NATIONAL BANK OF CANADA v SUNTERRA FOOD CORPORATION

This Application concerned whether senior executives of National Bank of Canada (“NBC”) and Compeer Financial (“Compeer”) could be compelled to attend examinations in advance of a scheduled claims hearing under the Companies’ Creditors Arrangement Act, RSC 1985, c C-36. At issue was whether Sunterra was required to establish that these individuals were likely to have relevant and material evidence in accordance with Rule 5.17, or whether Rule 6.8 governed the process such that Sunterra could select and require the attendance of corporate representatives without first demonstrating relevance.

Justice Lema noted that ordinarily, Rule 5.17 requires a party seeking to examine a non-party witness to first establish that the witness is likely to have relevant and material evidence. However, the Court held that the Parties had intentionally departed from that requirement through a negotiated scheduling order (the “Scheduling Order”). The Scheduling Order created a specific category permitting Sunterra to select up to two NBC witnesses whose attendance at questioning depended only on their status as current or former NBC personnel and Sunterra’s selection, with no mechanism for NBC to object on relevance grounds or seek judicial review of the choice. Given the structure and timelines of the Scheduling Order, Justice Lema concluded that the Parties intended to bypass the Rule 5.17 relevance threshold for this limited category of witnesses. On that basis, Lema J. held that Sunterra was entitled to examine NBC’s President without first demonstrating relevance.

With respect to Compeer, Lema J. highlighted that the Scheduling Order referenced Rule 6.8, which governs the questioning of corporate representatives. Justice Lema noted that this reference was procedural rather than substantive, meaning that Rule 6.8 addressed the mechanics of how the examinations would proceed, not whether Sunterra was required to first establish relevance. As with NBC, Lema J. determined that the Scheduling Order allowed Sunterra to select up to two Compeer executives for examination without a relevance review or objection process. Accordingly, Justice Lema found that Compeer was required to produce its CEO and Chief Risk Officer for questioning based solely on Sunterra’s selection.

Justice Lema concluded that by agreeing to a streamlined, disciplined pre-hearing examination framework in the Scheduling Order, both NBC and Compeer had effectively waived any protections under Rule 5.17 and any relevance-based objections under Rule 6.8. As a result, Lema J. granted Sunterra’s Application’s to require the executives to attend examinations and also allowed NBC’s separate Application to examine KPMG, whose role as auditor rendered its evidence relevant under the ordinary relevance standard.