COURT OF APPEAL FOR ONTARIO
Feldman, MacPherson and Epstein JJ.A.
BETWEEN
Louise Laver
Applicant (Appellant)
and
Jeffrey Swrjeski
Respondent (Respondent)
Christopher Spiteri for the Appellant
Todd Barney for the Respondent
Heard: October 2, 2013
On appeal from the order of Justice John A. McMunagle of the Superior Court of Justice, dated January 19, 2012, with reasons reported at 2012 ONSC 390, and from the costs endorsement dated February 8, 2012, with reasons reported at 2012 ONSC 899.
Feldman J.A.
1The appellant brought an application for a declaration that certain monies that she had advanced to her daughter and her daughter’s common-law husband towards the purchase of their house were not a gift, but a loan that constituted an unregistered mortgage on the home. Although the application was supported by one document, the meaning and intent of that document was in dispute, as were the facts that had to be found in order to determine whether the declaration should be granted.
2The application judge proceeded to find the facts, which necessarily involved deciding whom he believed. In the course of the colloquy during argument, the application judge made a number of comments that suggested that he would not be able or willing to disbelieve the respondent because he is a police officer.
3The appellant appeals on the basis that the application judge erred in failing to find that a trial was necessary in these circumstances, and on the basis that the impugned comments by the application judge created a reasonable apprehension of bias.
4For the reasons that follow, I would allow the appeal, set aside the judgment dismissing the application and order a trial of the issue.
Facts
5The applicant (now the appellant) Louise Laver, is the mother of Marianne Laver. In or about May 2006, she advanced $70,000 to her daughter and her daughter’s common-law husband, the respondent Jeffery Swrjeski, to help them purchase their home without having to pay the premium for a mortgage insured by the Canada Mortgage and Housing Corporation (CMHC). The appellant claims this advance was an unregistered loan. No one documented the transaction.
6At the time, the appellant was in the process of separating from her husband, Gary Laver. She moved in with her daughter and the respondent, where she looked after her grandchild on a regular basis, did housekeeping, and received free room and board for a few years.
7The respondent’s position, as expressed in one of his affidavits filed before the application judge, was that “[i]t was understood that, in return for the gift, the Applicant would live in our home without paying any rent or other expenses.” The appellant’s position was that the free room and board was in exchange for the child care she provided.
8The appellant stated that she did not feel it was necessary to have a formal agreement regarding the loan because it involved family, and because she trusted the respondent completely. On cross-examination she testified that “[i]t never occurred to me that no matter what happened that Jeff would ever not follow through with what he promised.” There was no interest or payments to be made on the loan. Rather, it was repayable on the sale of the home or on demand if she decided she wanted or needed the money.
9Marianne Laver’s evidence was that she and the respondent “agreed that the money was to be repaid either upon the sale of the property or upon demand.” She confirmed that her mother lived with them rent and expense free at the time in exchange for child care and housekeeping duties. She also deposed that they had all agreed that it was not necessary to have a formal agreement regarding the loan because it was to family.
10Marianne Laver and the respondent separated in November 2008. They agreed that the home would be transferred on title from joint tenancy to Marianne Laver alone and that the encumbrances on the property would be paid.
11The key document for the purposes of the application was created in March or early April 2009 as part of the negotiations between Marianne Laver and the respondent on their separation. It is handwritten by the respondent. Ms. Laver refers to it as a letter, while the respondent characterizes it as notes that record settlement negotiations. The document includes:
My math $430 value of house 265 mortgage
165 ÷ 2 = $82.5
- 35 owed to Louise [emphasis added] $47.5 > 42,000 Could I get half of $47,500 by the 17 Apr/09?
12The record in this case consisted of five affidavits and supplementary affidavits on behalf of the appellant and three affidavits and supplementary affidavits from the respondent. Cross-examinations of the appellant, the respondent and Marianne Laver were held and transcripts were obtained. The argument of the application took a full day and was recorded. No one asked the judge to order a trial of the issue.
13The issue before the application judge was whether the presumption of advancement when a parent provides money to an adult child was rebutted, in particular by the document written by the respondent that acknowledged that he owed $35,000 to the appellant.
14In his reasons for judgment, without making any specific credibility findings, the application judge made it clear that he accepted the evidence of the respondent and rejected the evidence of the appellant. He made a number of observations indicating that he believed that the appellant had lied under oath in other documents such as in her divorce proceedings, and that her conduct in not documenting the loan was inconsistent with her former employment at a bank. In making these observations, the application judge appeared to reject the appellant’s explanation for these alleged inconsistencies. The application judge referred to these matters as “curious” or “interesting to note”. He made a finding that the affidavits of the appellant and of her former spouse were “to simply be self-serving and of very little, if any weight, with the greatest of respect.” Finally, the application judge found that the written document made by the respondent, which showed $35,000 “owed to Louise” “cannot possibly constitute a ‘clear, unambiguous evidence to support the contention that the advance is a loan.’”
15On a number of occasions during the argument of the application, the application judge expressed concern about making a finding that a police officer was untruthful. The respondent and Marianne Laver are both police officers. However, the appellant is not. I quote one example:
But you understand my concern and my uber-sensitivity given that I’ve work – you know, I’ve done cases with all these officers. I don’t know them personally. I know them professionally, and so that’s my – and maybe I’m being over-sensitive here because of my background, but all you have is a reputation, gentlemen, and someone’s reputation is going to suffer if I am forced to decide what’s happening here, because of course had they not separated we wouldn’t be here, and Mum would still be living there as she is now, and everybody’s carrying on….
Issues
16There are two issues on appeal:
Did certain comments made by the application judge during the argument of the application create a reasonable apprehension of bias?
Should the application judge have ordered a trial of the issues, given the conflicting evidence and the need to make findings of credibility?
Analysis
Issue 1: Did certain comments made by the application judge during the argument of the application create a reasonable apprehension of bias?
17The issue of reasonable apprehension of bias was most recently discussed and considered by this court in Martin v. Sansome, 2014 ONCA 14. In that case, the context was interventions by a trial judge during the examination of witnesses. This court set out the legal framework for the assessment of bias in the following passage at paras. 31-33:
31Bias is a predisposition to decide an issue or cause in a certain way that does not leave the judicial mind open and impartial: Wewaykum Indian Band v. Canada, 2003 SCC 45, [2003] 2 S.C.R. 259, at para. 58. The burden of establishing bias is on the party arguing that it exists. The test, found in Wewaykum, at para. 60, is long-established:
[W]hat would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude[?] Would he think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly[?]
32There is a strong presumption of judicial impartiality. The threshold is high for finding an apprehension of bias: Wewaykum, at para. 76.
33In Chippewas of Mnjikaning First Nation v. Chiefs of Ontario, 2010 ONCA 47, 265 O.A.C. 247, leave to appeal to S.C.C. refused, 33613 (July 18, 2010), at para. 230, this court provided additional guidance:
A determination of whether a trial judge’s interventions give rise to a reasonable apprehension of unfairness is a fact-specific inquiry and must be assessed in relation to the facts and circumstances of a particular trial. The test is an objective one. Thus, the trial record must be assessed in its totality and the interventions complained of must be evaluated cumulatively rather than as isolated occurrences, from the perspective of a reasonable observer throughout the trial.
18In Martin v. Sansome, the appellant was a self-represented litigant. The trial judge tried to help him with procedural issues, but was apparently impatient and frustrated with the slow progress of the trial. On appeal, the court concluded, at para. 39, that, although some of the trial judge’s comments could create the impression of favouring the respondent when viewed in isolation, when the entire record was viewed as a whole, the court was not satisfied that “a reasonable person would have the impression that the trial judge was predisposed to decide the issues before him in favour of the respondent.”
19In this case, the comments of the application judge did not come in the context of witness testimony but during the oral argument of the application. The application judge made two types of comments that could raise a concern in the mind of a reasonable person that he was predisposed to decide the issues before him in favour of the respondent.
20The first were comments about the credibility of police officers and his concern about making an adverse credibility finding about a police officer. In this case the respondent and his common law wife were officers while the appellant, the mother, was not.
21The second was a number of adverse comments about the credibility of the appellant which were based on misapprehensions of the evidence or the law.
22The following are examples of some of the comments made by the application judge:
Excerpt group #1:
Mr. Spiteri: …That has to be viewed in light of all of the evidence. As the Court of Appeal said itself, you look at it all, including the credibility of the witnesses, the credibility of the parties. In terms of the evidence, you have the affidavit evidence. In terms of the evidence, you have Affidavit evidence…
The Court: Okay, let me stop you there. That’s my concern, gentlemen, and let me just lay it on the line. Someone is not being truthful, and we have police officers, whom I know and respect and, gentlemen, you’re asking me to make a finding that one of them isn’t being truthful, and I’m prepared to do that, but there’d better be some strong, strong evidence.
I have to make a finding of credibility, and I don’t want to do that with police officers and with senior police officers, because I – as my recently deceased father said, “Your reputation is like your virginity, son. You lose it once”, and I don’t want to make a decision on the record, available to the public, where I am forced to say one side is being truthful and one side is not, so I simply – that’s the elephant in the room, gentlemen, because of what these folks do for a living. I wouldn’t be so concerned if they were federal civil servants. Frankly, I wouldn’t be concerned at all, but they are Ottawa police officers, who I have huge respect for, given that I was a defence lawyer for 23 years, and reputation is all they have. It’s all we have as lawyers, judges, everybody, so I’m just letting you know. I’m very troubled by what I may have to do.
… I’m going to make a finding that someone is not being truthful, and if I’m a police officer or a judge or a lawyer or somebody else, I don’t want somebody making a finding that I’m not truthful, and unless there’s some other way that I can decide this case without making that finding, I don’t know how I can. I don’t know, gentlemen, I’m asking.
But you understand my concern and my uber-sensitivity given that I’ve work – you know, I’ve done cases with all these officers. I don’t know them personally. I know them professionally, and so that’s my – and maybe I’m being over-sensitive here because of my background, but all you have is a reputation, gentlemen…
Mr. Spiteri: And I do want to qualify this, Your Honour. I’m not suggesting that Mr. Swrjeski is a liar. That’s not what I’m suggesting.
The Court: Okay, thank goodness, because I’m going to have a real hard time making that kind of finding. I think, except being called a child molester, being called a liar is about the about the worst thing you can possibly be called.
Mr. Spiteri: That’s not…
The Court: Okay, so I just – okay, that makes me feel much better, because I’m not comfortable using that word with professional people.
The Court: Take your time, please, because I can tell you both, gentlemen, this case is not going to be decided – I’m not going to make any finding nailing anybody’s reputation here. The case is going to be decided based on the evidence and based on the balance of probabilities, but there’s no way that I’m going to make a finding that either one of your clients is lying or misleading or anything like that; not going to happen.
It’s based on evidence, just so we’re clear, so when you’re making your reply you might want to deal with that issue, because I’m very uncomfortable because I know these people. I worked with them for a long time, so I even thought, frankly, I was going to excuse myself, but then I thought, no, I don’t know them that well. I’ve never, you know, socialised with them ever. I’ve just had them as – when they accused my client of wrongdoing- or clients. Anyway, go ahead. Carry on.
Excerpt group #2:
The Court: Because just by her own financial statement, the woman at the very least is worth over a hundred grand, so that’s – I have a problem with that poor as a church mouse impression when the reality is, you know, you’re not. (Referring to the appellant)
Excerpt group #3:
The Court: … So I’m just saying: that causes me a great deal of concern when basically the only document that you can refer to as a so-called “document” is this one where he says “Owed to Louise, 35,000” and then he gives an explanation saying “Look, take the money. As long as I have my daughter I’m fine”. That’s your strongest piece of evidence versus the other. So we’re going to take 10 minutes, speak to your client and see if we can come up with some explanation or something, because you know, worst case scenario, she’s sworn a false affidavit. Best case scenario, there’s a confusion or a misunderstanding about filling out the form and whoever her family lawyer was didn’t explain it to her properly. But you can’t say you’re paying these expenses when the evidence is you’re not paying a dime. I have a concern about that.
Excerpt group #4:
The Court: … Go to part 7-F, counsel. “Money owed to you”. Why is that zero? If she regarded this money as a loan why is that zero? Even 35 – like, I can understand not putting 70. I get that, because half of it is her daughter’s. I understand that. But why doesn’t she indicate that “I’m owed 35,000 by my son-in-law”?
Mr. Spiteri: And I go back to what I said earlier. The two, Mr. and Mrs. Laver, had treated this inheritance – remember: these documents were prepared for purposes of NFP. It was for family law purposes.
The Court: Sure.
Mr. Spiteri: And she…
The Court: But they still have to be accurate, Mr. Spiteri.
Mr. Spiteri: Fair enough. And all…
The Court: And you’re under oath.
Excerpt group #5:
The Court: Well no. A disability payment is tax free,
Mr. Spiteri. I know that.
Mr. Spiteri: It says “income tax deducted from pay”.
The Court: Well, that might well be, but what I do know is a disability pension is tax free. So maybe she has some other monies coming in but you don’t – it’s illegal to tax a disability pension. You can’t tax it.
Mr. Spiteri: I think, Your Honour, that’s dependent on who paid the premium.
The Court: Okay.
Mr. Spiteri: If the premium was paid exclusively by the insured, then that’s quite right, that’s the case.
The Court: Is your client paying income tax or not?
Mr. Spiteri: Well, I’m only looking at this. And it’s saying here $264 is paid in income tax.
The Court: Well why don’t you ask her? She’s here. Was her disability pension tax free or not?
Ms. Laver: No, it wasn’t.
Mr. Spiteri: It was not tax free.
The Court: Okay. All right. Go ahead.
23Excerpt group 1 contains the comments by the application judge where he indicates that he would have trouble making a credibility finding against a police officer, and later suggests that he had considered recusing himself because of his feelings of connection to Ottawa police officers with whom he used to work when he was in legal practice as a criminal lawyer.
24As it turned out, the application judge believed the respondent, a police officer, and accepted his explanation for disowning the document that on its face is an acknowledgement of debt to the appellant. He disbelieved the appellant, who is not a police officer.
25Applying the test for reasonable apprehension of bias, in my view it is clear that a reasonable observer would conclude that it was more likely than not that, consciously or unconsciously, the application judge would not impartially decide whom to believe. The application judge’s comments indicate his partiality to the evidence given by police officers. Even though he gave other reasons for deciding whose evidence he believed, those reasons are tainted by his comments.
26Excerpts 2, 3 and 4 are examples of comments about the appellant’s credibility, and where the application judge asked counsel to ask the appellant for an explanation, although there was no oral evidence being taken. Again, in my view, the application judge’s comments created a reasonable apprehension of bias, by making clear that he challenged the appellant’s explanations for perceived inconsistencies in documents that were collateral to the application, and that, before the conclusion of the application, he had decided that he did not believe the appellant.
27Finally, excerpt 5 is an example of the application judge’s comments regarding an issue of the taxability of a disability pension. The application judge was mistaken on the issue but appeared to insist on his view in the face of the evidence to the contrary on the appellant’s document, which specifically stated that tax had been deducted. Based on his misunderstanding regarding the taxability of the pension, the application judge appeared to conclude that the appellant had kept more money from her pension than she actually had indicated. In my view, the application judge’s attitude towards the evidence of the appellant added to the impression of a reasonable observer that the application judge would be unable to assess the appellant’s evidence with impartiality.
28In aggregate, these comments, when considered in the context of the hearing as a whole, would cause a reasonable person to believe that the application judge was predisposed to make the credibility determinations before him in favour of the respondent.
29In light of my conclusion on the first issue, the decision of the application judge must be set aside. It is therefore not necessary to deal with the second issue or with two subsidiary issues regarding the timing of the reasons and the costs.
Result
30I would allow the appeal, set aside the order and order the trial of the issues in light of the significant conflict on the evidence and the need to make findings of credibility in order to decide those issues. In order to expedite the procedure, the parties should exchange pleadings with the appellant first delivering a statement of claim within two weeks of receipt of these reasons.
31I would fix the amount of the costs of the appeal at $5,000 inclusive of disbursements and HST, payable to the appellant.
Released:
“APR 17 2014” “K. Feldman J.A.”
“KF” “I agree J.C. MacPherson J.A.”
“I agree Gloria Epstein J.A.”
