Executive Summary: Key Legal and Evidentiary Issues

• International Wood Products (IWP) petitioned to enforce letters rogatory from Oregon seeking documents and depositions from non-party witnesses Gary Cheng and Graham Piccard regarding allegedly defective wood products.

• Mr. Cheng contested that Interworld Development Inc. was not the actual manufacturer, arguing the products were made by an arm's-length company in China called Yangzhou Muzhiyuan Wood Ind. Co. Ltd.

• The court found Mr. Cheng's July 7, 2022 email stating he was the owner of the factory that "produced the problematic products" appeared inconsistent with his claim that Interworld had no manufacturing role.

• IWP failed to establish necessity for several document requests, as correspondence should have been obtainable through existing discovery from CLG or IWP's own records.

• Relevance of manufacturing defect evidence was upheld due to CLG's counterclaim and defense allegations regarding product inspection and sourcing.

• Mr. Cheng's evidence that Interworld has not received any complaints appeared to be a full answer to that document request category.

Background of the dispute

International Wood Products, LLC (IWP), an Oregon-based company that distributes building materials, purchased exterior trim wood products from CLG Enterprises, Inc., a British Columbia-based company, under a purchase and sale agreement dated April 4, 2022. CLG sourced the products from Interworld Development Inc., a company where Gary Cheng is the majority shareholder, president, and director.

In July 2022, IWP discovered what it claims are defects in the products, alleging that when they become wet, they show visible signs of swelling in the finger joints, causing both structural and aesthetic defects, including delamination. Following notification of the defects to CLG, Mr. Cheng became involved and, through an email dated July 7, 2022 to IWP, committed to "get to the bottom of this to rectify the problem to ensure it will not happen again in the future." In that same email, Mr. Cheng told IWP that he was the owner of the factory that "produced the problematic products."

The Oregon litigation and letters rogatory

IWP started the Oregon proceeding against CLG by filing a Complaint on January 2, 2024, claiming US$262,299.26 in damages. The Complaint essentially pleads a sale of goods action. CLG has counterclaimed for US$2,352,156 for unpaid invoices that arise from IWP refusing to take delivery of further shipments of the products after the alleged defect was discovered.

The Request was issued by the District Court on February 19, 2025, seeking document production and depositions from Mr. Cheng and Graham Piccard, Interworld's sales agent. IWP then filed a petition proceeding on March 3, 2025 seeking to have the British Columbia Supreme Court give effect to the Request.

The manufacturer identity dispute

A central issue was whether Interworld actually manufactured the products. Mr. Cheng deposed that the products were not manufactured by Interworld but by an arm's-length company in China called Yangzhou Muzhiyuan Wood Ind. Co. Ltd. He stated that Interworld is "not in the business of manufacturing wood products and does not own or operate, or have any interest in, any manufacturing facilities in Canada or elsewhere." However, the court found this evidence appeared inconsistent with Mr. Cheng's July 7, 2022 email in which he stated that he is the owner of the factory that manufactured the products. The court also noted that the counterclaim CLG filed in the Oregon proceedings refers to Mr. Cheng as the "manufacturer" of the products.

Justice Kirchner concluded that even if Interworld did not actually manufacture the products, they were manufactured for Interworld, and that Interworld is not simply a buyer and seller in the supply chain like CLG. The court stated that principles of international comity and judicial assistance favour a purposive reading of the Request, not an overly strict one.

Analysis of document requests

The court declined to give effect to several document requests. For correspondence between Mr. Cheng and representatives of CLG and IWP, the court found IWP provided "almost no evidence" to explain why it must obtain these documents from Mr. Cheng when it already has access to them. The petitioner must establish that the evidence sought is "not otherwise available," and as the Court of Appeal stated in Liu, "bald assertions" of necessity and relevance do not meet the standard for giving effect to letters rogatory.

The court narrowed the remaining document requests to documents exchanged in 2022 between Mr. Cheng and Mr. Piccard in respect of potential defects in the product manufactured by or on behalf of Interworld for CLG to be sold and delivered to IWP.

The deposition scope

Regarding Mr. Cheng's examination, the court found that potential manufacturing defects in the products are relevant to the issues in the litigation for several reasons. First, if there are issues with the manufacturing process that cause defects in other products similar to the defects IWP complains of, this would tend to support IWP's contention that the product was defective as at delivery. Second, evidence of a manufacturing defect is relevant to the reasonableness of IWP's refusal to accept further product, which underlies CLG's counterclaim exceeding US$2.3 million. Third, CLG's defence alleges IWP obtained the defective products from a different supplier, not CLG. Fourth, CLG's counterclaim puts in issue Mr. Cheng's inspection of the product, alleging that on two different occasions in 2022, CLG "and its manufacturer" separately visited IWP's yard to inspect the product and found no "significant problems."

However, the court found it was not persuaded that evidence respecting purchase orders, invoices, bills of lading, shipping updates and expected delivery dates is relevant to the issues in the claim, as neither of Ms. Bennett's affidavits explain why these issues or Mr. Cheng's knowledge of them are relevant to an issue in the claim.

Ruling and outcome

Justice Kirchner granted partial enforcement of the letters rogatory. For document production, the court would give effect only to: (a) documents exchanged in 2022 between Mr. Cheng and Mr. Piccard in respect of potential defects in the product manufactured by or at the behest of Interworld for CLG to be sold and delivered to IWP; and (b) documents exchanged (if any) in 2022 between Mr. Cheng and other representatives (if any) at Interworld about the product to be sold and delivered to IWP.

With respect to the examination of Mr. Cheng, the court would give effect to the Request but limit the topics to: (a) manufacturing defects, if any, in the product manufactured by or at the behest of Interworld for CLG to be sold and delivered to IWP; (b) Mr. Cheng's inspection of the product at IWP's yard in July 2023; and (c) any complaints of defects from any customer who purchased the same or substantially similar product manufactured by or at the behest of Interworld, including questions about Mr. Cheng's affidavit evidence that there have been no such complaints.

The court found that seven hours for an examination sought by IWP is excessive and limited the examination to no more than the equivalent of one court sitting day with the time to be divided equally between IWP and CLG. Mr. Cheng was awarded an advance of $7,500 for reasonable legal fees and disbursements for counsel, as the court significantly narrowed the Request. Given that the court significantly narrowed the scope of the Request, costs of the petition were awarded to Mr. Cheng.