. RBC, 2014, the Ontario Superior Court of Justice denied a request from Silvercreek II Limited and Silvercreek Limited Partnership (collectively Silvercreek), which was seeking to examine Greg Mills, head of the global equities division of RBC Capital Markets, as part of the discovery in its suit against the bank.
Silvercreek also sought an order that the court appoint a referee to deal with thousands of documents that the bank is claiming are privileged. The court also denied that part of the motion.
According to the motion decision, Silvercreek, which was a customer of RBC’s prime brokerage unit, is suing the bank alleging that it caused significant losses back in January 2009, when Silvercreek was unable to meet the margin requirements for its accounts, and RBC subsequently liquidated them. The allegations have not been proven. The case is scheduled for a six to eight week trial starting in May 2015.
Silvercreek’s motion involved the discovery process. The decision notes that RBC produced Doug McGregor, chairman and CEO of RBC Capital Markets, to be examined in the case; but RBC denied a request that Silvercreek also be allowed to examine Mills.
Silvercreek argued that allowing it to examine Mills would expedite the case. However, the court disagreed, saying that Silvercreek did not meet the test to also examine Mills, and that it does not see how requiring his examination will expedite the lawsuit. “Nor do I think the discovery of the RBC will be faster and cheaper as a result,” wrote Judge Laurence Pattillo.
The court also declined to appoint a referee to assess the bank’s claim for privilege on approximately 2,500 documents. “Silvercreek submits that in light of the difficulties that have arisen in respect of RBC’s claim for privilege over the documents … in order to lay the privilege issue to rest in advance of the trial date, the court should appoint a referee and direct a reference to determine the privilege issue,” wrote Pattillo.
However, the court ruled that it has no jurisdiction to order Silvercreek’s request for a referee. And, even if it did, it would not appoint one in the circumstances of the case. “Apart from the many procedural issues that would need to be addressed and resolved to facilitate such a reference, in my view such a step is premature,” Pattillo wrote.
The court calls on the two sides to try to resolve their issues concerning RBC’s claim of privilege. And, if they cannot, it will hold a further motion hearing in the first two weeks of November.