In BDO Canada LLP (Re), 2020 ONSEC 2, a panel (the Panel) of the Ontario Securities Commission (OSC) considered a motion brought by Staff alleging that BDO Canada LLP (BDO) failed to meet the standard imposed by the Ontario Securities Commission Rules of Procedure and Forms (Rules) in the preparation of its witness summaries. The motion is part of a larger proceeding against BDO related to alleged breaches of the Securities Act, RSO 1990, C S.5 in connection with audits conducted by BDO. As a part of pre-hearing disclosure, Staff and BDO exchanged summaries of the anticipated evidence of witnesses that each party intended to call to testify at the merits hearing.
Staff cited two main deficiencies in BDO’s witness summaries. Firstly, all nine of the witness summaries used the words “including, but not limited to” when describing the anticipated evidence of the witness. Further, for the eight witnesses who were interviewed by Staff during the investigation, the witness summary stated that the witness would testify in a manner that is “broadly consistent with” that witness’ earlier testimony. Secondly, Staff submitted that the witness summaries did not properly identify the documents to which the witness is expected to refer.
While the Panel acknowledged some deficiencies in the witnesses statements, the motion was ultimately dismissed, with the Panel determining that the deficiencies did not rise to the level necessary to conclude, ahead of the merits hearing, that they failed to comply with Rule 27(3). The Panel noted that witness summaries are not typically provided to a panel unless there is a specific need to review them in response to an allegation that a witness has exceeded the scope of what was disclosed in the summary. It is otherwise difficult to assess the adequacy of a witness summary without the benefit of witness testimony at a merits hearing against which to compare.
Here, the Panel noted that of the eight individuals interviewed by the OSC, the witness summaries incorporated by reference the transcripts of those witnesses’ interviews. BDO’s counsel acknowledged during oral argument that the words “including, but not limited to” with respect to the witnesses’ expected testimony were “largely nominal” and of no real value. The Panel indicated that, as a result, the substance of those witnesses’ testimony would be limited to whatever substance may be found in the transcripts.
As it relates to the identification of documents to which the witnesses were expected to refer, the witness summaries identified “the hearing brief of BDO, which is expected to include, among other documents, BDO’s Audit Working Papers and e-mail correspondence relating to the audits in question”. The Panel determined that it was illogical and of no assistance for BDO to refer to a hearing brief which did not yet exist. Accordingly, BDO’s witness summaries would be effectively read to refer to BDO’s Audit Working Papers and e-mail correspondence. While Staff contended that BDO’s description was overly broad given the expansive scope of discovery, the Panel declined to order further and better witness summaries, reasoning that it would be difficult for the Panel to determine how the list of documents ought to be narrowed. However, the Panel did observe that BDO may face cost consequences if the hearing panel determines that BDO’s choice not to narrow the list of documents referred to in the witness summaries unnecessarily lengthened the proceedings.
Only time will tell whether BDO’s witness summaries comply with Rule 27(3) or whether they are too perfunctory to properly disclose the substance of testimony that BDO’s anticipated witnesses seek to give.
The author would like to thank Nazish Mirza, articling student, for her contribution to this article.