DATE: 2004-11-03
DOCKET: C39892
COURT OF APPEAL FOR ONTARIO
RE: DR. CALVIN J. (RUSTY) GOODMAN (Plaintiff) (Respondent) – and – SCOTIA CAPITAL INC., carrying on business as SCOTIAMcLEOD, and ROBERT SALTSMAN (Defendants) (Appellants)
BEFORE: DOHERTY, WEILER and SIMMONS JJ.A.
COUNSEL: Helen A. Daley for the appellants
Harry W. McMurtry for the respondent
HEARD: November 1, 2004
On appeal from the judgment of Justice Victor Paisley of the Superior Court of Justice dated March 25, 2003.
E N D O R S E M E N T
Overview
[1] The overarching issue on this appeal is whether the trial judge’s finding that the appellants failed to carry out the instructions of their client, the respondent, was unreasonable. There are two other subsidiary issues in relation to liability. The first is whether the trial judge erred in his reasons in referring to discovery evidence that was not properly adduced at trial. The second is whether he was entitled to use prior consistent evidence from discovery as probative of the respondent’s credibility. The appellant also takes issue with the damages awarded by the trial judge. The appellant submits that the trial judge failed to properly apply the law of mitigation and failed to calculate the respondent’s loss properly. Lastly, the appellant appeals the trial judge’s award of costs on a substantial indemnity scale.
Facts
[2] The appellant, Saltsman, was employed as a stockbroker by the appellant Scotia Capital. The respondent, a rheumatologist, was a client of the appellant, Saltsman. On January 27, 2000 the respondent instructed the appellant Saltsman to purchase 1000 shares in a company called Angiotech that were then trading at about $38.50 a share. This order was not carried out. Instead, shares of an unrelated company were purchased for a different account held in the respondent’s name. At the beginning of February, the respondent called the appellant Saltsman to inquire how much money he should put into his account to cover the cost of the purchase. At that point the appellant Saltsman acknowledged that the Angiotech shares had not been purchased and said he would take the matter up with his manager. Some two or three weeks later the appellant Saltsman told the respondent that the appellant Scotia Capital would honour the purchase order alleged by the respondent. At the beginning of March the shares were trading at around $126 a share. The respondent called the appellant Saltsman and said that he told him to place a stop-sell on the shares at $120 a share. The appellant Saltsman told the respondent that having regard to the volatile nature of the stock an order to sell the shares if they traded at $120 would mean that the shares would be sold even if they were in an overall uptrend. The respondent’s evidence is that as a result he placed a stop sell on the stock at $115 a share. The appellant Saltsman’s evidence is that the respondent decided not to put in an order for a stop sell. In fact, no stop sell order was ever entered. On March 15, the appellant Saltsman finally purchased the shares of Angiotech for the respondent’s account he should have originally purchased. On that date the shares were trading at $84 a share. On April 20, the respondent received his statement of account and his evidence was that he noticed for the first time that his instructions to Saltsman were not followed. The shares at that time were trading at about $42.62.
[3] Angry at what had transpired, the respondent wrote a letter to the appellant Scotia Capital in which he stated in part:
As you may be aware, Angiotech experienced a significant escalation in share price. When it hit $120 I instructed Mr. Saltsman to apply a stop sell of $115 on my holdings….Unfortunately, I was talked into removing the stop sell. I was told that the stop sell was too close to the share price, and that I could be taken out even if the stock was on an upswing. Based on the last Scotia McLeod statement, received today, the purchase of Angiotech did not go through until March 20th, 2000 at a share price of $84. This would suggest that when I wanted to sell the stock near its peak, I did not actually own it. Since, the stock, along with markets in general have gone into a freefall.
By my estimation, these actions have resulted in a loss of ~ $35,000 based on share price differential alone, or ~ $75,000 based on my negated stop-sell.
[4] The respondent’s claim of $35,000 for the appellants’ failure to purchase the shares of Angiotech on January 27, 2000 was not contested.
[5] The respondent sued the appellants for the amount he lost when the shares were not sold at $115. At trial, Justice Paisley found the appellants liable and awarded the respondent damages based on the difference between $115 and $42.62 resulting in damages of $72,380, prejudgment interest of $7,870.20 and costs on a substantial indemnity scale in the amount of $53,306.71. The total amount was $107,443.01. The appellants appeal from this judgment seeking a dismissal of the action, a reduction of the damages, as well as a reduction of the costs award.
Disposition
[6] The trial judge reviewed the entirety of the evidence. He appreciated the respondent’s position. He dealt with the issue of the meaning of the word “remove” in the respondent’s April 20th letter and accepted the respondent’s explanation at trial that he meant he removed his stop loss at $120 and instead put in a stop loss at $115. In addition, he considered as a factor that the respondent’s explanation was consistent with the secondary meaning of the word “remove” in the dictionary, namely to move from one position to another. We do not agree with the appellants that the trial judge’s conclusion was unreasonable. The trial judge saw and heard the witnesses and was in the best position to assess their credibility.
[7] In relation to the subsidiary issues, we do not agree that the evidence on discovery to which the trial judge referred in his reasons was not properly adduced at trial. The trial judge ruled the evidence admissible as an expansion on an answer read in by the appellants from the respondent’s discovery. In assessing the respondent’s credibility, the trial judge was entitled to consider that the appellants submitted that the respondent had made an inconsistent statement but that, in fact, the statement was consistent.
[8] The appellant further submits that the trial judge ignored certain pieces of evidence. It is trite law that a trial judge is not obliged to address every single piece of evidence in his reasons. The reasons as a whole do not indicate that the trial judge overlooked any important pieces of evidence. The appeal as to liability is dismissed.
[9] In relation to damages, the trial judge did not err in applying the law of mitigation in selecting the “cut-off” period that he did. Further, the respondent was allowed to retain the shares past the “cut-off” date. Once the cut-off date for purposes of mitigation was determined, the fact that the respondent retained the shares beyond the date selected for mitigation was irrelevant to the damage calculation. In retaining the shares, the respondent alone was responsible for any subsequent increases or decreases in the value of the shares, not the appellants. The approach adopted by the trial judge in relation to his assessment of damages was consistent with the authorities such as Hunt v. T.D. Securities (2003), 66 O.R. (3d) 481 (C.A.) at paras. 95- 100; Hongkong Bank of Canada v. Richardson Greenshields of Canada Ltd. (1990), 72 D.L.R. (4th) 161 (B.C.C.A.) at p. 165; and Jamal v. Moola Dawood, Sons & Co., [1916] 1 A.C. 175 (P.C.) at p. 179.
[10] With respect to the costs of the trial, we are of the opinion that the trial judge erred in awarding costs on a substantial indemnity basis. The misconduct alleged in the appellants’ statement of defence namely, insider trading, was only touched on in examinations for discovery and was not pursued at trial. Counsel for the appellants said at discovery that she would not allege or attempt to lead evidence of insider trading. Accordingly, we would set aside the award of costs at trial and substitute an award of $35,000.
[11] With respect to the costs of the appeal and bearing in mind that the appellants enjoyed some modest success we are of the opinion that the costs should be to the respondent fixed in the amount of $10,000 inclusive of GST and disbursements.
“Doherty J.A.”
“K.M. Weiler J.A.”
“Janet Simmons J.A.”