T-5189-73
Paul D. Bowlen (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Thurlow A.C.J.—Edmonton, Sep-
tember 22; Ottawa, October 13, 1977.
Practice — Applications for orders to produce — Docu
ments not in possession of persons against whom order sought
— In possession of foreign, wholly-owned subsidiary, and of
foreign, controlled subsidiary — Federal Court Rule 464.
These applications by the Crown are for orders, under Rule
464(1), requiring persons not parties to the action to produce
and permit the inspection and copying of documents. The first
two applications seek orders for the production of documents
not in the possession of persons against whom the orders are
sought. The third application seeks an order requiring the
production of documents in the possession of persons against
whom the order is sought, and of documents in the possession
of another person.
Held, the first and second applications, and a part of the
third, are dismissed. The documents sought in the first applica
tion are in the possession of a wholly-owned subsidiary of the
Royal Bank, a separate corporation established under Ameri-
can law, and operating in the United States. It has not been
shown that the documents sought are the property of the Royal
Bank, or that the subsidiary holds them in trust or as agent.
The evidence, rather, is that the documents belong to the
American subsidiary and its customers; they cannot be con
sidered to be in the possession of the Royal Bank within the
meaning of the Rule. The second application is more tenuous
than the first, for it involves a foreign corporation controlled
but not wholly owned by the Royal Bank, and fails for like
reasons. The third application seeks discovery of documents of
persons who are not parties, but is not limited to specific
documents, to documents shown to be in the possession of
persons against whom the order is sought, or even to documents
shown to be in existence. An order will be made for production
by the named individuals of the reports and documents men
tioned which they received from the Trust Corporation of the
Bahamas.
Reid v. Langlois (1849) 1 Mac. & G. 627, 41 E.R. 1408,
applied. Bowlen v. The Queen [1977] 1 F.C. 589, con
sidered. Rhoades v. Occidental Life Insurance Co. of
California [1973] 3 W.W.R. 625, considered.
APPLICATION.
COUNSEL:
H. S. Prowse, Q.C., for plaintiff.
M. R. V. Storrow for defendant.
Colin L. Campbell for National Westminster
Bank Ltd.
Julian C. C. Chipman, Q.C., for Royal Bank
of Canada.
Peter J. Royal for Arvella Regis Bowlen,
Patrick Dennis Bowlen, Mary Elizabeth Jager
née Bowlen, William Alexander Bowlen and
John Michael Bowlen.
SOLICITORS:
Fenerty, Robertson, Prowse, Fraser, Bell &
Hatch, Calgary, for plaintiff.
Deputy Attorney General of Canada for
defendant.
McCarthy & McCarthy, Toronto, for Nation
al Westminster Bank Ltd.
Ogilvy, Cope, Porteous, Montgomery,
Renault, Clarke & Kirkpatrick, Montreal,
for Royal Bank of Canada.
Milner & Steer, Edmonton, for Arvella Regis
Bowlen, Patrick Dennis Bowlen, Mary Eliz-
abeth Jager née Bowlen, William Alexander
Bowlen and John Michael Bowlen.
The following are the reasons for orders ren
dered in English by
THURLOW A.C.J.: In this action, three separate
applications have been made on behalf of the
Crown for orders under Rule 464(1) requiring
persons who are not parties to the action to pro
duce and permit the inspection and copying of
documents. In the first two applications, what is
sought is the production of documents which are
referred to in the notice of motion as being in the
possession not of the persons against whom the
orders are sought but of others. In the third, the
applicant seeks an order requiring the production
of documents referred to as being in the possession
of the persons against whom the order is sought
and documents in the possession of another person.
The proceeding is an appeal from income tax
assessments for the years 1963 to 1970. The cen
tral issue is whether three transactions carried out
on May 9, 1963, in one of which the plaintiff
transferred a portfolio of investments to Hambel-
don Estates Limited, a Bahamian corporation, for
$6,891,647.50, were shams and whether the
income from the investments continued to be, in
the years in question, in substance and in fact
income of the plaintiff.
Rule 464 consists of three paragraphs following
the title "Discovery and Inspection from Person
not a Party". It is found among a number of Rules
dealing with discovery and inspection but despite
the title its provision is not one for ordering discov
ery. It is limited to production and inspection.
Paragraph (1) reads as follows:
Rule 464. (1) When a document is in the possession of a
person not a party to the action and the production of such
document at a trial might be compelled, the Court may at the
instance of any party, on notice to such person and to the other
parties to the action, direct the production and inspection
thereof, and may give directions respecting the preparation of a
certified copy which may be used for all purposes in lieu of the
original.
The other two paragraphs are concerned with
documents in the possession of the Crown and are
not involved in the present applications.
It will be observed that the Rule applies only
"When a document is in the possession of a person
not a party to the action and the production of
such document at a trial might be compelled". It
was submitted that the use of the single word
"possession" indicates that the application of the
Rule is narrower than that of Rules 448, 451 and
453 to 456, under which a party may be required
to discover documents that are or have been in his
"possession, custody or power" and to produce
such of them as are in his "possession, custody or
power". On the face of it, this appears to be so but,
on reflection, I doubt that there is much differ
ence, at least in so far as the right to production is
concerned. However, it is not necessary to decide
the point. What is involved is simply the meaning
of "possession" in Rule 464. No case was cited in
which the meaning is discussed and, in the absence
of any expression of opinion on it, I think it means
what is referred to as "legal possession" by Lord
Cottenham in Reid v. Langlois' when he said at
page 636:
In one sense it [the document] is in his possession; but when
possession for the purpose of production is spoken of, that is to
say a right and power to deal with it, actual corporeal posses
sion is not meant, but legal possession in respect of which the
party is authorised to deal with the property in question.
The word plainly includes the situation where the
owner of a document has physical possession of it.
It includes as well, in my view, the situation where
the document is not physically in the possession of
its owner but is in the possession or custody of an
agent or bailee from whom the owner is entitled to
obtain it. I do not think, however, that it includes
bare custody or possession held by one who does
not own the document for, as I see it, the purpose
of the notice of the application required by the
Rule to be given to the person in possession is to
give the person entitled to it an opportunity to
object to its production and that purpose would not
be served if a mere custodian without title were the
only person entitled to be heard.
The purpose of Rule 464 and the jurisprudence
on comparable Rules in Ontario and British
Columbia were recently reviewed by Smith D. J.
in an earlier application in this case 2 . Smith D. J.
points out that in those Provinces there has been
some relaxation in recent cases of the strict limita
tions placed on the Rule by earlier cases which in
general restricted it to production of specific docu
ments for the purpose of simplifying the procuring
of evidence for use at the trial and prevented its
use as a means of obtaining discovery from persons
not parties to the proceedings.
Smith D.J., applying the more recent authori
ties, ordered the Royal Bank of Canada [at pages
601-602]:
(1849) 1 Mac. & G. 627, 41 E.R. 1408 at 1411.
2 [1977] 1 F.C. 589.
... [to arrange] through its proper officers, ... for the produc
tion to and [to] permit the inspection by officers of the defend
ant of all ledgers, records, memoranda, correspondence, docu
ments and other records in the possession of the Royal Bank of
Canada with respect to Paul D. Bowlen, the plaintiff herein,
Regent Tower Estates Limited, Hambeldon Estates Limited
and Bowlen Investments Ltd., wheresoever found, including,
without restricting the generality of the foregoing, the docu
ments, 319 in number, set out in Schedule A to the notice of
motion herein, which documents were sent, received, prepared
or originated by the Royal Bank of Canada, its agents or
servants in the course of carrying on its business.
Many of the documents referred to were in New
York and were produced there under arrange
ments between the Crown and the Bank. But
production was not given of documents said to be
in the possession of The Royal Bank of Canada
Trust Corporation (now The Royal Bank and
Trust Company), a New York bank, the shares of
which are owned by the Royal Bank of Canada
and which is incorporated and organized under the
law of New York and carries on its business there.
The first of the applications is directed to
obtaining production of these documents. It seeks
an order
A. Directing the Royal Bank of Canada to comply with the
Order of the Honourable Mr. Justice C. Rhodes Smith dated
August 19, 1976, by producing, and allowing officers of the
Defendant to inspect, all ledgers, records, reports, memoranda,
correspondence or documents with respect to Regent Tower
Estates Limited, Hambeldon Estates Limited, Paul Dennis
Bowlen and Bowlen Investments Limited, in the possession of
the Royal Bank of Canada Trust Corporation; or
B. In the alternative, an Order pursuant to Rule 464 of the
Rules of this Honourable Court, directing the Royal Bank of
Canada to produce and allow officers of the Defendant to
inspect all ledgers, records, reports, memoranda, correspond
ence or documents with respect to Regent Tower Estates
Limited, Hambeldon Estates Limited, Paul Dennis Bowlen and
Bowlen Investments Limited in the possession of the Royal
Bank of Canada Trust Corporation
The defendant's first submission was that the
production of the documents referred to was
included in what the order required the Royal
Bank to produce. It was conceded, however, that
they were not included in the 319 listed documents
referred to in the order and it does not appear to
me that they can be regarded as embraced by the
expression "in the possession of the Royal Bank of
Canada" in the order. I should add that, if I were
of the opinion that the documents were in the
possession of the Royal Bank within the meaning
of the order, I would regard procedure by an
application for a second order to the same person
for their production as open to question.
The defendant's principal submission was that
because The Royal Bank and Trust Company is a
wholly-owned subsidiary of the. Royal Bank and,
as a direction by it to the Company would prob
ably be respected, documents in the possession of
the Company should be considered to be in the
possession of the Royal Bank within the meaning
of the Rule and, accordingly, the Royal Bank
should be ordered to produce them. Counsel
conceded that this went further than any of the
jurisprudence on the scope of the Rule. In his
submission, the order of Smith D.J. went further
than most jurisprudence in requiring production of
documents not physically situated in Canada and
in not requiring specific identification of the docu
ments of which production was ordered and he
sought to further expand the scope of the Rule by
interpreting it as applying to documents in the
possession of a corporation controlled by the
person against whom the order is sought.
In my opinion, the submission is not sustainable.
The notice of motion describes the documents
sought as being in the possession of The Royal
Bank and Trust Company. Though that bank is a
wholly-owned subsidiary of the Royal Bank, it is
not the Royal Bank but a separate corporation
established under the law of another country and
carrying on its operation there. The documents
sought are not shown to be the property of the
Royal Bank. Nor has it been established that The
Royal Bank and Trust Company holds them in
trust for or as agent of the Royal Bank. Indeed,
such evidence as there is of what the documents
are suggests that they belong to The Royal Bank
and Trust Company or its customers rather than to
the Royal Bank. I do not think, therefore, that
they can be considered to be in the possession of
the Royal Bank within the meaning of the Rule.
Counsel referred to Dallas v. Dallas 3 but that
was a case on discovery by a party to the proceed
ings and the document was in his possession. The
case, in my view, is not of assistance in the present
situation.
The application, therefore, fails and it will be
dismissed with costs.
In the second of the three applications, what is
sought is an order directing the Royal Bank of
Canada and the National Westminster Bank Ltd.
... to produce and allow officers of the Defendant to inspect all
ledgers, records, correspondence, memoranda, reports or docu
ments with respect to:
1. Certain trusts, namely the Arvella Regis Bowlen Trust,
the Patrick Dennis Bowlen Trust, the Mary Elizabeth
Bowlen Trust, the John Michael Bowlen Trust and the
William Alexander Bowlen Trust;
2. Regent Tower Estates Limited;
3. Hambeldon Estates Limited; and
4. Bowlen Investments Ltd.
in the possession of the Trust Corporation of the Bahamas
Limited or its agents or servants ....
When filed, the application was also directed
against the Montreal Trust Company and the
Imperial Life Assurance Company of Canada but
the application was not pursued against them as in
the meantime they had disposed of certain share-
holdings which they had held in a Bahamian bank
known as Roywest Banking Corporation Limited.
The principal shareholders of that bank are Royal
Bank International Limited, a Bahamian company
owned, as to 100 per cent of its shares, by the
Royal Bank of Canada, and the National West-
minster Bank Limited, the two owning between
them some five-sixths of the issued shares. Roy-
west Banking Corporation Limited owns 99.99 per
cent of the issued shares of Trust Corporation of
the Bahamas, a Bahamian company carrying on in
the Bahamas the business of a trust company. It
was said that this company controls the portfolio
of investments sold by the plaintiff Bowlen to
Hambeldon Estates Limited in one of the
impugned transactions and has documents relevant
to the issue in this action and that, since the Royal
Bank and the National Westminster Bank com
bined have the effective ownership between them
of the Trust Corporation of the Bahamas, they
3 (1960) 24 D.L.R. (2d) 746.
have effectively in their possession all the docu
ments in the de facto possession of the trust com
pany and should be ordered to produce them.
Counsel freely conceded that no such order has
heretofore been granted but submitted that, as a
matter of reasonableness, the Royal and National
Westminster banks should be ordered to produce
the documents held by a company they control.
The implications of making such an order against
a majority shareholder or a combination of share
holders holding together a majority of the shares
of a company are far-reaching enough to make
counsel's suggestion of the reasonableness of it
questionable. In my opinion, the application is
more tenuous than the first and fails for the like
reasons. It is accordingly unnecessary for me to
consider or express any opinion on the objection
raised by counsel for the National Westminster
Bank Limited that his client is not present in
Canada.
The application will be dismissed with costs.
The remaining application seeks an order
A. Directing Arvella Regis Bowlen, Patrick Dennis Bowlen,
Mary Elizabeth Jager née Bowlen, William Alexander Bowlen
and John Michael Bowlen to produce and allow the officers of
the Defendant to inspect all ledgers, records, reports, memoran
da, correspondence or documents with respect to Regent Tower
Estates Limited, Hambeldon Estates Limited and the Trust
Corporation of the Bahamas in their possession, or in the
possession of the Trust Corporation of the Bahamas Limited,
its agents or servants; and
B. Directing the preparation of certified copies thereof.
The affidavit filed in support of this application
discloses that the named individuals are the
beneficiaries of trusts of which Trust Corporation
of the Bahamas Limited is the trustee, that the
property of the trust in each case consists of shares
of Regent Tower Estates Limited, a Bahamian
corporation, which is the beneficiary of a trust, of
which Trust Corporation of the Bahamas is trus
tee, of the shares of Hambeldon Estates Limited
which owns the portfolio of investments sold to it
by the plaintiff in the transactions of May 9, 1963.
The final paragraph of the affidavit reads as
follows:
THAT I am of the opinion that there are in the possession,
custody and power of Arvella Regis Bowlen, Patrick Dennis
Bowlen, Mary Elizabeth Jager née Bowlen, William Alexander
Bowlen, John Michael Bowlen, the Trust Corporation of the
Bahamas, Regent Tower Estates Limited, Hambeldon Estates
Limited, and/or their agents or servants, documents which may
be relevant to the action herein.
It will be observed that in the notice of motion
the named individuals and Trust Corporation of
the Bahamas are lumped together and production
of "ledgers, records, reports, memoranda, corre
spondence or documents" in the possession of any
of them is sought. Which sorts of documents are
claimed to be in the possession of the individuals
and which in the, possession of the corporation are
not specified.
In so far as the application seeks an order
requiring the named individuals to produce "ledg-
ers, records, reports, memoranda, correspondence
or documents" in the possession of Trust Corpora
tion of the Bahamas, the application, in my opin
ion, fails, except with respect to documents, if any,
which may be in the physical custody or possession
of the company but which are the property of the
named individuals, on the simple ground that the
individuals may not be required under Rule 464 to
produce documents which are not in their
possession.
With respect to documents in the possession of
the named individuals, within the meaning of Rule
464, it was stated by their counsel that they have
received reports from the trustee i.e. Trust Corpo
ration of the Bahamas, and that they had no
objection to an order being made that such reports
and all other documents received by them from
Trust Corporation of the Bahamas relating to their
relationship to Regent Tower Estates Limited and
Hambeldon Estates Limited be produced. Apart
from such reports and documents, however, it is
not, in my opinion, apparent from the material
before me that they have in their possession rele
vant "ledgers, records, reports, memoranda, corre
spondence or documents" respecting the three cor
porations named in the notice of motion.
In Rhoades v. Occidental Life Insurance Com
pany of California'', McFarlane J.A. described [at
pages 628-629] the limits of what may be ordered
under the corresponding British Columbia Rule as
follows:
I agree that when considering an application under the Rule
the court or judge should not permit it to be used for the mere
purpose of obtaining discovery from a person not a party. This
would be a "fishing expedition", i.e., an attempt to discover
whether or not that person is in possession of a document, the
production of which might be compellable at trial and if so, the
nature of the document. The reason why a fishing expedition is
not permissible is that the Rule envisages an application being
made with respect to a particular document and an order for
the production and inspection of that document. It must there
fore be shown to the court or judge that such a document is in
the possession of a person who is not a party to the action
before an order can be made for the production of the docu
ment by him. I do not, however, think that the description of
the document sought must be so specific that it could be picked
out from among any number of other documents.
In my opinion, what is sought in the present
application is the discovery of documents of per
sons who are not parties. What is asked for is not
limited to specific documents and it is not limited
to documents shown to be in the possession of the
persons against whom the order is sought. It is not
even limited to documents shown to be in
existence.
In the result, an order will be made for produc
tion by the named individuals of the reports and
documents above mentioned which they have
received from Trust Corporation of the Bahamas.
In other respects, the application will be dismissed.
The named individuals will be entitled to their
costs of the application. As between the parties to
the action, the costs of the application will be costs
in the cause.
[1973] 3 W.W.R. 625.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.