Halifax (Regional Municipality Pension Committee) v. State Street Global Advisors Ltd.

Halifax (Regional Municipality Pension Committee) v. State Street Global Advisors Ltd. Court Supreme Court Date 2011-09-29 Citation 2011 NSSC 355 Docket Hfx 309063 Judge/Registrar/Adjudicator Duncan, Patrick J. (Honourable Justice) (SC) Document Type Decision Relations See also - Halifax (Regional Municipality Pension Committee) v. State Street Global Advisors Ltd. - 2011 NSSC 447 - 2011-12-01 - Decision Decision Content SUPREME COURT OF NOVA SCOTIA Halifax (Regional Municipality Pension Committee) v. State Street Global Advisors Ltd., 2011 NSSC 355 Date: 20110930 Docket: Hfx 309063 Registry: Halifax Between: The Halifax Regional Municipality Pension Committee Plaintiff v. State Street Bank and Trust Company and State Street Global Advisors Ltd./ Conseillers En Gestion Global State Street, Ltée Defendants Judge: The Honourable Justice Patrick Duncan Heard: August 18, 19 and 20, 2010, in Halifax, Nova Scotia Counsel: George MacDonald, Q.C., Jane O’Neill, and Peter Rogers, Q,C, for the plaintiff Michael Ryan, Q.C. John Keith, Christopher Zimmerman, Andrea Robinson, and Michael Dube for the defendants I N D E X Heading Paragraph Number INTRODUCTION 1 Background 3 Legal Principles 20 Meaning of relevancy 29 Analysis 40 PLAINTIFF’S FIRST MOTION 43 The Preamble 46 Category 1 49 Category 2 95 Category 3 100 Category 4 111 Category 5 119 Category 6 126 Category 7 132 Category 8 152 Category 9 166 PLAINTIFF’S SECOND MOTION 177 Analysis 178 Heading Paragraph Number PLAINTIFF’S THIRD MOTION 226 DEFENDANT’S FIRST MOTIONS 237 Category 1 and Category 2 241 Analysis 252 Category 3 and Category 4 277 Northern Trust 282 RBC Dexia 283 Brockhouse Cooper and Ryan Anderson 291 Category 5 302 Background 303 Relevance 310 Solicitor - Client Privilege General 316 Express and Implied Waiver of Privilege 318 Analysis 322 Conclusion 342 DEFENDANTS’ SECOND MOTION 346 CONCLUSION 348 By the Court: INTRODUCTION [1] The plaintiff Halifax Regional Municipality Pension Committee (the Committee) has presented three motions seeking an order: 1. To compel the defendants (collectively, State Street) to make disclosure of several categories of documents; 2. Providing State Street with directions on disclosure; and 3. Setting dates for the trial of this matter. [2] The defendants counter with two motions seeking an order: 1. To compel the plaintiff to expand the parameters of their search for relevant documents and electronic information and to disclose such information as those searches reveal, including a requirement that the plaintiff’s law firm, McInnes Cooper, produce documents and information over which the plaintiff claims solicitor-client privilege. 2. To set a schedule for the exchange of relevant documentation/electronic information and discovery examinations. Background [3] The Committee is the pension manager for employees of the Halifax Regional Municipality and certain other Halifax public sector employees. [4] The defendant State Street Global Advisors Ltd./ Conseillers En Gestion Globale State Stree Ltee (SSGA Can) is a federally incorporated company with its’ registered office in Montreal, Quebec. It is registered to carry on business in Nova Scotia and was a party, with the Committee, to an Investment Management Agreement, dated January 16, 2007. SSGA Can is alleged by the plaintiff to have been acting as investment manager for the Committee at times relevant to this claim. [5] The defendant State Street Bank and Trust Company (SSBTC) is a Massachusetts trust company. It provides, among other things, financial services to institutional investors, including custody services, trust services, investment management, trading services, and investment servicing. [6] State Street Global Advisors (SSGA US) is an investment management firm with its offices in Massachusetts. It is alleged to be the investment arm of, and a division of SSBTC. [7] In the first half of 2007 there were meetings of Committee representatives with representatives of SSGA Can, the Global Alpha Edge Fund (the Alpha Fund) managers, SSGA US and SSBTC. There was various correspondence among these parties. [8] The Committee decided to invest in a “130/30 strategy”. Under this strategy, short positions are taken to a maximum of 30% of portfolio value. The risks associated with short positions are hedged by taking long positions to a maximum of 130% of portfolio value. The Statement of Defence filed by State Street provides the following explanation of "short positions" or "short selling": "Short positions" or "short selling" is an investment strategy in which an investor sells stock it does not own. The investor must first borrow the stock from a broker. Investors who sell short do so believing the price of the stock will fall and that they can buy the stock back at a lower price and therefore make a profit. However, if the price of the stock rises, the investor may be required to buy the stock back at a higher price, incurring a loss. [9] This investment strategy can employ different percentages ( e.g., 120/20; 130/30; 140/40) and is referred to generically as an “extension strategy”. [10] On July 30, 2007 the Committee entered into an Agreement of Trust (AoT) with SSBTC to settle funds on the latter to pursue this strategy. The Committee transferred approximately $47 million (the Halifax assets) to SSBTC , which were intended for investment in the Alpha Fund, a common trust fund controlled by the defendant SSBTC. The investment was managed from August 9, 2007 to September 15, 2008 by SSGA US. [11] The Alpha Fund had been created by two earlier declarations of trust. In October, 2004, SSBTC signed a general Declaration of Trust over all of its global managed common trust funds. This document contemplated the declaration of new common trust funds. The Alpha Fund was established by a separate trust declaration and became subject to the general Declaration of Trust as well as the terms specific to the Alpha Fund Declaration. [12] Custody of, and prime brokerage for, the Alpha Fund, which included all of the Halifax assets, was given by SSBTC to Lehman Brothers Inc. (LBI). In turn those assets were transferred to Lehman Brothers International (Europe), (LBIE). The Committee alleges that it was not informed that custody of the Halifax assets had been transferred to Lehman and that authorization for the transfer was not given. [13] SSBTC and Lehman are alleged to be signatories to the following agreements (the Lehman Agreements): (a) Margin Lending Agreement dated May 7, 2007, between LBIE and SSBTC, as Trustee of the Alpha Fund; (b) Customer Account Prime Brokerage Agreement dated May 7, 2007 between SSBTC, as Trustee of the Alpha Fund, and LBI, for itself and its affiliates, including LBIE; (c) Global Master Securities Lending Agreement, undated, between SSBTC, as Trustee of the Alpha Fund, and LBIE. [14] The Lehman Agreements purportedly grant Lehman authority to deal with any assets of the Alpha Fund in its’ possession, free and clear of any trusts or obligations to segregate them for protection in the event of insolvency. They allow Lehman to characterize them as "collateral" and to pledge them as collateral for Lehman's own loans. The following clauses of the Agreements have been identified by the plaintiff as particularly relevant to the present motion: [Lehman] ... shall have a lien on and a continuing first priority security interest in all of [the Alpha Fund] cash, securities, financial assets and other property from time to time delivered ... or otherwise held by, or under the control of [Lehman] (the "Collateral") ... Affidavit of T. Troy, Exhibit "1D", Clause 5(b) [the Alpha Fund] hereby authorizes [Lehman] to lend either to itself or to others any or all Collateral, to convey therewith all attendant rights of ownership ... and to use all such Collateral as collateral for its general loans. Any Collateral, together with all attendant rights of ownership, may be pledged, repledged, hypothecated or rehypothecated either separately or in common with other property for any amounts due to [Lehman] ... Affidavit of T. Troy, Exhibit "1D", Clause 5(c) ... cash delivered by [the Alpha Fund] will not be client money pursuant to the Rules [of the Financial Services Authority of England and Wales] and will not be subject to the protections conferred by the Rules. Such cash will not be segregated from the money of [Lehman] or any other counterparty of [Lehman] and will be held free and clear of all trusts¼[Lehman] will use such cash in the course of its business and [the Alpha Fund] will, therefore, rank as a general creditor of [Lehman] in respect of such cash." Affidavit of T. Troy, Exhibit "1D", Clause 7(c) ... [the Alpha Fund] represent[s] that all Assets shall at all times be free and clear of all liens, claims and encumbrances of any nature for the benefit of a party other than a Lehman Brothers entity... Affidavit of T. Troy, Exhibit "1E", Clause 4(c) [the Alpha Fund] hereby authorize[s] Lehman Brothers to lend either to itself or to others any Assets, to convey therewith all attendant rights of ownership ... and to use all Assets as collateral for its general loans. Any such property, together with all attendant rights of ownership, may be pledged, repledged, hypothecated or rehypothecated either separately or in common with other property for any amounts due to Lehman Brothers thereon or for a greater sum, and Lehman Brothers shall have no obligation to retain a like amount of similar property in its possession and control... Affidavit of T. Troy, Exhibit "1E", Clause 20(a) [15] It has been suggested that throughout the time that SSBTC invested the Halifax Assets in the Alpha Fund, numerous media reports discussed financial turmoil within Lehman Brothers, leading to a ratings downgrade in June, 2008 by Moody's Investment Service, Standard & Poors, and Fitch Ratings. [16] LBI declared bankruptcy on September 15, 2008. LBIE was placed under administration in England on the same date. The administrator of LBIE, PricewaterhouseCoopers, has taken the position that the Halifax assets, as part of the Alpha Fund assets, are “frozen”. Repeated demands made to the defendants for return of the Halifax assets, have not been successful. [17] The Committee filed the present action on March 25, 2009, seeking a return of the Halifax assets. It was amended on two occasions, the Second Amended Statement of Claim having been filed July 16, 2009. The Committee claims against the defendants for negligence, breach of fiduciary duty, and breach of contract. [18] A Defence to the claim was filed on August 19, 2009. It includes a general denial of the allegations. It specifically pleads that the plaintiff is a sophisticated investor that was aware of the role of a prime broker and the risks associated with the 130/30 investment strategy. The plaintiff asserts that the AoT provides all necessary authority for the actions of SSBTC. The Defence characterizes the Lehman insolvency as “sudden and unexpected” and that the defendants’ conduct insofar as the selection of Lehman as a prime broker was consistent with industry and contractual expectations of the defendants. [19] The parties have been unable to resolve differences over the extent of their mutual disclosure obligations in this litigation, or the timetable by which to effect disclosure and discovery. Legal Principles [20] The Nova Scotia Civil Procedure Rules require every party to litigation to make “full disclosure of relevant documents and electronic information”. It is presumed to be necessary for justice in a proceeding. see, Rule 14.08 (1). [21] This presumption equally applies to, among other things, the disclosure of electronic information: 14.08 (5) The presumption for disclosure applies, unless it is rebutted, on a motion under Rule 14.12, Rule 15.07 of Rule 15 ‑ Disclosure of Documents, Rules 16.03 or 16.14 of Rule 16 ‑ Disclosure of Electronic Information, Rule 17.05 of Rule 17 ‑Disclosure of Other Things, or Rule 18.18 of Rule 18 ‑ Discovery. [22] Parties to litigation have a concomitant duty to find and preserve relevant information as enunciated in Rule 14.08(2): 14.08 (2) Making full disclosure of documents or electronic information includes taking all reasonable steps to become knowledgeable of what relevant documents or electronic information exist and are in the control of the party, and to preserve the documents and electronic information. [23] Rule 15 sets out a topic specific framework for the identification, preservation and disclosure of documents. Rule 16 similarly sets out a specific framework within which “electronic information” must be searched for, preserved and disclosed. [24] What is determined to be relevant and disclosable has the potential to substantially shape the way in which the parties map out their litigation strategies. The parties do not agree as to what are the appropriate parameters of their respective searches for relevant materials. [25] In support of its’ motions, the plaintiff says that a definition of “relevancy” that is too restrictive will result in a failure to capture information in the possession or control of the defendants that is necessary for the plaintiff to properly advance its’ claim. This would, in their submission, result in an unreasonable limitation upon the information available for the discovery of witnesses. [26] The defendants argue against the relevancy of some of the information that the plaintiff seeks. They add that some of the plaintiff’s requests will generate cost, and a burden, that is disproportionate to the likely probative value of the information sought by the plaintiff. In this latter proposition they rely on the provisions of Rule 14.08(3) which states: 3) A party who proposes that a judge modify an obligation to make disclosure must rebut the presumption for disclosure by establishing that the modification is necessary to make cost, burden, and delay proportionate to both of the following: (a) the likely probative value of evidence that may be found or acquired if the obligation is not limited; (b) the importance of the issues in the proceeding to the parties. [27] In advancing this argument, the defendants must also comply with the evidentiary obligations set out in Rule 14.08(4): (4) The party who seeks to rebut the presumption must fully disclose the party’s knowledge of what evidence is likely to be found or acquired if the disclosure obligation is not limited. [28] In support of their first four motions the defendants submit that the plaintiff has not taken “all reasonable steps to become knowledgeable of what relevant documents or electronic information exist and are in [its’ control]” as required by Rule 14.08(2). Meaning of relevancy [29] Rule 14.01 defines “relevant” and “relevancy” as follows: Meaning of “relevant” in Part 5 14.01 (1) In this Part, “relevant” and “relevancy” have the same meaning as at the trial of an action or on the hearing of an application and, for greater clarity, both of the following apply on a determination of relevancy under this Part: (a) a judge who determines the relevancy of a document, electronic information, or other thing sought to be disclosed or produced must make the determination by assessing whether a judge presiding at the trial or hearing of the proceeding would find the document, electronic information, or other thing relevant or irrelevant; (b) a judge who determines the relevancy of information called for by a question asked in accordance with this Part 5 must make the determination by assessing whether a judge presiding at the trial or hearing of the proceeding would find the information relevant or irrelevant. [30] This provision was considered by Justice Moir in the case of Saturley v. CIBC World Markets Inc. 2011 NSSC 4. He sums up by setting out the following principles: 45 As I read Rule 14.01(1), counsel who are deciding whether to make an issue about the relevancy of something for disclosure, or at discovery, must do their best to put themselves at the vantage they will have at the beginning of the trial. And, when the issue goes to chambers, counsel will have to do their best to give the chambers judge the vantage the trial judge would have at the beginning of the trial. And, the chambers judge must make a ruling from that vantage, imperfectly constructed though it may be. 46 This examination of the legislative history, the recent jurisprudence, and the text of Rule 14.01 leads to the following conclusions: * The semblance of relevancy test for disclosure and discovery has been abolished. * The underlying reasoning, that it is too difficult to assess relevancy before trial, has been replaced by a requirement that judges do just that. Chambers judges are required to assess relevancy from the vantage of a trial, as best as it can be constructed. * The determination of relevancy for disclosure of relevant documents, discovery of relevant evidence, or discovery of information likely to lead to relevant evidence must be made according to the meaning of relevance in evidence law generally. The Rule does not permit a watered‑down version. * Just as at trial, the determination is made on the pleadings and evidence known to the judge when the ruling is made. In my opinion, these conclusions follow from, and are enlightened by, the principle that disclosure of relevant, rather than irrelevant, information is fundamental to justice and the recognition that an overly broad requirement worked injustices in the past. 47 In my opinion, these conclusions do not suggest a retreat from the broad or liberal approach to disclosure and discovery of relevant information that has prevailed in this province since 1972. [31] Bryson J.A., writing in Brown v. Cape Breton (Regional Municipality) 2011 NSCA 32, approved of Justice Moir’s conclusions. see, at paras. 12-13. [32] The starting point for any analysis then is the “... meaning of relevance in evidence law generally”. I have considered the helpful review of case and academic authority that discusses the meaning of “relevance”, provided by LeBlanc J. in Murphy v. Lawton’s Drug Stores Ltd. 2010 NSSC 289 at paras. 14-20. [33] The following are representative statements of the law by which I have guided myself in making the findings set out herein. At page 30 in The Law of Evidence, 5th ed. revised, (Paciocco, David M.; Struesser, Lee) (Toronto: Irwin Law, 2010) the authors describe the concept of relevance: Evidence is relevant where it has some tendency as a matter of logic and human experience to make the proposition for which it is advanced more likely than that proposition would appear to be in the absence of that evidence. To identify logically irrelevant evidence, ask, “Does the evidence assist in proving the fact that my opponent is trying to prove?” While the concept of materiality describes the relationship between evidence and the matters in issue, logical “relevance” is about the relationship between evidence and the fact it is offered to prove. There is no legal test for identifying relevant evidence. Relevance is a matter of logic. To identify logically irrelevant evidence, ask, “Does the evidence assist in proving the fact that my opponent is trying to prove?” For example, evidence that the breath of the accused smelled of alcohol is relevant to whether her ability to drive was impaired by alcohol. Evidence that she was seen drinking alcohol a week before is not. [34] And at page 31: 3.3) The Standard of Logical Relevance Evidence is relevant where it has some tendency as a matter of logic and human experience to make the proposition for which it is advanced more likely than that proposition would be in the absence of that evidence. [ see, R. v. J. (J.‑L.), [2000] 2 S.C.R. 600 at para. 47, and R. v. B.(L.), above note 4 at 47– 48. See the American Federal Rules of Evidence, Rule 401, and the decision of La Forest J. in R. v. Corbett, [1988] 1 S.C.R. 670.] [35] In R. v. Arp, (1998), 129 C.C.C. (3d) 321 the Supreme Court of Canada has said: To be logically relevant, an item of evidence does not have to firmly establish, on any standard, the truth or falsity of a fact in issue. The evidence must simply tend to “increase or diminish the probability of the existence of a fact in issue.” . . . As a consequence, there is no minimum probative value required for evidence to be relevant. [at p. 338] [36] Sopinka, Lederman and Bryant, in The Law of Evidence in Canada, 3rd ed. (Markham: Lexis Nexis Canada, 2009), state, at para. 2.35: §2.35 A traditionally accepted definition of relevance is that in Sir J.F. Stephen’s A Digest of the Law of Evidence, where it is defined to mean: ... any two facts to which it is applied are so related to each other that according to the common course of events one either taken by itself or in connection with other facts proves or renders probable the past, present, or future existence or non-existence of the other. [37] There are degrees of relevance. The concept is discussed in Witnesses (Mewett, Alan W.; Sankoff, Peter) (Toronto: Carswell, looseleaf 1991 as updated to 2011- Rel. 2), at p. 1-13: Relevance is not a black or white concept. Evidence may range all the way from being conclusive proof of an issue down to being vaguely and only of the slightest assistance and from there down to the point when it ceases to be relevant. While there is no difficulty in determining relevance at the upper end of the scale, the problem that arises is usually at the lower end of the scale. [38] So although we have moved away from a “semblance of relevancy” threshold for disclosure, disclosure is required of what may be relevant though “only of the slightest assistance”. [39] Rule 14.08(3) must be seen in this light. It will not justify an exemption of that which is highly relevant. It may support relief from disclosing otherwise relevant information that the cost and delay does not justify production of. Analysis [40] This case has the potential to be a complex piece of litigation. There is a significant sum of money at stake. The plaintiff is a manager of almost $1.0 billion in assets but operating out of a single location with a concentrated professional management structure and a volunteer Committee. [41] Costs of the burden to identify, preserve and disclose relevant information is, on the face of it, less onerous for the plaintiff, but it has expressed privacy concerns for the personal information of the volunteers who employ personal computers in receiving and storing information, and concerns for the information of uninvolved co-workers who share their employer’s data storage systems. [42] State Street is part of a complex corporate structure that has multiple related entities, with significant numbers of employees and clients. It operates globally. That, in and of itself, is not an excuse to limit production that is otherwise called for by law. If , however, its' disclosure obligation is defined too broadly, then there is a risk of generating delay, unwarranted cost, and an unhelpful, and unfocused search for, and production of, information throughout a large, multi-dimensional corporate structure. PLAINTIFF’S FIRST MOTION [43] The plaintiff’s first motion seeks an order directing the defendants to produce, pursuant to Civil Procedure Rules 14.12(1), 15.07(2) and 26.02(3), documents falling into nine categories to specifically include though not be limited to thirty three subcategories. [44] During the hearing, counsel for the plaintiff submitted a revised and narrower form of order than that sought in the original motion documents. [45] The defendants, without conceding the relevance of any of the sought after information, responded with its’ own version of that proposed order. They allow that certain of the requests could be complied with, and without undue burden as contemplated by Rule 14.08(3). The defendants’ version is generally distinguished from that of the plaintiff in the following ways: 1. The order would apply to “decision makers” only; 2. The order would limit the application of the order to four funds for which Lehman Brothers was the Prime Broker; 3. The order restricts the applicable time periods. 4. The order would not include those items where to comply would be unduly burdensome. The Preamble [46] The parties disagree as to the form of preamble to the proposed order which responds to the plaintiff’s first motion. The following, taken from the defendants’ draft, sets out the difference in the underlined phrasing. THAT the Defendants State Street Bank and Trust Company and State Street Global Advisors Ltd./Counseillers en Gestion Global State Street, Ltèe (collectively “State Street”) must produce the following documents created prior to September 15, 2008 (unless a different time period is specified below): [47] The defendants seek that the production be limited to relevant time frames which they initially define by the date of the LBI declaration of bankruptcy, and the placement of LBIE under administration in England, both events which took place on September 15, 2008. [48] I agree with the defendants’ reasoning and proposed form of Preamble subject to variations within specific categories and/or subcategories. In particular, there are some sources of relevant information that post date the September 15, 2008 date which should be disclosed. Category 1 [49] The plaintiff seeks: All documents relating to State Street’s knowledge of the risks involved in counter party concentration of credit risk with a single institution. [50] The plaintiff submits that State Street should not have allowed all of the Halifax assets to be placed in the custody of a single prime broker, Lehman. They say that the financial crisis of 2008, including the insolvency of Bear Stearns, created a foreseeable risk of prime broker default and consequential losses as incurred by the plaintiff. [51] In this category, the plaintiff seeks documents that show what information about this credit risk was available to the defendants prior to the Lehman insolvencies. They point to evidence that the defendants employed analysts to assess the credit risk of counterparties; that SSGA established policies and procedures to select and monitor prime brokers, and that there were options available to the defendants to avoid the risk, primarily by the use of multiple prime brokers. [52] The information sought is said to evidence whether: (i) State Street failed to disclose information that was relevant and material to the investment of the Halifax assets; (ii) Lehman’s insolvency was unforseen; (iii) the defendants’ actions were reasonable in light of the information available; and (iv) the defendants acted reasonably by depositing the entirety of the Halifax assets with Lehman and allowing them to be transferred to the United Kingdom. [53] The defendants’ response is germane not only to this category but to others to be considered. In general they take the position that the plaintiff’s requests are overly broad, and disclosure should be limited to that information relating to the selection and monitoring of Lehman as the prime broker for the Global Alpha Edge fund. They say that no case has been made out to show that information relating to other funds, investors, or prime brokers is relevant to this matter. [54] The defendants also argue against being subjected to the burden that compliance with the plaintiff’s request would place upon them where they say there is little likelihood of identifying anything that has probative value. [55] Speaking to that burden they adduced evidence that as at July 2010 State Street spent over $1.0 million USD collecting and reviewing the documents of 23 custodians for privilege and relevance. They suggest that some 8 million documents were already under review, before the application of any expanded search and disclosure parameters that might be imposed as a result of these motions. [56] As to the places and people to search: State Street is described as “... a global corporation which, at the end of 2009, had total assets of $157.95 billion USD, total deposits of $90.06 billion USD, $18.79 trillion USD of assets under custody and administration, and $2.92 trillion USD of assets under management. Between 2007 and 2009, State Street employed between approximately 27,100 and 28,400 employees around the world.” [57] As to the funds to search: The defendants state that as at September 30, 2008 they managed 35 prime brokered funds, using seven different prime brokers. Twenty two of those funds employed a form of “extension strategy”. [58] As to the scope of the transactions under review: The defendants offer as an example of the importance of a focused search that “...for custody customers alone, approximately 225,000 counter party transactions...” are undertaken daily. [59] The defendants equate the plaintiff’s requests to a proposal for a “grand rummaging through voluminous paper and electronic files”. [60] I turn now to the specifics of the requested disclosure. Category 1 - Introduction [61] The first category sought by the plaintiff is introduced as follows: (i) All documents relating to State Street’s knowledge of the risks involved in counter party concentration of credit risk with a single institution, in relation to any State Street fund utilizing a prime broker, including edge or extension strategy funds, including but not limited to the following: [62] The defendants’ proposal is: (i) All documents in the possession of State Street custodians who were responsible for the decision to hire and retain Lehman Brothers as prime broker of those State Street Extension/Edge funds prime brokered by Lehman Brothers relating to State Street’s knowledge of the risks involved in counter party concentration of credit risk with a single prime broker, including but not limited to the following: [63] Having considered the positions of the parties I have concluded that there is an insufficient evidentiary basis existing at this time to merit an unrestricted disclosure in relation to “any State Street fund using a prime broker” (of which there are said to be 35). In saying this I have considered how the plaintiff’s proposed version would meet their four objectives set out above. It does not. [64] I agree that it is the so called “decision makers” whose knowledge is relevant and material. It is important that the disclosure include that information which was in their possession or control at relevant times and which speaks to the counter party concentration of credit risk with a single prime broker, irrespective of whether that information relates directly to Lehman. If it was in the decision makers’ possession or control before, or while they made assessments of the appropriateness of hiring and retaining Lehman as the prime broker then it is disclosable. [65] Counsel for the plaintiff has expressed concerns about the restriction to “custodians” which the defendants’ arguments would seem to equate to “decision makers”. The real issues are (i) who is captured by those terms; and (ii) who makes the determination as to whether an individual falls into the class. [66] For clarity, the term “decision makers” or “custodians” being the word employed in the introduction to category 1 should not be limited to the person or persons who handled the plaintiff’s investment, but should include the most senior management of State Street who had oversight of the decisions to hire and retain Lehman as a prime broker. Their knowledge, the degree to which they share that knowledge with the operational staff, and their role in setting corporate policy and direction is very relevant to the manner in which the day to day decision makers fulfilled their tasks. [67] It will be for the defendant to ensure that this information is searched for and disclosed as required by the Rules. [68] I have included wording to ensure that the obligation on the defendants conforms to Rule 15.02(1) and note that the defendants have an obligation under Rule 15.02(2)(a) with respect to documents “once controlled but no longer controls ...”. [69] Therefore the Introduction to Category 1 will read: (i) All documents in the possession or under the control of the State Street custodians (which term includes senior management of SSGA, SSBTC or who were involved in the operation of the Global Alpha Edge Fund) who were responsible for or oversaw the decision to hire and retain Lehman Brothers as prime broker of those State Street Extension/Edge funds prime brokered by Lehman Brothers, and which relate to State Street’s knowledge of the risks involved in counter party concentration of credit risk with a single prime broker, including but not limited to the following: [70] There are six subcategories of information sought. I will set out the parties respective positions as each are considered. Category 1, Subcategories (a), (b) and (c) [71] The plaintiff seeks: (a) any audited financial statements prepared between January 1, 2007 and September 15, 2008 for any State Street common trust fund or other investment fund utilizing extension strategies, (b) any communications between State Street and PricewaterhouseCoopers or other auditors concerning the audited financial statements set out in subparagraph (i) (a) above, (c) any documents relevant to State Street’s knowledge of the statement of PricewaterhouseCoopers found on the December 31, 2007 audited financial statements (dated June 25, 2008) for the Global Alpha Edge Fund, which expressly warns of “counter party concentration of credit risk with a major financial institution”, [72] The defendants' responses are: (a) [Defendants are willing to produce the financial statements for those State Street Extension/Edge funds prime brokered by Lehman Brothers] (b) [Unduly burdensome] (c) [Encompassed within prior searches and productions] [73] After the Lehman bankruptcy, the plaintiff obtained a copy of the financial statement prepared for the Alpha Fund and dated December 31, 2007. A note on these financial statements (dated June 25, 2008) is said to expressly warn of counter party risk resulting from the concentration of assets with a single entity. The note in question says: At December 31, 2007, the fund had counter party concentration of credit risk with a major financial institution. All amounts receivable and security positions held are deposited with this financial institution. Credit risk exists to the extent that financial institution may be unable to repay amounts owed to the fund. [74] By its response, the defendants acknowledge the relevance of this information but seek to limit the disclosure to the financial statements prime brokered by Lehman Brothers. They argue that to accept the plaintiff’s position will require an examination of all the materials exchanged among many persons over the approximately 10 months required to prepare each statement for the 22 funds using the extension strategy. [75] The plaintiff responds that it is entitled to know when this warning first started to appear on any of the statements, for any of these funds. They want know whether this warning was general to all prime brokered funds or only to those for Lehman Brothers International Europe brokered funds. The distinction could signal awareness of a risk that would be material to the investor. The plaintiff says that because of the limited time frame specified in its request there can be no argument of undue burden. In effect, they are looking for the statements that would encompass the 2006 and 2007 years. [76] I observe that the Preamble limits the disclosure to that information in the possession or control of a limited group of custodians, which to some degree would limit the extent of the disclosure requirements generated by the plaintiff’s request. For example, if the custodians did not have the financial statements, and did not participate in the preparation of those other financial statements, then it is unlikely to be disclosable under this provision. There would be resources expended in the search, but the defendants make it clear that they are already conducting searches in relation to those persons. This provision is only to ensure that as they continue those searches, they identify and disclose this additional information. [77] The question then is whether there are reasonable limits to impose based on relevance as measured against the burden and probative value. [78] Category1(a) as requested by plaintiff is very limited, it seeks only the final audited financial statements and not the working documents generated in the preparation of the statements. These are statements that should be readily identifiable and capable of production. I believe that there are 22 funds and it is likely to generate 2 reports for each making a likely maximum total production requirement of 44 financial statements. [79] I conclude that the plaintiff will have the information they seek in 1(a) which will read: (a) any final audited financial statements prepared between January 1, 2007 and September 15, 2008 for any State Street common trust fund or other investment fund utilizing extension strategies. [80] As to 1(b) I agree with the defendants that it is overbroad, even when limited to the “decision makers”. [81] The objective is to identify that information which informed the decision making with respect to the investment with LBI and ultimately LBIE, together with the risks associated with such an investment arrangement. If a decision maker communicated with auditors specifically on the inclusion or the significance, or the meaning of such a warning in the financial statements, then it does speak to their assessment in hiring and retaining LBI and should be disclosable. This is so irrespective of whether the communications exchanged related to the Alpha fund or some other fund using the same strategy. [82] If the decision makers were alerted to the risks indicated by the warning set out in the Alpha Fund statement for 2007, and that they were greater for some prime brokered funds than others then it goes directly to the defendants’ statement in paragraph 6 of its Defence that “at all times preceding Lehman’s insolvency, State Street’s actions were entirely reasonable in light of the information available.” (Emphasis added) I take this to mean that “information” which was “available” to the decision makers. [83] As to paragraph 1(c), the defendants say that current searches are already meeting this request. As such it could be included in the order as submitted. However, I have concluded that it should be varied to ensure that the information emanating from the financial statements produced in response to 1 (a) and that I conclude is relevant and disclosable is captured in the wording. [84] For greater certainty, the wording in (c) is framed by the Introduction to Category 1 and so will include any communications between the “decision makers” (as set out in the Preamble) and PricewaterhouseCoopers or other auditors that speaks to any warnings of "counter party concentration of credit risk with a major financial institution" and that arises from the audited financial statements required to be produced by 1(a) above. [85] In summary the plaintiff’s motion to include 1(b) is denied, while 1(c) will be replaced by the following: (Note: the paragraph and subparagraph numbering will be changed in the final order to reflect the proper sequence. I retain the parties’ paragraph numbering for the purposes of the analysis only) (c) any documents relevant to State Street’s knowledge of the statement of PricewaterhouseCoopers found on the December 31, 2007 audited financial statements (dated June 25, 2008) for the Global Alpha Edge Fund, or included in the audited statements produced pursuant to (a) above and which expressly warns of “counter party concentration of credit risk with a major financial institution”. Category 1 Subcategory (d) [86] The plaintiff request that the defendants produce: (d) any documents explaining why the audited financial statements referenced in subparagraph (i)(c) were not provided to the Committee until after the bankruptcy of Lehman Brothers, (in this Notice, “Lehman Brothers” includes all of the Lehman entities referred to in paragraph 1 of the Agreement dated May 7, 2007 between Lehman Brothers Inc. and State Street Bank and Trust) [87] The defendants submit that this request is “Encompassed within prior searches and productions”. This position was founded on a narrower interpretation of what 1(c) would include. I grant the plaintiff’s motion to include disclosure set out in 1(d) but to achieve the original purpose the wording will need to be changed since the variation I have permitted above will generate documents that are not related to this request. I am not including reference to the financial statements for the other extension funds as the relevance to this particular warning cannot be determined at this time. [88] What has been identified in argument as paragraph 1(d) will now read: (d) any documents explaining why the audited financial statements of PricewaterhouseCoopers for December 31, 2007 (dated June 25, 2008) for the Global Alpha Edge Fund, which expressly warns of “counter party concentration of credit risk with a major financial institution”, were not provided to the Committee until after the bankruptcy of Lehman Brothers, (“Lehman Brothers” includes all of the Lehman entities referred to in paragraph 1 of the Agreement dated May 7, 2007 between Lehman Brothers Inc. and State Street Bank and Trust) Category 1 Subcategories (e) and (f) [89] The Plaintiff seeks: (e) any documents relating to strategies employed or not employed by State Street to mitigate prime broker counter party risk in relation to any State Street fund utilizing a prime broker, including edge or extension strategy funds, (f) any documents relating to the consideration of risks associated with the use of prime brokers or the use of particular prime brokers, including European prime brokers, and any protections taken by State Street, for its own protection or that of its customers, against the risk, in relation to any State Street fund utilizing a prime broker, including edge or extension strategy funds; [90] If granted, then disclosure would relate to 35 funds. [91] The defendants counter that this should be limited to the four funds prime brokered by Lehman. They propose: (e) any documents relating to strategies employed or not employed by State Street to mitigate prime broker counter party risk for such funds, (f) any documents relating to the consideration of any risks associated with the use of a prime broker generally or Lehman Brothers, including Lehman Brothers International (Europe), specifically for such funds, and any protections taken by State Street, for the protection of the investors in such funds against any such risks, [92] The plaintiff is concerned that the combined effect of limiting this disclosure to the four funds and only for the “custodians” or “decision makers” is unduly restrictive and creates substantial risk that there will be no opportunity to obtain information that would show a contrast in how risks were managed and which could show negligent handling of the plaintiff’s funds. [93] I am satisfied that the information sought by the plaintiff is relevant to the extent that the material relates to funds employing extension strategies. I am not satisfied that relevancy has been made out as it relates to the remaining funds that are prime brokered. I conclude that the plaintiff’s request is granted but to apply only to the 22 prime brokered funds employing extension strategies. [94] Paragraphs 1(e) and (f) will read: (e) any documents relating to strategies employed or not employed by State Street to mitigate prime broker counter party risk in relation to any State Street prime brokered fund employing an edge or extension strategy; (f) any documents relating to the consideration of risks associated with the use of prime brokers or the use of particular prime brokers, including European prime brokers, and any protections taken by State Street, for its own protection or that of its customers, against the risk, in relation to any State Street fund prime brokered fund, employing an edge or extension strategy; Category 2 [95] The plaintiff seeks more complete information as to SSBTC’s effort to retrieve the Fund assets frozen in the Lehman insolvency administration. [96] The debate between the parties is not whether the plaintiff is entitled to know what the status of the claim in the Lehman insolvency is, but whether and the extent to which such information is relevant in this action. [97] The defendants say that there is no pleading suggesting a claim is made against them for the manner in which they have pursued the Fund’s insolvency claims. As well they say that they have been providing regular reporting in detailed written updates regarding SSBTC’s effort to retrieve the Fund assets frozen in the insolvency administration. [98] The plaintiff says that this information is relevant to damages - they want to know whether the defendants are advancing their interests unreservedly, or are they making concessions in favor of other creditor groups, in particular putting the defendants’ interests ahead of those of the plaintiff. [99] The defendants have not returned the invested funds to the plaintiff, in part because they submit that the funds are “frozen” in the insolvency administration. I am satisfied that the plaintiff is correct in suggesting that the communications being sought are relevant to a potential damage claim and that there should be production, though not on the basis of the first submissions of the plaintiff, but rather on the common position adopted by the parties at the end of oral submissions. My acceptance of that conclusion was made subject to a determination of relevancy, which was not conceded by the defendants. Having concluded that the information is relevant I order that the defendants must produce: (ii) All communications between State Street and PricewaterhouseCoopers, in its capacity as administrator of Lehman Brothers, following Lehman Brothers’ filing for bankruptcy protection on September 15, 2008 concerning the Global Alpha Edge Fund, or collectively concerning all four edge or extension strategy funds for which Lehman Brothers International (Europe) acted as prime broker; Category 3 [100] In the Notice of Motion the plaintiff sought: (iii) All documents evidencing State Street’s awareness of, analysis of, and response to the collapse of Bear Stearns in March 2008; [101] During the hearing, the plaintiff presented a revised request: (iii) All hard copy or electronic documents in the possession of State Street custodians who have been, or will be, subject to an electronic search or targeted document follow-up for relevant hard copy or electronic documents, by agreement, order, or otherwise, evidencing State Street’s awareness of, analysis of, and response to the collapse of Bear Stearns in March 2008; [102] Defendants’ pre hearing brief took the position that Bear Stearns’ situation was radically different than that of Lehman and had no bearing on the Alpha Fund management. As such it was not relevant. [103] The plaintiff’s evidence includes a so called “Bear Stearns email” which was sent out to clients of State Street in the wake of the Bear Stearns collapse. It is entitled “ Is Lehman one of SSGA’s Prime Brokers? If so, what is your opinion of Lehman and are they subject to similar risks as Bear Stearns?” It states that Bear Stearns “... has never been an approved prime broker at SSGA.” It draws comparisons between Lehman and Bear Stearns to differentiate the two. [104] I have also been presented with an email comparing the failures of Bear Stearns and Lehman, and seeking to differentiate State Street’s responses. It is captioned “Why didn’t we react to the market events regarding Lehman earlier, especially post Bear Stearns?” [105] I am satisfied that the defendants saw the circumstances of the failures of the two entities as related, if only to explain why the failure of Bear Stearns should not have alerted them to the problems with Lehman. The underlying analysis that was conducted in-house to reach that conclusion is relevant to the forseeability of the Lehman collapse and the failure of the defendants to react in a timely manner so as to protect the plaintiff’s assets. The disclosure sought is relevant. [106] The defendants also submitted that complying with the request would create an undue burden for which they seek relief pursuant to Rule 14.08(3). The plaintiff, perhaps recognizing the merit of this position restricted the scope of the desired disclosure in the second version. The defendants did not have an opportunity to assess whether this more restricted request would also be unduly burdensome and requested an opportunity to consider and possibly make further representations. [107] To this suggestion, the plaintiff says that there is sufficient information before the court to resolve the matter without further information. [108] While I am inclined to agree with the assessment of plaintiff’s counsel, fairness requires that the defendants be provided the opportunity they seek to consider and if necessary to make further submissions. [109] In the absence of evidence that satisfies Rule 14.08(3) the plaintiff’s motion will be granted. [110] A determination of the motion in respect to Category 3 is held in abeyance pending further submissions of counsel. I will address this with counsel at our next case management hearing. Category 4 [111] The plaintiff seeks: (iv) All hard copy or electronic documents in the possession of State Street custodians who have been, or will be, subject to an electronic search or targeted document follow-up for relevant hard copy or electronic documents, by agreement, order, or otherwise, evidencing State Street’s awareness of, monitoring of, analysis of, or response to market concerns regarding Lehman Brothers from January, 2008 to September 15, 2008, including but not limited to the following documents: (a) any documents that refer to the decreasing market price for Lehman Brothers shares, (b) any documents that refer to downgrades in Lehman Brothers’ credit rating, or changes in the pricing of Lehman credit default swaps (c) any documents that refer to increases in security requirements, interest rates or other terms associated with money or assets loaned to or subject to rehypothecation by Lehman Brothers, (d) any documents evidencing any requests by clients of State Street to avoid transactions with Lehman Brothers as a counter party, (e) any documents that refer to efforts by Lehman Brothers to persuade State Street to continue to use it for prime brokerage services or other services involving counter party risk or which indicate or imply consideration for State Street continuing to use Lehman Brothers for such services; [112] The defendants respond: (iv) All hard copy or electronic documents in the possession of State Street custodians- who were responsible for the decision to hire and retain Lehman Brothers as prime broker for those State Street Extension/Edge funds prime brokered by Lehman Brothers, evidencing State Street’s awareness of, monitoring of, analysis of, or response to market concerns regarding Lehman Brothers from January, 2008 to September 15, 2008, including but not limited to the following documents: (a) any documents that refer to the decreasing market price for Lehman Brothers shares, (b) any documents that refer to downgrades in Lehman Brothers’ credit rating, or changes in the pricing of Lehman credit default swaps (c) any documents that refer to increases in security requirements, interest rates or other terms associated with money or assets loaned to or subject to rehypothecation by Lehman Brothers, (d) any documents evidencing any requests by clients of State Street to avoid transactions with Lehman Brothers as a prime broker, (e) any documents that refer to efforts by Lehman Brothers to persuade State Street to continue to use it for prime brokerage services which indicate or imply consideration for State Street continuing to use Lehman Brothers as prime broker; [113] The parties again debate the breadth of the class of persons whose records are to be searched for the information required. As I have previously determined, the problem is with the description of the class of “custodians” and I will resolve it in the same manner to reflect an expanded definition of who the decision makers are: (iv) All documents in the possession or under the control of the State Street custodians (which term includes senior management of SSGA, SSBTC or who were involved in the operation of the Global Alpha Edge Fund) who were responsible for or oversaw the decision to hire and retain Lehman Brothers as prime broker of those State Street Extension/Edge funds prime brokered by Lehman Brothers, evidencing State Street’s awareness of, monitoring of, analysis of, or response to market concerns regarding Lehman Brothers from January, 2008 to September 15, 2008, including but not limited to the following documents: [114] Having determined the class to be searched I turn to the subcategories requested. The parties’ differences are in (d) and (e). [115] As to 4(d), I agree with the defendants that the reluctance of a client to use Lehman as a prime broker is relevant to the claim. Any similar reluctance to Lehman acting as a counter party is not so apparently relevant having regard to the many and quite likely unrelated counter party transactions that take place on a daily basis. [116] As to 4(e), I accept the plaintiff’s version. The relevant issue is whether a special relationship existed as between Lehman and State Street that influenced the latter to use Lehman’s services, and undermined the defendants’ independent judgment in deciding whether to hire and retain them to act as a prime broker. [117] An incentive would not necessarily have been provided to encourage use as a prime broker, but the consequence of incentive in a collateral commercial relationship of the two could result in the same outcome as if the incentive was directly tied to use as a prime broker. Again, the information sought is restricted by the class of persons who are being searched. This is not an unfettered global search but a targeted search of those who decided and those who oversaw the decision making. [118] Therefore Category 4 will be: (iv) All hard copy or electronic documents in the possession or under the control of the State Street custodians (which term includes senior management of SSGA, SSBTC or who were involved in the operation of the Global Alpha Edge Fund) who were responsible for or oversaw the decision to hire and retain Lehman Brothers as prime broker of those State Street Extension/Edge funds prime brokered by Lehman Brothers, evidencing State Street’s awareness of, monitoring of, analysis of, or response to market concerns regarding Lehman Brothers from January, 2008 to September 15, 2008, including but not limited to the following documents: (a) any documents that refer to the decreasing market price for Lehman Brothers shares, (b) any documents that refer to downgrades in Lehman Brothers’ credit rating, or changes in the pricing of Lehman credit default swaps (c) any documents that refer to increases in security requirements, interest rates or other terms associated with money or assets loaned to or subject to rehypothecation by Lehman Brothers, (d) any documents evidencing any requests by clients of State Street to avoid transactions with Lehman Brothers as a prime broker, (e) any documents that refer to efforts by Lehman Brothers to persuade State Street to continue to use it for prime brokerage services or other services involving counter party risk or which indicate or imply consideration for State Street continuing to use Lehman Brothers for such services; Category 5 [119] The plaintiff seeks: (v) All documents relating to the choice of prime broker for the Global Alpha Edge Fund and other funds using an extension or edge strategy, including but not limited to the following documents: (a) any documents relating to the selection of any Lehman Brothers entity as prime broker, whether in connection with the Global Alpha Edge strategy or otherwise, (b) any documents that refer to or which may explain the decision of State Street to use Lehman Brothers as the prime broker for some extension or Edge Funds, and Goldman Sachs or other prime brokers as the prime broker for other extension or edge strategies, (c) any documents that refer to or which may explain the decision of State Street to allow a Lehman Brothers’ European affiliate, Lehman Brother International (Europe), as prime broker for some extension or Edge Funds, (d) any documents that refer to the reason for including the Committee in the particular Global Edge Fund in which it was included; [120] The defendants suggest: (v) All documents in the possession of State Street custodians who were responsible for the decision to hire and retain Lehman Brothers as prime broker for those State Street Extension/Edge funds prime brokered by Lehman Brothers relating to the choice of prime broker for the Global Alpha Edge Fund and the other Extension/Edge funds using Lehman Brothers as prime broker, including but not limited to the following documents: (a) any documents relating to the selection of any Lehman Brothers entity as prime broker for such funds, (b) any documents that refer to or which may explain the decision of State Street to use Lehman Brothers as the prime broker for such funds, (c) any documents that refer to or which may explain the decision of State Street to allow a Lehman Brothers’ European affiliate, Lehman Brother International (Europe), as prime broker for such funds, (d) any documents that refer to the reason for including the Committee in the particular Global Edge Fund in which it was included; [121] The class of persons whose records are to be searched will be defined in the same manner as I have previously held to constitute the decision makers. They are the group likely to hold this relevant information. [122] The parties again disagree on whether the search should include information relevant to funds and prime brokers other than the extension funds brokered by Lehman. [123] The plaintiff suggests that there is relevance in how and who was selected as the prime broker for the 22 extension funds. The defendants say that relevance should be circumscribed by the decision to choose Lehman as a prime broker for four extension funds, and that relevance of the selection process for other funds is not relevant. I agree with the defendants. In this instance the plaintiff has not made out its’ case to cast the net so wide. [124] Even if relevant, I am satisfied that such a requirement for disclosure would generate a burden disproportionate to the probative value of the information sought. The ability of the plaintiff to advance its’ position on the important issues of the claim should not be undermined by this limitation. [125] I conclude that Category 5 will read: (v) All documents in the possession or under the control of the State Street custodians (which term includes senior management of SSGA, SSBTC or who were involved in the operation of the Global Alpha Edge Fund) who were responsible for or oversaw the decision to hire and retain Lehman Brothers as prime broker of those State Street Extension/Edge funds prime brokered by Lehman Brothers, relating to the choice of prime broker for the Global Alpha Edge Fund and the other Extension/Edge funds using Lehman Brothers as prime broker, including but not limited to the following documents: (a) any documents relating to the selection of any Lehman Brothers entity as prime broker for such funds, (b) any documents that refer to or which may explain the decision of State Street to use Lehman Brothers as the prime broker for such funds, (c) any documents that refer to or which may explain the decision of State Street to allow a Lehman Brothers’ European affiliate, Lehman Brother International (Europe), as prime broker for such funds, (d) any documents that refer to the reason for including the Committee in the particular Global Edge Fund in which it was included; Category 6 [126] The plaintiff seeks: (vi) All documents relating to the use of the following disclaimer, or a disclaimer of a similar nature, by State Street in certain of its account summaries for its extension or edge strategies: “in the event of a failure or insolvency of the prime broker or its related entities, the Assets and Rehypothecated Assets are subject to set off loss and the fund may become an unsecured creditor of the prime broker”, including but not limited to the following documents: (a) any account summaries posted to the State Street “Client Corner “ website for the Committee or other extension or edge strategy investors after January, 2007, (b) any documents that evidence when such disclaimer first came into use for any extension or edge strategy, (c) any documents that refer to or which may explain why the disclaimer was not present in the account summaries provided by State Street to the Committee prior to September 15, 2008; [127] The defendants respond: (vi) All documents created prior to July 1, 2009 relating to the use of the following disclaimer, or a disclaimer of a similar nature, by State Street in certain of its account summaries for any Extension/Edge fund prime brokered by Lehman Brothers: “in the event of a failure or insolvency of the prime broker or its related entities, the Assets and Rehypothecated Assets are subject to set off loss and the fund may become an unsecured creditor of the prime broker”, including but not limited to the following documents: (a) any account summaries posted to the State Street “Client Corner” website for the Committee or other such Extension/Edge fund investors after January, 2007, (b) any documents that evidence when such disclaimer first came into use for any such Extension/Edge fund, (c) any documents that refer to or which may explain why the disclaimer was not present in the account summaries provided by State Street to the Committee prior to September 15, 2008; [128] The plaintiff is not opposed to the inclusion of a specific date by which such documents were created, however seek a much later date. In support of this position they note that the “disclaimer” found was from June 2009. The plaintiff says that using the July 1, 2009 date does not assist them to assess whether it was “run” on other occasions. [129] Relevance is not in issue and there is no substantial increase in the burden that a later date would generate, given the very specific information being sought. I accept that an appropriate date is July 31, 2010. [130] The second dispute relates to the fund summaries that are to be reviewed for this disclaimer. I do not agree with the defendants in this instance. The disclaimer information is highly relevant to the awareness of the defendants to the risks, and to the recognition of the obligation to advise its’ clients of that risk. Evidence that speaks to when the defendants recognized that risk, and who received the warning and when, goes to the manner in which the defendants met their obligations to their clients. Isolating the four Lehman brokered funds would provide an incomplete picture. [131] I conclude that disclosure in Category 6 will be: (vi) All documents created prior to July 31, 2010, relating to the use of the following disclaimer, or a disclaimer of a similar nature, by State Street in certain of its account summaries for its extension or edge strategies: “in the event of a failure or insolvency of the prime broker or its related entities, the Assets and Rehypothecated Assets are subject to set off loss and the fund may become an unsecured creditor of the prime broker”, including but not limited to the following documents: (a) any account summaries posted to the State Street “Client Corner “ website for the Committee or other extension or edge strategy investors after January, 2007; (b) any documents that evidence when such disclaimer first came into use for any extension or edge strategy, (c) any documents that refer to or which may explain why the disclaimer was not present in the account summaries provided by State Street to the Committee prior to September 15, 2008; Category 7 [132] The plaintiff seeks: (vii) All documents in the following categories related to securities lending by State Street: (a) any documents related to any potential or actual securities lending arrangement involving the Committee’s assets, or those of the Global Alpha Edge Fund, including any documents explaining the extent to which the assets of the Global Alpha Edge fund were being loaned to Lehman Brothers or were purportedly being used as collateral for the short sales, (b) any documents containing securities lending terms and conditions for those State Street Common Trust Funds which lent securities to Lehman Brothers in the period between March 1, 2008 and September 15, 2008, (c) any presentation materials used by State Street’s Security Finance Division between April 2007 and September 15, 2008 that contains any mention of securities lending risks of any kind, save and except that production shall not be required in the event that the content of the documents in relation to securities lending risks is identical to that within another document being produced; [133] The defendants submit: (vii) [Preamble unnecessary and confusing] (a) Any documents related to any potential or actual securities lending program involving the Committee’s assets, and any documents explaining the extent to which the assets of the Global Alpha Edge fund were rehypothecated by Lehman Brothers or were purportedly being used as collateral for the short sales, (b) [Irrelevant and Unduly burdensome] (c) [Irrelevant and Unduly burdensome] [134] The plaintiff says that the Alpha Fund loaned securities, including the Halifax assets, to LBIE. It relies on a letter dated October 8, 2008, from Philip Gillespie, in-house counsel for State Street, to counsel for the plaintiff, to support this assertion which letter says, in part, “... the [Alpha ] Fund loaned securities, including the HRC assets, to LBIE in execution and furtherance of the Fund’s investment strategy and directives.” This was sent in the wake of the Lehman failure. [135] The plaintiff adduced evidence that the Committee had, in September of 2007, confirmed in writing its refusal of authority to engage in securities lending in their “CAFI SWF”. The Committee intends to argue that the defendants knew or ought to have known that it would not have approved of the transfer of the assets on terms set out in the Lehman agreements. [136] It concludes that to pursue this argument it requires the information in this category. [137] The defendants submit that the vast majority of the documents and electronic information that the plaintiff seeks in this category are not relevant to the litigation; and that which is relevant is a subject of the ongoing searches. [138] They deny that securities lending is a program that was available to investors and refer me to a May 11, 2007 email from Patrice Denis of SSGA Can to Terri Troy which says: “For your information, securities lending is not available for 130-30 strategies due to the structure with Prime Brokers.” I note that this predates the SSGA US investment management which did not begin until August of that year. The defendants also provided evidence of Rebecca Hayes confirming that the Alpha Fund did not participate in a securities lending program. [139] The apparent contradiction between the Denis email and the Hayes affidavit evidence, and the Gillespie letter makes disclosure of some kind relevant to shed light on whether and to what extent securities lending was occurring. If it was occurring, then it is relevant to the plaintiff’s case to know what the defendants understanding was as to the (un)willingness of the plaintiff to permit such a practice. [140] I accept the defendants’ submissions that the preamble is unnecessary. [141] The defendants submit that their version of (a) will capture: 1. the relevant communications that speak to the Committee’s decision not to participate in the security lending program and in the CAFI Investment; and 2. the unavailability of securities lending in the Alpha Fund. [142] By employing the words “program” instead of “arrangement” to describe the manner of securities’ lending; and the term “rehypothecated” instead of “loaned” the defendants’ version seems to be more focused, perhaps more accurate. After all, hypothecation “...is a pledge of security or collateral for a debt, without delivery of title or possession.” see, Black’ Law Dictionary, 9th ed., (Garner, Bryan A. ed.) (St Paul MN: West, 2009) [143] However, I favor the language of the plaintiff as their terms would include programs and rehypothecation but without limitations that may unnecessarily restrict access to relevant and disclosable information. [144] As to subcategories (b) and (c) the defendants do not concede relevance but add that the burden generated would be unjustified in any event. The defendants say that it is searching for and intends to produce any non-privileged documents and electronic information related to the negotiation of the Fund’s prime brokerage agreements with Lehman, including the Global Master Securities Lending Agreement. [145] The plaintiff submits that in (b) it hopes to find communications that will evidence whether the rights awarded to Lehman under the Lehman Agreements are similar to the rights granted to Lehman under securities lending agreements with respect to State Street’s Common Trust Funds. [146] I do not agree that this information sought is relevant, at least based on the information before the court on these motions. The terms and conditions on which Lehman was loaned securities by any of the Common Trust Funds would not enhance the understanding of whether the defendants knew of the plaintiff’s unwillingness to participate in such programs, or whether their assets were used in such a program in contravention of the authority that it provided. The plaintiff’s request in (b) is refused. [147] As to (c) the plaintiff says that the principal securities lending risk is a common feature of securities lending and the Lehman agreements and that presentation materials produced by State Street evidencing securities lending risks during the April 2007 to September 15, 2008 time frame are relevant to the following issues: 1. State Street’s knowledge of securities lending risks; 2. State Street’s practice regarding disclosure of securities lending risks to its clients; 3. Whether State Street correlated securities lending risks to prime brokerage risks in its presentation materials. [148] The defendants says that it is required to and will produce any presentations made to the Committee and that relate to any issues relevant to the matters raised in the pleadings. [149] They note that its’ Securities Finance division had 445 “agency” securities lending clients, with US$2.4 trillion in lendable assets. It operated 330 lending funds, with US$189.3 billion in lendable assets. During the relevant period, it says that it is likely that at least 1000 presentations referring to securities lending would have been made to agency lending clients, securities lending fund investor clients and prospective investors in funds participating in securities lending programs. [150] Presentation materials employed in communications with the plaintiff are clearly relevant and will be disclosed. I am not satisfied that presentations made by the defendants to unrelated parties is relevant. I am also satisfied that the search requested would create a significant burden and with a relatively low likelihood of providing relevant information. [151] In summary, the preamble, and clauses (b) and (c) of the plaintiff’s proposed order will not be included. The motion reflected by the plaintiff’s wording in clause (a) will be granted. Category 8 [152] The plaintiff seeks: (viii) All documents evidencing any participation by State Street, pension plans or funds for employees of State Street, or clients of State Street’s internal advisory group, in an “extension strategy” or “edge strategy” investment. Said documents shall include, but not be limited to any documents evidencing: (a) the date(s) of any such investment, (b) the amount(s) of any such investment, (c) the amount(s) and date(s) of any withdrawal(s) from any such investment, (d) the identity of the prime broker(s) used for any such investment, (e) whether the prime broker(s) used for any such investment was involved in a tri-party agreement, (f) whether custody of the assets was given to the Prime Broker(s) for any such investment, and the extent to which custody of the assets was transferred, (g) any change in the Prime Broker(s) for any such investment, and any documents evidencing the reason(s) for any such change, (h) any contractual and financial arrangement(s) made with the Prime Broker(s) for any such investment, (i) the country in which assets for any such investment were held by a Prime Broker(s), (j) any communications concerning counter party risk or the financial health of prime brokers, whether such communications were internal to State Street, made between State Street and its employees’ pension plan representatives, or made between State Street and clients of State Street’s internal advisory group. [153] The plaintiff alleges that the defendants failed to act in the best interests of the Committee, and placed its own interests ahead of those of the Committee by “... removing the Halifax Assets from the Alpha Trust Fund” and “... in continuing to leave custody of and title to the Halifax Assets with LBIE”. See, para. 50(ix) and (x) of the Claim. [154] The defendants plead that it acted in good faith at all times material to the claim. See, para 7 of the Defence. [155] This request intends to access information which the plaintiff says is relevant to both these claims and the defence. The plaintiff adds that this information is relevant whether it proves or disproves matters at issue in the action. [156] The facts upon which this motion is based are set out in the materials. In the early part of 2010, State Street entered into a Settlement Agreement with the Massachusetts Attorney General and the Massachusetts Securities Division of the Office of the Secretary of State: ... to resolve their investigations into losses incurred by, and disclosures made with respect to, certain active fixed income strategies managed by ... SSGA ... during 2007, and earlier periods. ... [157] It appears that SSGA adopted a no contest position and paid out approximately $663 million in compensation, fines and disgorgement of fees and interest. Their activity was described in an article reporting on the settlement as an allegation that it “misled investors about the risks of its Limited Duration Bond Fund: State Street was alleged to have “...favored certain investors, including clients of State Street’s internal advisory groups with fuller information about the fund’s exposure to subprime mortgages, allowing those clients - including State Street’s own pension funds... to get out early... Other investors... were given information that understated the fund’s exposure to risky subprime mortgages, as well as its use of derivatives and leverage ... [158] The defendants resist the motion arguing: 1. What the defendants did, or did not, do for other clients or its own pension fund is irrelevant, particularly since no complaint is made about the extension fund strategies per se. The relevant standard of care is measured by the trust documents governing the plaintiff’s investment in the Alpha Fund, not by comparing with other investors. 2. That the information sought in relation to the “internal advisory groups” is similarly irrelevant in that the three groups encompassed by that descriptor serve external clients, as well as State Street. Investment programs and strategies pursued on behalf of these various clients have unique characteristics which render a comparison valueless. Affidavit evidence indicates that no client of the internal advisory groups was invested in the Global Alpha Edge Fund although some were invested in extension strategies including those managed by SSGA. 3. It would be unduly burdensome. [159] I am not satisfied that a causal link has been made that warrants the disclosure sought by the plaintiff. [160] Information upon which this request has been advanced supports the notion that the defendants have been investigated for and paid compensation to other clients, for giving preferential treatment to some clients over others, in particular in the extent to which it disclosed risks associated with sub prime mortgages. [161] I agree that if other clients of the internal advisory groups, including State Street pension funds, were invested in the Alpha Fund, then it would be relevant to understand whether the defendants demonstrated an awareness of the risk by giving preferential treatment to some of those clients over others. It would at the very least demonstrate that the defendants were aware of the increased risk, and that steps were necessary for the clients to be protected against those risks. However, the sworn evidence of Rebecca Hayes is that “No client to the internal advisory groups was invested in the Global Alpha Edge Fund.” See, at para. 27. [162] Against this factual backdrop, the effect of the proposed order would require a search for and disclosure of information that, at this point, has not been shown to be relevant. It relates to different clients, different investments, and possibly different time frames. [163] The plaintiff acknowledges that they cannot say that the information exists, or that it would support its position. I acknowledge that in some situations the lack of confirmatory information can be as relevant as the existence of it, however I do not accept that is a compelling argument on the facts offered in support of this request. [164] The evidence is that, together, the internal advisory groups have approximately 450 clients and manage approximately $200 billion. There are 50 people employed in these internal advisory groups. The search would be far-reaching, in areas not demonstrated to provide evidence of any probative value to the claims advanced. [165] The motion of the plaintiff is dismissed in relation to Category 8. Category 9 [166] The plaintiff seeks: (ix) all documentation reviewed or produced by any variation of the State Street risk management team or committee, and its predecessors or successors, from at least 2006 forward in connection with the selection and monitoring of prime brokers, the structuring of prime brokerage agreements and consideration by the Defendants of risks associated with the use of prime brokers and any protections against that risk. This documentation shall include, but not be limited to: (a) all documentation reviewed or produced in connection with the selection and monitoring by the Defendants of any Lehman Brothers entity as prime broker, whether in connection with the Global Alpha Edge strategy or otherwise, and (b) the documents originally attached to the email thread from Gregory Chrispin to Vicky Houle dated October 12, 2006 entitled “Prime Brokerage Selection Matrix Version II.pdf”, “Prime Brokerage Fees Charges Spreadsheet Version II.xls”, and “Prime Broker Fund Overview - Global Alpha Edge ex-UK.doc”. [167] The defendants respond: (ix) [Preamble unduly burdensome] (a) all documentation reviewed or produced in connection with the selection and monitoring by the Defendants of any Lehman Brothers entity as prime broker for the Global Alpha Edge fund or for any other Edge/Extension funds, and (b) the documents referenced in the email thread from Gregory Chrispin to Vicky Houle dated October 12, 2006, entitled “Prime Brokerage Selection Matrix Version II.pdf”, “Prime Brokerage Fees Charges Spreadsheet Version II.xls”, and “Prime Broker Fund Overview - Global Alpha Edge ex-UK.doc [168] The plaintiff submits that the information sought speaks to the following issues: 1. Whether State Street properly selected and monitored Lehman as prime broker. See, Claim at paras. 28, 29 and 50; 2. Whether State Street failed to disclose relevant and material information to the Committee. See, Claim at para. 50 (v). 3. Whether the Lehman insolvency was unforeseen. See, Defence, at paragraph 6 (b) 4. Whether State Street’s “actions were entirely reasonable in light of the information available”. See, Defense, at paragraph 6 (c) [169] The plaintiff refers to section 6 (l) of the Declaration of Trust for the Global Managed, and Trust Funds of State Street which references the defendants’ assessment of brokers or dealers as “reasonably necessary or desirable”. I have also been referred to an e-mail thread referred to in (b) above, the “Bear Stearns e-mail”, and the “ Lehman client e-mail” (the latter two having been previously discussed) as collectively demonstrating that the defendant had, at times relevant to this claim, processes for selecting and monitoring prime brokers and for structuring prime brokerage agreements. [170] The plaintiff says that the evidence supports the conclusion that there was a team of analysts used to assess credit risks of SSGA’s counterparties, including prime brokers; a “set of procedures” and “Prime Broker Selection Criteria by Strategy” to select and monitor prime brokers; and that State Street had a list of “ongoing problem areas” identified in relation to prime brokers , and that strategies were employed to mitigate prime broker counterparty risk. It seeks to reduce the burden by indicating that it is the Risk Management Team or Committee that was in place at the relevant time, whose information is intended to be searched. The plaintiff argues that if the court sees the request as overbroad, then it would alternatively argue for the order to apply to prime brokered funds. [171] The defendants submit that the relevant issue is the Lehman role as prime broker of the Alpha Fund. To the extent that this motion seeks disclosure of documents and electronic information that is unrelated to Lehman and the Alpha Fund, or the monitoring of perceived risks associated with that relationship, then the plaintiff is overreaching into that which is not relevant. [172] It is also submitted by the defendants that a “tremendous burden” would be imposed that is disproportionate to any benefits that such documents might provide. Again they refer me to the 35 prime brokered funds, the 23 custodians involved in the Alpha Fund management of the Halifax assets, and the 175 State Street employees working in the area of relationship management, fund management, risk management and legal services in connection with the additional funds, as evidence of the complexities of such a search. They speculate that to conduct a search as extensive as the motion currently seeks would involve an expenditure in the hundreds of thousands of dollars, if not millions. [173] I agree that the Preamble is unnecessary and potentially burdensome. I also agree with the defendants that in its current form the request would almost certainly trigger information that would not be relevant to the issues. However, I do not agree with all of the limitations proposed by the defendants. [174] The relevant information for the purposes of this action is the documentation that was being produced or reviewed by those responsible for risk assessment of Lehman Brothers during the relevant time frame, whether or not the documentation specifically referred to Lehman. For example, the Lehman name may not be mentioned in a particular document, but may have been reviewed by the risk analysts and the information used for determination of whether or when to use Lehman as a prime broker. I am also satisfied that it is appropriate to limit the search to those cases where Lehman was used as a prime broker. I am not prepared to limit the disclosure to only those circumstances where Lehman acted as prime broker for extension funds. [175] To obtain this relevant information, and without creating undue burden, I have concluded that the following wording should suffice: (a) all documentation reviewed or produced by the State Street risk management analysts in the period January 1, 2007 to September 15, 2008 in connection with the selection and monitoring by the Defendants of any Lehman Brothers entity as prime broker, including any documentation used for purposes of assessment or comparison of Lehman as a prime broker, whether Lehman is mentioned in the document or not; [176] As to paragraph (b), the defendants adduced evidence to suggest that there were no attachments to the Gregory Chrispin e-mail, but that to the extent earlier e-mails in the thread are relevant and exist with attachments elsewhere in the defendants’ materials, they have undertaken to produce such documents. Therefore they submit the motion is unnecessary. Having said that, they have proposed alternate wording as set out above which, in their submission, would meet the objectives of the plaintiff while accurately reflecting the facts. The plaintiff agrees and so the order as to (b) will be in the form advanced by the defendants. PLAINTIFF’S SECOND MOTION [177] The plaintiff’s second motion seeks an order “for directions for disclosure of documents and electronic documents, pursuant to Civil Procedure Rules 14.13, 15.07; 16.05, 16.14, 26.02(3) and 88.02". Specifically, the plaintiff seeks: 1. A date by which production of documents relevant to the action be produced; 2. That the defendants provide to the plaintiff, on an ongoing basis, the names of State Street employees whose electronic mailboxes have been searched; 3. That four named persons be the subject of electronic mailbox searches; 4. That five additional search terms be employed by the defendants to locate electronic documents relevant to the action. Analysis 1. A date by which production of documents relevant to the action be produced; [178] The plaintiff provided an extensive review of communications as between the parties in relation to their attempts to reach agreements on the extent and the timing of production. It complains that the defendants have not fulfilled agreements reached with respect to scheduling of production; and have unreasonably delayed or seek unreasonably extended periods of time in which to complete production. [179] This decision creates new disclosure obligations on the defendants who will have to assess the impact on the conduct of their searches, and on the scheduling of production. [180] If the parties are still unable to agree on a schedule then further submissions on this question will be scheduled during the next case management conference. 2. That the defendants provide to the plaintiff, on an ongoing basis, the names of State Street employees whose electronic mailboxes have been searched; [181] The Committee seeks an order pursuant to Rule 16.05 (2) requiring the defendants to provide complete details of its electronic search strategy. [182] Rule 16.05 permits the parties to make an agreement for disclosure of relevant electronic information and holds that a term of the agreement prevails over an inconsistent provision of Rule 15 or Rule 16. The court is empowered to enforce the terms of an agreement for disclosure of electronic information, and breach of a term in an agreement for disclosure is the same as a breach of rule for the purposes of Rule 88 - abuse of process. [183] The plaintiff submits that there was an agreement for disclosure of relevant electronic information in accordance with the provisions of Rule 16.05 (1) and that the defendants have not fulfilled a term of that agreement. [184] In December of 2009, the plaintiff disclosed its electronic search strategy and a list of search terms it was employing. It sought that the defendants do the same. The materials set out the communications as between counsel that led up to an “agreement” said to have been reached in a conference call held with counsel for the defendants on March 10, 2010. That agreement was memorialized in the notes of plaintiff’s counsel, Peter Rogers: Defendants’ counsel agreed to set out in writing the identities of the SSBTC and SSGA(CDA) document custodians whose mailboxes are being searched, and the specific search strategy being employed, in a form similar to that sent by plaintiff’s counsel to defendant Halifax counsel. [185] In a letter of March 12, 2010 from defendants’ counsel, Andrea Robinson, to Mr. Rogers she sets out the defendants’ electronic search strategy. It includes information with respect to search terms, data sources, e-mail/hard drives/home shares searched and specifies the names of several “custodians”who were or would be subject to search. [186] It is also in this letter that defendants counsel refers to the “targeted follow-up” that has become the source of contention: D. Targeted follow-up - Beyond those custodians described above, we expect as we continue our review to conduct targeted follow-up with additional individual employees as necessary to determine whether they may possess potentially relevant materials. [187] Plaintiff’s counsel advised counsel for the defendants that it was imperative that the details of the targeted follow-up be provided since the plaintiff suffered from the disability of not knowing the individuals at State Street who would be responsible for various functions relevant to the proceedings, beyond those in customer relations with whom the plaintiff interacted. Counsel noted in that same correspondence, a letter of May 3, 2010, that there were certain individuals known to have had involvement in the matter and who were omitted from the searches known to the plaintiff at that time. They requested the addition to the defendants’ search of the names of Scott Powers, Phil Gillespie, Mark Brown and Peter Lindley. [188] On June 21, 2010 the defendants agreed to conduct a targeted follow-up of those named persons. The defendants point to this as evidence of its good faith in fulfilling its obligations under the Rules. Beyond that the defendants’ counsel maintained that it has no obligation to nor is it willing to provide further information from its targeted follow-up. [189] The plaintiff seeks to know: 1. The identities of the person(s) subject to targeted follow-up; 2. Whether the targeted follow-up includes searches of electronic mailboxes belonging to the person (s), and whether said searches include archived mailboxes and home drives; 3. The search terms applied to the mailboxes of the person (s) subject to targeted follow-up. [190] The defendants deny the existence of an agreement saying that they only agreed to “disclose information ‘similar to that sent’ by HRM- i.e., custodians and search terms.” [191] The defendants further submit that Rule 16 does not require them to disclose the information that the plaintiff seeks. [192] Was there an agreement? [193] The defendants have not offered evidence to contradict Mr. Rogers’ recollections. Instead they suggest that his use of the term “similar to that sent” is sufficiently vague as to be unenforceable in compelling the disclosure sought. [194] By the time of the March 10, 2010 conference call the defendants were in possession of the plaintiff’s materials. It contained specific names and details of searches conducted. There could be no misunderstanding as to what would constitute a “similar” response. [195] The response provided by Ms. Robinson on March 12 was indeed “similar” to the disclosure by the plaintiff. It contained the same type of detail, including names of custodians searched. This evidences what the defendants understood was its obligation under the “agreement”. [196] To suggest that the parties contemplated withholding information as to whose material would be subject to search, or the details of the search, is inconsistent with this course of conduct. [197] In my view, an agreement is evidenced by both the express language reported by Mr. Rogers memorandum from March 10, 2010, and by the conduct of the parties. It reflected a reasonable condition for disclosure having regard to the complexities of the corporate structure within State Street and the disadvantaged position held by the plaintiff in understanding and assessing how that structure impacted on disclosure. [198] Therefore, pursuant to Rule 16.05 (2) I order the defendants to provide the plaintiff with information that pertains to the targeted follow-up and which is set out in the three enumerated paragraphs above. [199] In view of my conclusion that a term of the agreement required this production, it is unnecessary to consider whether the disclosure would have been necessary under the default provisions set out in Rule 16.08. 3. That four named persons be the subject of electronic mailbox searches; [200] The plaintiff seeks an order pursuant to Rule 16.14 requiring the defendants to conduct full searches of electronic mailboxes of: Scott Powers -President and CEO of SSGA US Phil Gillespie - General Counsel to SSGA US Mark Brown - CAO of SSGA US Peter Lindley - President and head of investments for SSGA Can [201] Rule 16.14 provides: (1) A judge may give directions for disclosure of relevant electronic information, and the directions prevail over other provisions in this Rule 16. (2) The default Rules are not a guide for directions. (3) A judge may limit preservation or disclosure in an action only to the extent the presumption in Rule 14.08, of Rule 14 ‑ Disclosure and Discovery in General, is rebutted. [202] The defendants take the position that these individuals have had limited involvement in the matters in dispute and that the defendants’ decision to conduct a “targeted follow up” is the most cost effective way to identify and produce relevant information. [203] A targeted follow up has been described as a varied approach that depends upon a series of factors such as when they became employees of SSGA, or had any involvement with the Committee or its assets. It may mean interviewing the person to assess the extent to which they might have relevant information and then seeking out that information. It may include electronic searches. It is not intended that all search terms would be applied to these persons unless there was sound reason to do so. To require this would, in the defendants’ submission, be unnecessary and costly. To the extent that the targeted follow up does identify further information that requires an expanded search the defendants say that it has and will continue to do so. [204] The defendants reject the plaintiff’s assertion that there was an agreement to conduct searches on the instructions of the opposing party and says that they are fully compliant with their obligations under Rule 16.03 by conducting searches that fulfill the default provisions in Rule 16.08. [205] I agree that neither party has surrendered its control of who or what to search. There is no “agreement” to yield to the dictates of the opposing party. [206] The plaintiff does not accept that such an approach is sufficient. They submit evidence that demonstrates that each of these persons were at certain points in possession of relevant information to the matters in issue, and that the “targeted follow up” approach cannot be expected to identify all information that is relevant. [207] Rule 16.08 dictates the default position with respect to what constitutes a “sufficient search”: 16.08 (1) A party who does all of the following performs a sufficient search for relevant electronic information: (a) identifies computers and storage media the party actually possesses that are likely to contain relevant electronic information; (b) identifies other sources that are likely to contain relevant electronic information, such as a source the party accesses to the exclusion of another party on computers the party does not actually possess; (c) performs all reasonable searches, including thorough keyword searches, to find relevant electronic information in the computers, storage media, or other sources; (d) identifies persons who hold, or are likely to hold, relevant electronic information the party controls; (e) takes reasonable steps to acquire information. [208] Ultimately, the determination must be whether the defendants are acting in a “reasonable” manner to acquire information that may be subject to production. [209] At the outset it is important to note that these named persons may be captured by the disclosure requirements I have set out in relation to Categories 1, 4 and 5 of the plaintiff’s first motion, that is, they might well be included by the determination that “State Street custodians” includes “...senior management of SSGA, SSBTC or who were involved in the operation of the Global Alpha Edge Fund”. [210] I am satisfied that the evidence demonstrates the named individuals to have been in a position to and did have access to relevant documents and information that is subject to production. [211] Mr. Powers is a directing mind of the company and receives daily briefings on client issues. This would have included matters relating to the plaintiff’s claims. He joined State Street in May of 2008 and is likely to be privy to the unsettling events surrounding the failure of Bear Stearns and the credit downgrade of Lehman. His role, however, in the affairs of the Alpha Fund, is likely to have been only a small part of his overall responsibilities and so the more intrusive search contemplated by the plaintiff may or may not be warranted. [212] Mr. Gillispie has been previously identified in this decision. His file information is quite likely to be subject to a claim of privilege. He too came to his position in mid 2008 and so it is not clear from the evidence that he would have much information about the events in issue. [213] Mr. Brown has had his involvement characterized by the defendants as participating in a single conference call and other “matters at State Street post-dating the Lehman insolvency”. They say that he is an excellent example of a case where a targeted follow up is suitable. [214] Mr. Lindley has similarly had his role in relevant matters minimized by the defendants. [215] I consider these individuals to be likely sources of relevant information. It is hard to believe that Mr. Powers, in particular, and Mr. Lindley would not have been closely following the turmoil in 2008 and assessing how it might impact upon the investments of their clients, and on the manner in which their companies managed their client relationships. [216] As counsel for both parties have reminded me on various occasions the Halifax assets constituted a substantial sum of money that was placed with a prime broker that moved that money beyond the regulatory controls of the United States and into the United Kingdom where, as history demonstrated, the money was ultimately put beyond the recovery of the plaintiff or the defendants. This would or should have become a topic of discussion internally. [217] Having said that, I am reluctant at this early stage of the litigation to dictate the manner in which the search is conducted in these targeted follow ups. The four persons were not the first line of decision makers in relation to the plaintiff’s investment. All but Mr. Lindley had contact with the plaintiff only to a very limited extent as referred to by the plaintiff in its submissions. [218] Mr. Lindley has been described by the plaintiff as “responsible for overall business strategy in Canada... head of investments ... for inter alia fixed income and equity strategies for SSGA in Canada. .... [He] was involved in or present at meetings with the plaintiff during which the investment in the ... Alpha Edge strategy was discussed ...” This would certainly place him in a key position as it relates to his Canadian clients. It is not clear that this would have given him much of a role in selecting the prime broker for the Alpha Fund or the subsequent actions taken by Lehman. [219] The defendants assume some risk of failing to fully meet their obligations under the Rules if they cast the net too narrowly in relation to persons who seem to be in central positions relative to the issues raised by the claim. If through the process of document production, discovery or by other means it is determined that the search was inadequate, and it creates some prejudice to the plaintiff then sanctions may be appropriate. [220] The request to expand the searches of the four named individuals is refused, but without prejudice to the plaintiff to re-present the motion if further information becomes available tending to demonstrate that the defendants are not complying with their disclosure obligations. 4. That five additional search terms be employed by the defendants to locate electronic documents relevant to the action. [221] The defendants have agreed to add two of the requested search terms. The remaining and contested ones are: “Agreement of Trust”/ “AoT” “Common Trust Fund “/ “CTF” “Custody” / “Custodian” [222] The defendants submit: 1. That the terms are so generic that they are unlikely to identify relevant information that would not otherwise be captured by the searches; 2. That it is premature to impose what would be an onerous search without permitting the defendants to complete disclosure using its’ own judgment and then assessing whether there are any evident gaps in the production; [223] Examples offered by the defendants to underscore the problem are: “Agreement of Trust”/ “AoT” There are many such agreements to which the defendants are parties. There is only one that is relevant to the plaintiff and defendants. The current search terms are sufficient to identify that one. To expand the scope of the search would trigger an enormous number of “hits” on unrelated and irrelevant materials. “Common Trust Fund “/ “CTF” State Street was trustee to approximately 300 of these funds between 2006 and 2009. Only one of these is relevant to the action and information relevant to that one is being searched for. “custody/ custodian” Custody services accounts for US$18.79 trillion in assets under custody and administration. At relevant times to this matter, there were approximately 2,000 “custody clients”. [224] I agree with the defendants. As I reviewed the materials filed in support of these motions, it is apparent that the terms would be in common usage within the operations of the defendants and in ways wholly unrelated to the issues raised by this claim. While there might be a way to combine the terms with others that would focus an electronic search, that is a decision that involves more micro management by the court than can be justified at this point. [225] I conclude that the motion seeking that the defendants add the three listed search terms set out above is refused. PLAINTIFF’S THIRD MOTION [226] The plaintiff’s third motion seeks an order to set trial dates, pursuant to Rule 26.04(1)(b): 26.04 (1) A judge who presides at a conference may do any of the following: (a) ... (b) appoint a time, date, and place for a trial or hearing; [227] A “conference” convened for the purpose of setting down the trial of a matter is intended by Rule 26.03(1) to be either a date assignment conference, or a trial readiness conference. [228] There is a discretionary authority in Rule 26.03(2) to convene a conference for certain purposes: 26.03 ... (2) A conference may be convened to provide any of the following: (a) organization of a trial or hearing; (b) hearing a motion to appoint a time and date, and provide directions, for an application in court, a judicial review, or an appeal; (c) case management by a case management judge; (d) anything that may aid the disposition of a proceeding or motion, and may properly be dealt with outside a courtroom. [229] I do not interpret these provisions as intending to circumvent the prescribed provisions of the court for assignment of a trial date. Rule 4.13 (1) sets out four prerequisites to the setting of a date assignment conference: 4.13 (1) A party may obtain a date assignment conference to appoint trial dates after pleadings close as provided in Rule 38 - Pleading, and after each party has done all of the following: (a) disclosed documents and electronic information as required; (b) discovered each individual party of whom discovery is required; (c) discovered, from each corporate party of whom discovery is required, at least the designated manager or one other officer or employee; (d) answered interrogatories required to be answered by or on behalf of the party. [230] None of these four requirements are satisfied at this time. [231] Rule 4.13(2) permits a party to seek a date assignment conference without having first completed the four conditions in (1). That provision is: (2) A party may make a motion for permission to request a date assignment conference before each party has done everything required in Rule 4.13(1), and the party must satisfy the judge on one of the following: (a) a party is lagging in making disclosure or conducting discovery, and the party requesting the conference has made disclosure and conducted the discoveries that party requires; (b) an emergency exists, it can only be resolved by a trial, and it is clear that the parties will be ready for trial when the trial readiness conference is conducted; (c) the efficient administration of justice requires that the conference be held. [232] The plaintiff is, understandably, anxious to move this litigation forward expeditiously. In that respect, it is a sentiment shared by most plaintiffs. The plaintiff seeks to “jump the cue”. [233] There can be circumstances where that is appropriate and Rule 4.13(2) anticipates this. It would be extraordinary to set a date for trial in the absence of the information that the court relies upon to accurately assess the requirements for trial. The plaintiff cannot satisfy any of these requirements at this time and so can find no support for its position in this provision. [234] To assign a trial date at this point prejudices the rights of other litigants who have satisfied the requirements under Rule 4.13(1), where the special circumstances set out in Rule 4.13(2) cannot be met, and where the complexities of the case inhibit the ability to readily forecast when the parties will be trial ready. This would be an unacceptable and inappropriate precedent. [235] As the answers to these questions become more clear the case management process will be able to assist the parties in obtaining suitable trial dates. [236] The motion is dismissed. DEFENDANTS’ FIRST MOTION [237] The plaintiff has, from time to time, informed the defendants of the search terms it has employed as well as the list of persons and sources searched to obtain relevant and producible information. [238] The defendants have concerns with respect to the search methodology, including what they characterize as the plaintiff’s failure to: 1. Adequately preserve and search for relevant electronic information maintained by the individual committee members; 2. Search all reasonably accessible sources of relevant electronic information; and 3. Search and request all reasonably accessible sources of information concerning its third-party investment advisors and consultants. [239] Essential to the defence is the assertion that the plaintiff Committee was a “decision maker” and knew or ought to have known that: 1. State Street engaged a prime broker to implement the Fund strategy; 2. Lehman served as prime broker for the fund; and 3. As prime broker, Lehman retained the ability to transfer, pledge and re-hypothecate Fund assets. [240] The defendants seek an order requiring the plaintiff to conduct a search for, and provide disclosure of, documents and electronic information which are identified in four categories and which are relevant to issues raised in the pleadings. The sought after disclosure is intended to access information that is relevant to the Committee’s knowledge of the role and responsibilities of Lehman as a prime broker. Category 1 and Category 2 [241] In relation to Category 1, the defendants seek an order requiring that the plaintiff search (including thorough keyword searches) reasonably accessible electronic information and disclose all relevant information generated by such search for every member of the Halifax Regional Municipality Pension Committee who participated in: (i) an April 26, 2007 presentation made by SSGA Canada to the Committee regarding the 130/30 investment strategy; (ii) the decision which the Committee made to amend its Statement of Investment Policies and Procedures (SIPP) to permit and/or otherwise authorize such investments; (iii) the decision which the Committee or its representatives made to invest in the Fund; and (iv) the management and/or oversight of HRM’s investment in the Fund. [242] In relation to Category 2 the defendants seek an order requiring that the plaintiff collect all reasonably accessible preserved electronic information, including, but not limited to, electronic information from archived e-mail, hard drives, file servers, home shares or other shared or common drives of the plaintiff, for the keywords plaintiff has agreed to employ as well as the additional search terms requested and then to produce all relevant electronic information identified as result of these additional searches. [243] The defendants submit that the plaintiff has failed to conduct a “sufficient search” within the meaning of Rule 15.02 (Duty to disclose documents) and Rules 16.03(1)(c) and 16.08(1)(c), provisions that speak to the duty to disclose, and the sufficiency of a search for, relevant electronic information. They argue that Committee members are “decision makers” and that some have not been subject to search while others have not been subject to sufficient or reliable searches, with the result that production has been incomplete. They extend this complaint to the search for both documentary and electronic information. [244] The plaintiff accepts that Committee members should produce any relevant hard copy and electronic documents in their possession. To fulfill this duty a questionnaire was circulated to 15 persons asking them to search for and disclose whether they had any relevant hard copy or electronic documents. [245] In the preamble to the questionnaire it required the responding Committee member to confirm their position, the obligation required by Part 5 of the Civil Procedure Rules and that they understand the statements which they were asked to respond to. [246] The questionnaire then sets out a series of questions under four headings: 1. Relevant documents and electronic information: the Committee member is provided with the definition of “relevance” and must confirm that where they are in doubt as to the relevance of a document or electronic information they are to provide the information so that counsel can determine relevancy. 2. Disclosure obligations: the Committee member is required to confirm their understanding of their obligations including what “control” means; their obligation where they no longer have control; that disclosure is an ongoing duty; and that diligent efforts are required to become informed about relevant documents and information that they have or once had control of. 3. Disclosure of documents: the Committee member is required to confirm searches of paper files both at work and at home, for relevant documents; to set out in an attached memorandum what was found; and to provide information about relevant documents once controlled but no longer in control. 4. Disclosure of electronic information: the Committee member is required to confirm a search of e-mail files, desktop, and hard drive, both at work and at home, for relevant electronic information; to attach to the memorandum paper copies of relevant electronic information and to preserve the originals thereof for disclosure in electronic form; and to provide information in a memorandum with respect to that electronic information once controlled but no longer in the control of the member. [247] The structure of the questionnaire sufficiently encompasses the duties imposed by the provisions of Part 5 of the Rules, providing that the respondent understood the information in the questionnaire and did carry out a diligent and complete search. [248] The defendants complain that they are unable to assess whether the individual Committee members: 1. Were properly informed as to the requirements of Rule 16; 2. Had the necessary expertise to conduct the searches; 3. Were instructed to meet the default standards set out in Rule 16.08; (they complain that the information available suggests that the members did not understand that they needed to search for e-mails that were exchanged among the Committee members on relevant matters to the litigation). 4. Conducted reliable searches; 5. Applied consistent standards when searching for relevant electronic information. [249] They further submit that the list of persons completing the questionnaire did not include seven persons who sat as Committee members, including alternates, and who participated in an April 26, 2007 presentation regarding long-short investment strategies. Those persons were Charlotte McInnis, Ken Wilson, Don Johnson, Angela Jones-Riekst, David Huble, Jack Dragatis and Audra Abbott. [250] The plaintiff takes the position that the questionnaire was sufficient and that the minimal volume of materials found is consistent with a reasonable expectation of what these members would have ( or not have) in their possession or control, past or present. [251] It is also argued that a more complete search would generate costs disproportionate to the likelihood of finding further relevant materials. Analysis [252] The Committee is comprised of 12 voting members, five union, five management, one retiree and one supervisory level non union representative. They are not involved in the day to day management of the Pension Plan; that is the responsibility of Terri Troy, CEO of the Committee who is assisted in her role by a permanent staff of five persons. [253] The plaintiff says that privacy was a factor in deciding how to approach the search and collection of electronic information. The Committee members included a lawyer employed by the municipality and police officers. Their work emails are on servers that deal with confidential third party information or information that may be subject to significant privacy concerns. [254] Some members use the HRM server for emails, but other do not, making detailed searches more difficult and costly. [255] Ms. Troy has unfettered discretion to act, providing she does so within the policies set by the Committee. It is she, and not the Committee members who would and did have contact with the defendants. The exception is the April 2007 presentation on the 130/30 strategy which Committee members and alternates did attend. [256] The complete search undertaken by the plaintiff of the electronic and documentary information of Ms. Troy and of her staff is said to have been the way to capture that information which would have been distributed to the Committee. The combination of that search with the questionnaire responses from Committee members is said to render the overall effort “reasonable and thorough”. [257] Although not framed this way in argument, the methodology and the motives behind its use for Committee members is analogous to the “targeted follow up” the defendants applied to its’ employees who had authority to set the corporate policy, but did not necessarily deal directly with the clients or their individual investments. [258] My review of the returned questionnaires demonstrates that most respondents indicated that after conducting the required searches they did not locate documents or electronic information that was relevant. Some responses indicated that they had received documentary information but they were no longer in possession or had control of the information. Some respondents attached documents that would be consistent with an appropriate understanding of the concept of relevance. One respondent indicated that documents were distributed to the members but only for the meetings, and that he did not retain them. [259] There is some uncertainty as to whether the members searched “deleted and archived email”. The plaintiff suggests that the questionnaire sufficiently covers this search. In my view, the questionnaire does not directly address this type of search, nor does it address the scope of a search so as to indicate the importance of looking for email communications among and between the members. At most, it refers to information which was “once controlled but no longer controls”. Deleted emails that are capable of recovery from the trash or other storage space can remain in the control of the custodian, but may not have been thought to be looked for. [260] The plaintiff suggests that Rule 16.08(2) exempts a search of deleted or archived email. I do not agree with that interpretation. I conclude that there is an obligation to conduct such a search unless it is only to find duplicated information. It does not appear that such a search was undertaken and there is no assurance that deleted information would only be duplicated information. [261] Finally, the plaintiff says that the HRM server does not have an archive server for emails and so a search is not feasible. [262] Notwithstanding these shortcomings, the question remains as to whether the searches that have been conducted are sufficient. [263] The people whose information is to be searched includes the Committee members - that is not in issue, however the alternate Committee members are. The evidence is that each member is permitted to have two alternates, though some only have one. Alternates only vote when the primary member is absent. The evidence suggests that the alternates had some involvement in matters that are relevant to the issues in the action. [264] Mr. Rogers advised Ms. Robinson in July 2010 that it was his intention to circulate the questionnaire to the alternates, if the court so orders, and that it would speak to the period March 1, 2006 to September 15, 2008. [265] I conclude that the duty on the plaintiff is to conduct searches run on the alternate members, however given that their involvement is likely to have been minimal or perhaps none at all, having them complete a questionnaire constitutes a sufficient search. [266] I am not satisfied that the questionnaire did accomplish its’ intended purposes and so it needs to be revised before further circulation. Before addressing that question I will deal with the issues raised in the Category 2 request. [267] The plaintiff has provided a list of 38 search terms used to search shared/common drives and individual drives on HRM servers for six custodians, being Ms. Troy and her staff. That search was not conducted in relation to the Committee members or their alternates. The places searched and the search terms have not been challenged by the defendants. However they suggest that the Committee members and alternates should be subject to exactly the same searches. [268] The plaintiff re-iterates that to repeat the process employed for the managers to the Committee members and alternates is unnecessary, costly and provides a low likelihood of producing further relevant information than that already located and disclosed. The plaintiff says that when the Affidavit of Documents is sworn, likely by Ms. Troy, she is available for cross examination and that will provide a further opportunity to the defendants to question the success of the searches undertaken. [269] I am not prepared to direct the plaintiff to incur the cost burden to conduct an independent electronic search of the emails, shared/ common drives and individual drives used by the Committee members or their alternates. It may be an option that the plaintiff will re-consider in light of my further directions. [270] The questionnaire needs to better specify the information to be searched for. It must specify that emails that reference relevant information, irrespective of who the originator of the email is are to be searched for and provided to counsel. It will be for counsel to then assess the information for relevance. [271] In the interests of ensuring a consistent search result, I direct that the Committee members and the alternate members be subject to searches using the 38 keywords that the plaintiff used for the custodians, as well as for the emails ending in @brockhousecom; @mcinnescooper.com; @guardiancapital.com. [272] It is open to the plaintiff to choose the mechanism by which it may accomplish this. It may choose to use HRM IT, a third party vendor, or employ the questionnaire format already used but specifying in writing to the person completing the questionnaire that they must, in answering the questions confirm that they have undertaken a search for the list of terms and email addresses; that the search must include storage areas for deleted or archived emails and must include a search of any emails that were exchanged with other committee members or alternates in relation to matters at issue in the action. Finally, they must be advised that the Committee will provide technical expertise, where necessary, to assist them to conduct the searches. [273] In giving a broad discretion to the plaintiff as to how to collect the required information, I intend to permit them to find the most cost effective way to complete the searches. [274] If gaps in the disclosure become evident then further intervention by the court may be sought. [275] In summary, the Committee members and their alternates will be subject to searches for relevant information using the list of search terms used for the Committee managers and accessing the available active and deleted or archived emails, hard drives, file server, home shares or other shared or common drives used by them. The method to accomplish that more complete search is within the discretion of the plaintiff and its’ counsel, subject to certain conditions I have attached if it is decided to permit the respondents to conduct their own searches and report by questionnaire. [276] Whether additional keyword search terms will be added to the list is addressed in Categories 3 and 4 and this ruling must be read as subject to that further decision. Category 3 and Category 4 [277] In relation to category 3, the defendants seek an order requiring that the plaintiff disclose relevant third-party documents and electronic information of the plaintiff’s consultants and investment advisors in their control, but not actually possessed by the plaintiff including, but not limited to, those materials prepared by, or involving communication with RBC Dexia, Northern Trust and Brockhouse Cooper. [278] In relation to category 4, the defendants seek an order requiring that the plaintiff conduct additional searches of all reasonably accessible electronic information (including, but not limited to, electronic information specified in categories 1 and 2 above) and produce all relevant electronic information generated from searches employing the following additional keywords and variations thereof: (i) RBC Dexia (ii) Northern Trust, NT and Northern (iii) Brockhouse (iv) Ryan Anderson [279] The defendants point to evidence that suggests to them that the plaintiff had the benefit of investment advice from third parties in relation to the role of and risks associated with the use of a prime broker, as well as the investment strategy in issue. They seek that the plaintiff obtain and disclose that information to them as it speaks to the sophistication of the plaintiff as an investor and whether it knew or ought to have known the facts that it pleads State Street failed to disclose. [280] Rule15.02(1)(c) requires a party to: (c) acquire and disclose relevant documents the party controls but does not actually possess. [281] Rule 16.03(1)(c) requires a party to: (c) acquire and disclose relevant electronic information the party controls but can access only through a custodian who is not an employee or an officer of the party.” Northern Trust [282] At hearing, evidence was adduced from John Folk of Northern Trust which satisfied the defendants that his company did not provide relevant information or documentation to the plaintiff and so the motion with respect to adding that company has been withdrawn. RBC Dexia [283] RBC Dexia was custodian of the HRM Pension Plan Assets until January 2, 2008 when it was replaced by Northern Trust. The role of the custodian, described by Mr. Folk, in relation to investments such as the Alpha Fund is to “... maintain a record of the number of units held, and of the net asset value of such units based on information supplied by the client or by others at the direction of the client.” In the case of the Alpha fund that was supplied directly by State Street. He denies that the role of a custodian would include giving advice on the risks and benefits of investments such as the Alpha Fund and the extension strategy. [284] The plaintiff says that RBC Dexia’s position as custodian was the same as that of Northern Trust and that they have made no attempt to search their records as they are not likely to hold documents relevant to the action. [285] An email search intended to capture RBC Dexia communications with managers of the Committee was conducted and relevant information disclosed to the defendants. see, Exh. M to Elizabeth Maynes Affidavit. [286] I have reviewed a number of emails attached to the affidavit of Ms. Maynes, who is employed by the defendants’ Halifax counsel. They are the basis on which I have made an assessment of the role of RBC Dexia. I am unable to find any evidence that contradicts the position advanced by the plaintiff. [287] The plaintiff has also conducted searches on the managers using terms that should have picked up advice received from any source on the role of a prime broker. Adding the term RBC Dexia to the search list would not provide any greater likelihood of finding their communications on that topic, but would trigger significant hits dealing with unrelated communications and documents pertaining to all of the assets of the Pension Plan, of which RBC Dexia acted as custodian. [288] The search of names of RBC Dexia contacts and of emails employing the RBC Dexia email address was conducted on managers’ information. That, combined with the already conducted keyword searches are sufficient to fulfill the plaintiff’s duties to collect and disclose, subject to one exception. [289] I direct that RBC Dexia known contact names and email addresses known to be associated with RBC Dexia be added to the list of terms to be searched for by Committee members and their alternates. The intention is to ensure that the same information sought of the managers is sought of the decision makers in the Committee. [290] While it would be preferable to have had affidavit evidence from an RBC Dexia representative, the absence of that type of evidence does not, on a consideration of the whole of the evidence, lead me to believe that the plaintiff needs to do more to collect RBC Dexia related information. Brockhouse Cooper and Ryan Anderson [291] Brockhouse Cooper (BrC) was retained to assist the Committee while it considered investing in a second “130/30" strategy employing a prime broker. This was in or about October of 2007. [292] The BrC task was to research and review State Street and Guardian Capital as potential investment managers for this investment. They were not retained, according to the plaintiff, to review the risks and benefits of any investment or the mechanics of the implementation. BrC was not, says the plaintiff, an investment advisor. [293] Ryan Anderson is employed by BrC and had some involvement in the Alpha Fund investment. He attended the State Street presentation to the Committee on the Alpha Fund for “educational purposes” and to “better appreciate SSGA”. This was known at the time to the defendants. [294] It is apparent, and the plaintiff acknowledges, that any advice it received from BrC or its employees may be relevant and that the plaintiff has an obligation to collect and disclose that relevant information. [295] To fulfill that obligation they advise that the searches done to date include electronic searches of its managers’ email, as well as individual and shared/ common drives, to find relevant communications. It has employed searches on email addresses ending in “brockhousecooper.com”; using a keyword search for “Anderson” and for the terms already agreed to such as “prime broker”, “Guardian”, “130/30", “Edge”. [296] The defendant says that failing to include Brockhouse Cooper means that internal email exchanges among Committee members and/or managers where the term arose are not captured. [297] The plaintiff says that it has met its obligations to search internally, and that it is not required nor does it have the authority to require an independent third party like BrC to submit to searches of its’ records to, in effect, double check the Committee’s production upon completing the described searches. [298] The information available suggests a real possibility that BrC provided information, if not advice, on the extension strategy, State Street, and prime brokers. This would be highly relevant. [299] I agree with the defendant that failing to include “Brockhouse” as a search term of documentation could miss internal discussions emanating from the information supplied by BrC. [300] I direct the plaintiff to conduct an additional electronic search of all reasonably accessible electronic information and to produce all relevant electronic information generated from searches employing the keyword “brockhouse” and variations thereof. (My understanding is that “Anderson” has already been run. If I am incorrect in this then I direct the same search employing that name as a keyword). [301] I further direct that the plaintiff subject the information of the Committee members and their alternates to the same searches relating to BrC and Anderson, as the managers were subjected to, with the exception that the plaintiff may choose the most cost effective method to fulfill the search, including by questionnaire following searches conducted by the respondents. If this mechanism is chosen, then it will be included as part of the search I directed in consideration of Categories 1 and 2 above. Category 5 [302] The defendants seek an order to compel the plaintiff to produce relevant documents and electronic information in the possession of the law firm McInnes Cooper and which relate to advice given by McInnes Cooper to the plaintiff, before the plaintiff invested in the Fund. In particular they seek materials concerning the trust documents which govern the Fund and the client trust, including at least the following matters: (a) the rights, duties and responsibilities of State Street as trustee of the Fund and the client trust; (b) the plaintiff’s right to demand return of trust assets; and (c) the potential application of the Pension Benefits Act to the investment. Background [303] The plaintiff retained counsel at McInnes Cooper to provide legal advice in relation to the proposed terms of the Agreement of Trust (AoT) being negotiated as between the plaintiff and SSTBC. [304] On May 27, 2007 Terri Troy, the Chief Executive Officer for the plaintiff, sent an email to Patrice Denis and Marina Romaelli at SSGA Canada. It stated, in part: Attached are initial comments from my external pension and tax lawyers. Is it possible for you to get the documents referred to in 1 and 2 under Follow Up Items? Also, please pass these comments along asap to your Canadian and US legal teams. I will talk to the plan sponsors who gave their names as references to me re: tax issues ¼ [305] A second e-mail from Ms. Troy to SSGA Can representatives, dated June 15, 2007 included this: ¼ My lawyers are asking that you indemnify the HRM plan in the event of a breach in representations by you, because you require a similar indemnification on representations provided by me. This seems fair. Most contracts either have a cross indemnification or are silent on the issue. [306] Included with this email was an email message from McInnes Cooper counsel to Ms. Troy together with a proposed draft version of the Agreement of Trust prepared by counsel. [307] The attachment referred to in the first e-mail was a Memorandum prepared by plaintiff’s counsel, and dated May 25, 2007. The Memorandum contains detailed comments on documents examined by McInnes Cooper, including the Agreement of Trust (SSBTC Trust), the Umbrella Declaration of Trust, and the Fund Declaration- Global Alpha Edge Common Trust Fund. [308] The defendants’ position is that release of this document constituted a waiver of the plaintiff’s solicitor-client privilege which would otherwise attach to the document. But the defendants go further, seeking to expand the scope of the waiver to include all of the working papers and documents that constituted the “plans” from which this “house” ( the Memorandum) was built. It relies upon the following arguments in support of this request: (i) the documents are relevant; (ii) fairness and consistency require that these documents be produced. [309] The plaintiff does not concede relevance of either the released information, or the further documentation which it has refused to produce. However, the plaintiff makes no substantive arguments in opposition. Instead the plaintiff emphasizes its’ view that there is an absence of legal authority in support of the defendants’ position that the undisclosed information should be produced. Relevance [310] The plaintiff alleges, inter alia, that the defendants exceeded their authority under the trust documents governing the Fund by transferring custody of trust assets to the prime broker with authority to pledge those assets, by failing to maintain trust assets in a separate account, by failing to return them on request and by failing to comply with the standard of care mandated by the Pension Benefits Act. More particularly, in the Second Amended Statement of Claim, at paragraphs 2, 19, 27, 46 and 51, the plaintiff repeatedly alleges that these things occurred without the plaintiff’s knowledge or authorization. [311] In paragraph 5 (b) of the Statement of Defence, the defendants plead that the plaintiff is a: ¼ sophisticated investor with the experience and expertise to fully oversee and administer the assets under investment. At all material times and in all matters requiring investment expertise, the committee was represented by its staff, investment counselors, legal advisors and Troy ¼ [312] In paragraph 5 (i), the defendants plead that: The Committee retained external legal counsel to review and negotiate the terms of an Agreement of Trust (the “AoT”) pursuant to which the Committee would formally invest in the Global Alpha Edge Fund. [313] The disclosed Memorandum contains information which could form the basis of examination of Committee members or managers as to their understanding of the risks associated with its’ investment in the Fund. The degree to which the Committee members and managers understood and approved of the purportedly broad discretion afforded to the defendants under the terms of the agreement will be a relevant consideration at trial. [314] Part III of the Memorandum, entitled “Detailed Comments on the Documents” contains the following comments: III.A. Agreement of Trust (SSBTC) (6) Paragraph 3rd (a) authorizes the trustee to invest in such securities as the trustee selects. The alternative investment in the CTF is also authorized. The investment in securities is authorized regardless of their “character, their quality, any requirement of diversification or any other principle applicable to investment fiduciaries”. It is unclear how this would comply with potential obligations in the PBA and SIPP. ... III.B. Umbrella Declaration of Trust (4) Article IV, Section 5- No withdrawal may occur unless written notice of intention to withdraw has been approved by the trustee or other authorized representative. This appears to place a restriction on withdrawal. See note below on Article V, Section 4; ... (8) Article VII, section 3- Complete discretionary authority to the Trustee with respect to investment.¼ Section 4 provides the Trustee has the broadest power and authority in making investments consistent with the investment powers herein provided and consistent with special purposes applicable to each fund; ... (10) Article VII, Section 6 (h), (i)- Securities of the Fund may be held in the name of a nominee or nominees without designation of trust and maybe kept in any place or places selected by the Trustee; ... III. C. Fund Declaration-Global Alpha Edge Common Trust Fund (1) Section 4- Fund will invest directly in equity securities selected from issues deemed attractive by the trustee. Short selling is authorized as is levered long positions. Aggregate notional exposure will not extend beyond total net assets. Further authority is provided to invest in common stock, derivatives, “or other investments as an affiliate of Trustee in his discretion deems appropriate under the circumstances”. [315] It is apparent that in drafting this memorandum, counsel for the Committee were alert to the issues of the defendants’ discretion in transferring assets, whether the investment scheme would comply with the PBA, and the ability to invest the Committee funds without a designation of trust attached to the investment. The degree to which this information was conveyed to the plaintiff is relevant to the plaintiff’s actual or presumed knowledge. see, Halifax Bridge Commission v Walter Construction Corporation 2009 NSSC 403. By pleading that it did not know about, or authorize the transfer of funds, the Committee has put in issue the information that it had from its’ legal counsel on the issues pleaded and commented upon in the disclosed memorandum. Solicitor - Client Privilege General [316] The Supreme Court of Canada has confirmed that solicitor-client privilege is “as close to absolute as possible”. see, Blood Tribe Department of Health v. Canada (Privacy Commissioner), [2008] 2 SCR 574, at p. 9; and see, R. v. McClure, [2001] 1 SCR 445 at para. 35. [317] Solicitor-client privilege does not yield to the principles of disclosure set out in the Nova Scotia Civil Procedure Rules. Rule 14.05 makes it clear that relevance alone is not a sufficient basis upon which to require disclosure of privileged material. It also sets out the authority of the court to determine a claim for privilege: 14.05 (1) Nothing in Part 5 requires a person to waive privilege or disclose privileged information. (2) A provision in a Rule in Part 5 for disclosure of a relevant document, electronic information, or other thing means disclosure of a relevant document, electronic information, or other thing that is not privileged. (3) A provision in a Rule in Part 5 that requires an answer to a question calling for relevant evidence, or information that reasonably could lead to relevant evidence, means relevant evidence that is not privileged, or information, not itself privileged, that could lead to relevant evidence that is not privileged. (4) A judge may determine a claim for privilege, except the information and confidences referred to in sections 37 to 39 of the Canada Evidence Act are determined under that Act. (5) A judge who is required to determine a claim for privilege may direct a person to deliver the thing claimed to be privileged to the judge in order that it may be dealt with under Rule 85.06, of Rule 85 ‑ Access to Court Records. Express and Implied Waiver of Privilege [318] Privilege may be surrendered or lost in circumstances where the holder of the privilege has expressly, or by implication, waived the protections of the privilege. [319] I am satisfied that there is information contained in the two e-mails and in the McInnes Cooper Memorandum that would, but for their disclosure to employees of the defendants, be privileged information that would not be required to be disclosed. [320] The plaintiff initially claimed privilege over the information disclosed on May 27 and June 15, 2007. During the course of discussions between counsel for the parties, the plaintiff subsequently agreed that privilege had been waived in relation to those documents and disclosed them to the defendants. As such, these documents being both relevant and no longer subject to solicitor client privilege have been properly produced. [321] The issue is whether as result of these disclosures, and the attendant waiver of privilege, there is a basis to conclude that privilege has been or should be treated as waived over the information described above as contained in the files of McInnes Cooper. Analysis [322] The position of the defendants is that the requested information “¼ may further shed light on the extent of the plaintiff’s actual or presumed knowledge. ¼ The Defendants submit that principles of fairness, consistency and avoidance of the risk that it will be misled support and justify a finding of implied waiver.” [323] In support of its argument the defendants refer to The Law of Evidence in Canada, 3rd edition, Lexis-Nexis Canada Inc. 2009: Canada, where the authors state that: 14.122 An obvious scenario of waiver is if the holder of the privilege makes a voluntary disclosure or consents to disclosure of any material part of a communication....Moreover, if the privilege is waived, then production of all documents relating to the acts contained in the communication will be ordered 14.129 Whether intended or not, waiver may occur when fairness requires it, for example, if a party has taken positions which would make it inconsistent to maintain the privilege”. [324] I have also been referred to The Law of Privilege in Canada, R.W. Hubbard, S. Magotiauz, S.M. Duncan, looseleaf, Canada Law Book: Aurora, Ontario where the authors state that: Generally, waiver of part of a communication will be deemed to be a waiver of the entire communication if it is related to the same subject matter. ... As a better approach, Canadian courts have embraced an examination of all of the circumstances of the case. If the disclosure of part of the communication only is likely to mislead the other party or the court, privilege may then be lifted over the whole communication. [325] Other courts have expressed this concept as “where fairness and consistency require, partial waiver can lead to full waiver”. [326] The defendants have referred the court to the decisions in: * Canada Life Mortgage Services Ltd. v. Leeside Estates 2002 NSSC 30; * S & K Processors Ltd. v. Campbell Avenue Herring Producers Ltd.,[1983] 4 W.W.R. 762, 45 B.C.L.R. 218 (S.C.); * Hanscom v. Coyle (1995), 26 Alta. L.R. (3d) 313; * Allied Signal Inc. v. Dome Petroleum ( sub. nom. Canada Southern Petroleum Ltd. v. Amoco Canada Petroleum Co.), [1995] WWR 726 (ABQB); * Verney v. Great West Life Assurance Company (1998), 38 O.R.(3rd) 474 (On. Ct. Gen.Div.); * Trask v. Canada Life Assurance Co. 2002 BCSC 1741 [327] The plaintiff submits that all of the authorities cited by the defendants involve disclosure of privileged information in the context of litigation, and that those authorities generally concern situations where one party attempts to gain an unfair advantage over the other by "cherry picking" evidence that the party wants to rely on to support its’ position. [328] The plaintiff continues that what the Committee did in May 2007 was “utilize a commonly accepted method of raising particular concerns that needed to be addressed in pre‑contractual discussions”. They distinguish this from a partial waiver during litigation, something that the plaintiff says will more readily lead to an inference that the evidence is being selectively and therefore unfairly disclosed. [329] The plaintiff summarizes its’ opposition to production as: (i) The Committee does not rely on the Comments in the litigation to establish any proposition, nor were the Comments disclosed in the course of ongoing litigation; (ii) The Comments are not misleading, largely comprise a paraphrasing of wording in the Agreement of Trust, and require no clarification; and (iii) The "state of mind at issue" exception does not apply. [330] The plaintiff submits the following cases for consideration, in addition to addressing those submitted by the defendants: * Kwok v. Kwok (2008), 78 BCLR(4th) 377 (SC); at para. 53; * Harris v. Doucette (1988) 99 NSR(2d) 241 (SC) at paras 12 and 22; * R. v. Shirose (1999), 133 CCC(3d) 257 SCC, at para 68; * Chapelstone Developments Inc. v. Canada 2004, 277 NBR 2d 350 at paras: 56-57; leave to appeal refused at SCC. .... , * Transamerica Life Insurance Co. Of Canada v. Canada Life Assuarance Co. (1995), 27 OR(3d) 291 (SCJ) at para 42; * National Bank v. Potter 2005 233 NSR(2d) 1233 )SC) at para 92; * Leopold v. Leopold (1999) 48 RFL (4th) 388 (CA) [331] I accept that an implied waiver of privilege may be found where fairness and consistency require it. see, S & K Processors, supra. [332] The plaintiff submits that it will not rely on the memorandum in whole or in part at trial. It points out that the information is not referenced in the claim. It is true that there are cases which make it clear that: If a party chooses to rely on part of a privileged document or one or more of a group of documents, he or she may be held to have waived any claim of privilege over the document or group of documents. Kwok at para. 53. [333] The Committee concludes that since it does not rely on the document that the fairness test is not met. It adds that in this case, the desire to use the document is being triggered by the defendants and that it is not open to the defendants to springboard off its’ own reliance on the document to extend the waiver of privilege. [334] This argument does not acknowledge that it is the plaintiff’s pleadings that put the information in issue. The defendants say that the memorandum is inconsistent with the plaintiff’s position and that it is that fact that triggers the fairness concern. [335] The plaintiff, in its’ claim pleads that the funds transfer was made by the defendants without the knowledge or authorization of the plaintiff. [336] In oral argument, counsel for the plaintiff characterized these pleadings as statements of fact: that the defendants transferred without telling the plaintiff or seeking their prior authorization. This does not address the question of whether the authority to transfer funds without notice was granted by the Agreement of Trust. i.e., that by the terms of the Agreement the defendants were not required to provide further information or to seek further authority of the Committee to do so. A question for the trial will be whether the Committee knew that transfers could happen without further notice and authorization. [337] The defendants’ argument is that it is unfair to them, and potentially misleading to them and the court, if the trial proceeds on the basis that the Committee had the right to notice and required to provide authorization of funds transfers, when the legal advice given to them could counter that assertion. [338] The plaintiff also suggests that it has disclosed the entirety of the memorandum and therefore cannot be held to have selectively disclosed, such as was attempted in cases like Allied Signal Inc. v. Dome Petroleum. I do not agree that this is determinative of the extent of disclosure that fairness and consistency may dictate. Relying on one document of a group of documents, is no less problematic than relying on a part of a document, in circumstances where the partial disclosure may render the trial unfair. [339] The plaintiff submits that this is not a situation where it would mislead the defendants unless there is further disclosure of the underlying privileged materials. It says that the Memorandum speaks for itself, and nothing further is required to clarify or expand on the comments contained therein. In support of its’ position it refers to Transamerica Life Insurance Co., supra, at para. 41: It is not suggested that there was an intention to waive privilege. However, the plaintiff relies on the principle that a party is not entitled to disclose only those parts of a privileged document which are to the party's advantage as fairness and consistency may require full disclosure: see S & K Processors Ltd. v. Campbell Ave. Herring Producers Ltd. (1983), 35 C.P.C. 146 at pp. 148‑49, 45 B.C.L.R. 218 (S.C.); Ronald D. Manes and Michael P. Silver, Solicitor‑Client Privilege (Markham: Butterworths, 1993), p. 191, para. 1.04. In my view, the plaintiffs have failed to establish waiver and the defendants are entitled to maintain their claim of privilege. With respect to these documents. It is plainly not the law that production of one document from a file waives the privilege attaching to other documents in the same file. It must be shown that without the additional documents, the document produced is somehow misleading: Nova Aqua Salmon Ltd. Partnership (Receiver of) v. Non‑Marine Underwriters of Lloyd's of London (1994), 28 C.P.C. (3d) 269, 135 N.S.R. (2d) 71 (S.C.). There is nothing before me to suggest that the disclosed documents are misleading without production of all documents in the C.L.M.S. incorporation file. It is understandable that the opinion letter provided to satisfy the regulatory requirements of the Superintendent of Financial Institutions would have been produced and it certainly stands on its own. The memorandum from the internal legal department is self‑contained and readily understood and precedes the next document in the file for which privilege is claimed by five months. There is, in my view, no basis for saying that this document presents a misleading or incomplete picture unless it is the case that any time one document is produced, all the others relating to the same subject must also be produced. [340] I agree with the principle enunciated and further that there is nothing misleading in the Memorandum that requires disclosure of the other file materials to understand it. [341] However, it would be an error to look at the Memorandum in isolation. The information in the Memorandum signals a position that it is alleged to be inconsistent with the plaintiff’s pleadings and therefore it is suggestive, in the defendants’ submission, that it is the pleadings that may mislead. For example, the Memorandum identifies that the Trustee has a broad discretion to invest, and in vehicles that might not comply with the PBA. The Umbrella Declaration of Trust is noted to permit investments without designation of trust, and in “any place” the Trustee may select. If these concepts were elaborated upon by counsel to the Committee, it may show that the Committee knew that the documents themselves resolved any questions of notice of intended funds transfers by the Trustee. Conclusion [342] Privilege should not be treated as waived by implication except in those circumstances where it has been shown that it is likely that the defendants or the court will be misled if there is a failure to disclose the related material. Notions of fairness cannot be a guise for a fishing expedition into the plaintiff’s lawyers files. [343] I conclude that the evidence is not sufficient to imply such a waiver of privilege and justify an order for disclosure. However, the evidence is sufficient to raise a legitimate question as to whether there is an inconsistency between the disclosed opinion and portions of the plaintiff’s claim. To assess whether there is such an inconsistency and resulting unfairness by non disclosure, I have concluded that it is necessary for the court to view the material sought by the defendants. This is the only way that a determination of the claim for privilege can be arrived at. In doing so, I rely on the authority provided in Rule 14.05(5) and Rule 85, the latter of which reads: Privileged documents 85.06 (1) Nothing in these Rules diminishes the power of a judge who must determine a claim that a document is privileged, or otherwise subject to a confidentiality protected by law, to keep the document confidential until the determination is made. (2) A judge who must determine a claim that a document is privileged, or otherwise subject to a confidentiality protected by law, may do any of the following without the document being marked as an exhibit, made part of the public court record, disclosed to the party who contests the claim, or made available to the public: (a) personally take control of the document; (b) give directions to the prothonotary or any other member of court staff for storing the document, keeping it separate from court records, and doing with it only as the judge further directs; (c) read, view, or listen to the document for the purpose of making the determination. (3) A document taken control of and kept confidential by a judge is not part of the public court record and need not be made the subject of a confidentiality order. (4) A judge who takes control of a document and determines that it or part of it is not privileged, and that it is not otherwise subject to a confidentiality protected by law, must do both of the following: (a) maintain control of the document long enough for the party who claims privilege to make a motion for a confidentiality order pending appeal (b) place the document or the part on the court record, unless a confidentiality order is in effect pending appeal. (5) A judge who takes control of a document and determines that it or part of it is privileged must make a sealed record for review by the Court of Appeal. (6) The sealed record must include everything determined to be privileged, and everything else delivered to the judge for the determination must be placed on the record. (7) The party who claims privilege may make a motion for the sealed record to be delivered to the party in the time referred to in Rule 84.04, of Rule 84 ‑ Court Records. [344] I direct that McInnes Cooper deliver to the court, under seal, all materials and electronic information in its’ possession which predates the execution of the Agreement of Trust by the Committee and which concerns the trust documents which govern the Fund and the client trust, including the following matters: (a) the rights, duties and responsibilities of State Street as trustee of the Fund and the client trust; (b) the plaintiff’s right to demand return of trust assets; and (c) the potential application of the Pension Benefits Act to the investment. [345] I will hear submissions of counsel on the form that an Order should take to give effect to this conclusion, if necessary. DEFENDANTS’ SECOND MOTION [346] The defendants seek to establish a “...reasonable schedule for the exchange of relevant documentation/electronic information and discovery examinations ...”. [347] The parties will need to assess their obligations for disclosure in light of this decision, and to discuss as among themselves whether a mutually acceptable timetable can be arrived at to fulfill their obligations. If they cannot, then a schedule for further submissions will be discussed at a case management conference. CONCLUSION [348] As success has been mixed, I request that the parties consult with respect to the drafting of the orders. If they are unable to agree then I direct that the moving party prepare the order that responds to their motions. [349] Where there is disagreement as to the form of Order, or where the parties are experiencing difficulty in capturing the intent of the decision in the Order then those questions may be directed to me. [350] In some instances, particularly as it relates to motions for directions as to scheduling, further submissions will be required unless the parties can reach agreement among themselves on timing of future production. Similarly, directions may be necessary for plaintiff’s counsel to comply with my direction pursuant to Rules 14.05(5) and 85. A further case management conference may be convened to address these or other questions arising from the disposition. [351] As to costs, I invite the parties to reach agreement on disposition but if they are unable to do so then I will receive their written submissions. Duncan, J.