COURT FILE NO.: DC-07-391

DATE: 20080702

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CUNNINGHAM, STAYSHYN, KITELEY, JJ.

B E T W E E N:

THE TORONTO-DOMINION BANK

Dennis Touesnard, counsel on behalf of the Plaintiff

Plaintiff

• and -

BOGUSLAW J. BUKIN, URSZULA B. PASTERKIEWICZ and DANUTA BUKIN

J. David Sloan, counsel on behalf of the Defendants/Appellants Boguslaw J. Bukin and Danuta Bukin

Defendants

A N D B E T W E E N:

BOGUSLAW J. BUKIN and DANUTA BUKIN

Plaintiffs by Counterclaim

• and -

THE TORONTO-DOMINION BANK

Defendant by Counterclaim

• and -

URSZULA B. PASTERKIEWICZ

Defendant by Crossclaim

HEARD: February 21, 2008 (at Hamilton)

STAYSHYN J.

1A trial was held before Festeryga J., at Brantford, Ontario, on January 24, 2007, following which oral reasons for judgment were given. Justice Festeryga found for the Respondent TD Bank, and awarded the TD Bank $12,637.00 inclusive of interest.

2Mr. and Mrs. Bukin (the “Appellants”), appeal from that decision. Originally they pursued a cross-claim against Mrs. Pasterkiewicz, however, at the commencement of trial, they filed a new Statement of Defence and Counterclaim, which did not include the Cross-claim, however, now seek judgment on the previous Cross-claim, if judgment were found against them.

BACKGROUND

3The parties entered into a loan agreement for $30,000.00 on July 19, 2000. The defendant, Urszula B. Pasterkiewicz, along with her husband, had previously applied for a loan from the respondent Toronto Dominion Bank and been denied. TD Bank advised the Pasterkiewiczs they required a co-signor in order to qualify for a loan. The appellants accompanied the Pasterkiewiczs and co-signed the loan agreement. According to the terms of the loan, all signatories were jointly and severally liable for the loan.

4The loan went into default as the regular monthly payments, required by the loan agreement, were not made. The TD Bank demanded payment of the outstanding balance by solicitor’s letter on September 1, 2004. Mr. Pasterkiewicz filed an assignment in bankruptcy.

5The TD Bank initiated an action under Simplified Procedure against the remaining borrowers on September 13, 2004 for the outstanding balance. A default judgment was obtained against Mrs. Pasterkiewicz on October 26, 2004. According to the TD Bank, Mrs. Pasterkiewicz now resides in the United States of America. The appellants filed a defence to the action and counterclaimed against TD Bank for negligence, negligent misrepresentation and breach of fiduciary duty. The appellants also crossclaimed against Mrs. Pasterkiewicz for indemnity in respect of any judgment.

6A trial proceeded in the Superior Court of Justice. The TD Bank produced one witness, Jolanta Wardzinska, the Financial Advisor at TD Canada trust who met with the parties to execute the loan agreement. Each of the appellants gave evidence in their defence. Upon conclusion of the trial, which took two to three hours and encompassed 47 pages of trial transcript, Festeryga J. made the following findings:

I am satisfied on the balance of probabilities, that what transpired was as set out in Paragraphs 1 to 4 inclusive in the notice to admit.

I am satisfied that Jolanta Wardzinska told the defendants, Bukin, that they would be financially responsible for the loan if Pasterkiewicz did not pay. I am satisfied that the defendants, Bukin, failed to make reasonable inquiry as to the ability of Pasterkiewicz to pay before they signed the documents. The defendants, Bukin, are familiar with borrowing money from a bank and signing documents. They knew or ought to have known what they were signing in these circumstances.

With respect to the counterclaim, it is nothing but bald statements that the defendants have suffered at the hands of the bank employee, they say, because of the way she handled this matter. There is no cogent admissible evidence to support the contentions of the defendants, Bukin, on the counterclaim.

7As a consequence of that judgment, the counterclaim was dismissed and TD Bank was awarded judgment for $12,637.00, inclusive of interest. Justice Festeryga also awarded costs be paid to the respondent in the amount of $9,000.00, inclusive of GST and disbursements.

KEY ISSUES

[8]

1. Could TD Bank sue for default based on a loan agreement executed by Canada Trust with the appellants?

2. Did the trial judge inappropriately interfere with the evidence of the appellants so as to create a reasonable apprehension of bias against them?

3. Did TD Bank owe the appellants a fiduciary duty, and if so, was it breached?

Re: 1. – This matter was abandoned on the appeal.

Re: 2. – It is noted that:

In Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369, the test for apprehension of bias which governs in Canadian courts was articulated by de Grandpré J. at p. 394 as follows:

The apprehension of bias must be a reasonable one held by reasonable and right minded persons, applying themselves to the question and obtaining thereon the required information...that test is ‘what 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?’

9Having reviewed the entire transcript with care and concern, it is my view that no reasonable and right minded person could realistically and practically conclude that the transcript of the hearing reveals any apprehension of bias.

Re: 3 – STANDARD OF REVIEW

10The Supreme Court of Canada most recently addressed the standard of review of an appeal from a judge’s decision in Housen v. Nikolaisen (2002), 2002 SCC 33, 211 D.L.R. (4th) 577 (S.C.C.), [2002] S.C.J. No. 31 (Cited to QL). (2002) 2 S.C.R. 235. In summary, it noted that:

The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a ‘palpable and overriding error’: Stein v. The Ship “Kathy K” (at para. 10)

What is “palpable and overriding error”?

11It is noted that the Supreme Court of Canada made comments regarding Housen in H.L. v. Canada (Attorney General) 2005 SCC 25, [2005] 1 S.C.R. 401 at para. 110:

With respect, I do not find persuasive any of the arguments advanced in support of the contention that the rules governing appellate intervention in Saskatchewan differ from those set out in Housen. On the contrary, I am satisfied for the reasons given that the standard of review for inferences of fact, in Saskatchewan as elsewhere in Canada, is that of palpable and overriding error and its functional equivalents, including “clearly wrong”, “unreasonable” and “not reasonably supported by the evidence”.

12It is also noted that the Ontario Court of Appeal in Waxman v. Waxman, 2004 39040 (ON CA), [2004] O.J. NO. 1765 at paras. 296-97, 300 (C.A.), indicated:

The “palpable and overriding” standard addresses both the nature of the factual error and its impact on the result. A “palpable” error is one that is obvious, plain to see or clear: Housen at 246. Examples of “palpable” factual errors include findings made in the complete absence of evidence, findings made in conflict with accepted evidence, findings based on a misapprehension of evidence and findings of fact drawn from primary facts that are the result of speculation rather than inference.

An “overriding” error is an error that is sufficiently significant to vitiate the challenged finding of fact. Where the challenged finding of fact is based on a constellation of findings, the conclusion that one or more of those findings is founded on a “palpable” error does not automatically mean that the error is also “overriding”. The appellant must demonstrate that the error goes to the root of the challenged finding of fact such that the fact cannot safely stand in the face of that error: Schwartz v. Canada, 1996 217 (SCC), [1996] 1 S.C.R. 254 at 281.

Housen provides a detailed analysis of the “palpable and overriding” standard of review. Several specific points made in that analysis have direct application to the arguments advanced by the appellants. First and foremost, as indicated above, the “palpable and overriding” standard applies to all factual findings whether based on credibility assessments, the weighing of competing evidence, expert evidence, or the drawing of inference from the primary facts. This court cannot retry any aspect of this case.

13The central question on the appellants’ appeal therefore is whether the court erred by failing to consider and adjudicate upon “a significant part” of the defendant’s, Bukins’, claim.

14In considering the findings of Festeryga J. as to credibility in what transpired between the parties in the obtaining of the loan in issue, it was open to Festeryga J. to accept or reject the evidence, and he clearly did so on the evidence before him as clearly indicated in the transcript:

(a) Pasterkiewicz applied for a loan from TD. TD declined the loan and Pasterkiewicz was advised that she would require co-signors in order to qualify for a loan. (Evidence of Jolanta Wardzinska (“Wardzinska”), page 13, line 33 to page 14,line 1 and page 14, lines 5-6)

(b) Pasterkiewicz brought the Bukins to TD for the purpose of co-signing on their loan application. The Bukins were advised by Wardzinska, Financial Advisor with TD, that they would be personally liable for any outstanding balance under the loan. (Evidence of Wardzinska, page 21, line 1-6, pages 13-19)

(c) The Bukins understood that Pasterkiewicz could not obtain approval for a loan without the Bukins as co-signers. (Evidence of Danuta Bukin, page 48, lines 2-12)

(d) The Bukins were required to provide financial support documents, including income verification statements, in order to be approved as co-signers for the Pasterkiewicz loan. (Evidence of Wardzinska, page 18, line 19 and page 19, line 32)

(e) Upon review of the Bukins financial documentation, TD approved the Bukins as co-signers and the loan application was approved. (Evidence of Wardzinska, page 18, line 19 and page 19, line 32)

(f) Wardzinska explained the terms and obligations of the loan agreement to the Bukins in English and in Polish (being their native tongue) (Evidence of Wardzinska, page 13, lines 20-32, page 15, lines 5-12)

(g) Wardzinska testified that the Bukins then read and signed the Loan Agreement and that they appeared to understand the terms and obligations of the Loan Agreement. (Evidence of Wardzinska, page 23, lines 20—31, page 15, lines 5-12)

(h) The Bukins were provided with a copy of the Loan Agreement before they signed it but choose [sic] not to read it. (Evidence of Wardzinska, page 13, lines 20-31, page 15, lines 5-12)

(i) The Bukins never requested any information about the Pasterkiewicz’s credit history, nor did they ask TD for any advice about the transaction, or at all. (Evidence of Wardzinska, page 14, line 14, page 31, lines 11-13)

(j) The Bukins were never forced to sign the Loan Agreement. (Evidence of Danuta Bukin, page 52, lines 16-19)

(k) The Bukins had signed previous loan agreements with TD on substantially the same terms as the Loan Agreement and that all agreements with TD stated:

When you sign below, you agree that all persons signing this agreement are individually and jointly liable for fulfilling its terms.

(Evidence of Wardzinska, page 23, line 15, page 24, line 12; Evidence of Danuta Bukin, page 52, lines 20-30; Evidence of Boguslaw Bukin, page 57, lines 17-24)

(l) The Bukins were familiar with signing bank documents, having signed several loans before the Loan Agreement. (Evidence of Boguslaw Bukin, page 58, lines 18-23)

(m) Wardzinska testified that TD was a successor to Canada Trust. (Evidence of Wardzinska, page 14, lines 20-24)

15It is further noted the previously referred to Notice to Admit was very clear and unambiguous and accepted by the appellants.

16In my view, these key findings attract considerable deference for a reviewing court about palpable and overriding error by the trial judge, and appellate interference with such findings is precluded.

17The Supreme Court of Canada stated in Housen at p. 264, S.C.R.:

[W]e emphasize that the failure to discuss a relevant factor in depth, or even at all, is not itself a sufficient basis for an appellate court to reconsider the evidence. This was made clear by the recent decision of [Van de Perre v. Edwards, [2001] S.C.R. 1014], where Bastarache J. says at para. 15:

...omissions in the reasons will not necessarily mean that the appellate court has jurisdiction to review the evidence heard at trial. As stated in Van Mol (Guardian Ad Litem of) v. Ashmore (1999), 1999 BCCA 6, 168 D.L.R. (4th) 637 (B.C.C.A.), leave to appeal refused, [2001] 1 S.C.R. vi, an omission is only a material error if it gives rise to the reasoned belief that the trial judge must have forgotten, ignored or misconceived the evidence in a way that affected his conclusion. Without this reasoned belief, the appellate court cannot reconsider the evidence.

18In Housen, it was unclear from the trial judge’s reasons which portions of the evidence of several witnesses the trial judge relied upon, or to what extent. Nonetheless, the Supreme Court concluded at pp. 280-81 S.C.R.:

[T]he full evidentiary record was before the trial judge and, absent further proof that the omission in her reasons was due to her misapprehension or neglect, of the evidence, we can presume that she reviewed the evidence in its entirety and based her factual findings on this review. The presumption, absent sufficient evidence of misapprehension or neglect, is consistent with the high level of error required by the test of “palpable and overriding error”. [page 633].

19Having reviewed and considered the totality of the proceedings herein , the reasons of the trial judge, read as a whole, do not support a reasoned belief that the trial judge forgot, ignored or misconceived the evidence. As a consequence of the findings above, the appeal is dismissed.

20The trial judge allowed the amended statement of defence and counterclaim to be filed at the outset. In his decision, he dealt with the claim and the counterclaim. Originally, the Bukins had served a statement of defence and counterclaim and a crossclaim. Although the statement of defence and counterclaim was amended, the crossclaim was not amended and was not withdrawn. The trial judge did not deal with the crossclaim against Pasterkiewicz. Having found that the Bukins were liable to the Bank, he ought to have found that Pasterkiewicz was liable on the crossclaim. There was evidence to support such a finding. It may have been an oversight from which this court has the jurisdiction to relieve. Judgment to issue on the crossclaim as follows: Boguslaw J. Bukin and Danuta Bukin are entitled to contribution and/or indemnification by Pasterkiewicz in the same amount as in the judgment, namely $12,637.00 and costs in the amount of $9,000.00 inclusive of GST and disbursements.

21At the completion of the case, counsel were asked for their representations as to costs. Having considered those representations, costs are awarded to the respondent in the appeal in the amount of $5,000.00.

Stayshyn J.

CUNNINGHAM A.C.J.

22I have now had an opportunity to read the reasons of my colleagues, Stayshyn and Kiteley JJ.

23While I agree with the conclusion reached by Stayshyn J., I thought I should add my brief comments, in light of the dissenting reasons of Kiteley J.

24In my view, Festeryga J., as the trial judge, was in the very best position to assess the credibility of the competing witnesses and without question, preferred the evidence given on behalf of the plaintiff. As Stayshyn J. carefully considers in para. 14 of his reasons, Festeryga J., on the basis of the evidence before him, made significant findings of fact which led him to his decision in favour of the plaintiff. I disagree with my colleague, Kiteley J., that the learned trial judge did not assess the evidence of Mr. and Mrs. Bukin which, as she notes, was in conflict with that the of the bank representative. The fact that certain of the evidence on behalf of the plaintiff was contradicted by Danuta and Boguslaw Bukin, something not entirely uncommon in these circumstances, does not mean that Festeryga J. failed to consider the merit of the respective evidence given in making his findings. I am satisfied that Festeryga J., as an experienced trial judge, did properly assess the competing evidence when making his findings of credibility. I conclude that his reasons do enable meaningful appellate review and in arriving at that conclusion I have, as well, considered Diamond Auto Collision Inc. v. Economical Insurance Group, 2007 ONCA 487, [2007] O.J. 2551 and in that context I have as well carefully considered the reasons of Binnie J. in R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869. Accordingly, I disagree with Kiteley J. when she says that, “the three functions of reasons have not been fulfilled.”

25I have as well concluded that the trial judge appropriately considered the request to admit facts which, as Kiteley J. properly noted, were deemed admitted at trial for failure to respond. These admissions, however, in my view, were not irrelevant and formed an important evidentiary underpinning in the decision of Festeryga J.

26Given the agreement that the standard of review is palpable and overriding error, after a thorough review of the reasons of Festeryga J., I cannot conclude that the learned trial judge committed such an error. In fact, I am satisfied that his reasons are fulsome, to the point, and very clear in terms of the evidence he accepted. In my view, Mr. and Mrs. Bukin would have no difficulty, reading the reasons of Festeryga J., in understanding why they lost.

27One final point. All of this must be placed in context. This trial took place on January 24, 2007 and lasted less than one day, including the reasons of Festeryga J. given orally from the bench. Without question he reached the correct conclusion. I would as well dismiss the appeal.

Cunningham A.C.J.

KITELEY J. (Dissent)

28I agree with my colleagues that the standard of review is palpable and overriding error. I disagree with the application of that standard in this case.

29The reasons for decision of the trial judge consisted of the following:

This is a claim for $12,637 being the balance left on a loan made by the plaintiff to the defendants.

The defence, Bukin, allege that there was no meeting of minds. They say that they were merely character references with no obligation to pay if the loan went into default. The defendants, Bukin, admit the truth of the facts and the authenticity of the documents set out in the notice to admit, served by the plaintiff.

Even without those admissions, I am satisfied on the balance of probabilities, that what transpired was as set out in Paragraphs 1 to 4 inclusive in the notice to admit.

I am satisfied that Jolanta Wardzinska told the defendants, Bukin, that they would be financially responsible for the loan if Pasterkiewicz did not pay. I am satisfied that the defendants, Bukin, failed to make reasonable inquiry as to the ability of Pasterkiewicz to pay before they signed the documents. The defendants, Bukin, are familiar with borrowing money from a bank and signing documents. They knew or ought to have known what they were signing in these circumstances.

“Simple justice requires that the party, who by the application of reasonable care was in the position to avoid a loss to any of the parties, should bear any loss that results when the only alternative available to the courts would be to place the loss upon the innocent appellant.” This was stated in the Supreme Court of Canada by Mr. Justice Estey as he then was. He goes on to say, quoting from Waberley v. Cockerel (1542), 1 Dy. 51 that:

. . . if matter in writing [such as we have here] may be so easily defeated, [as to say they did not know what they were signing] and avoided by such surmise and naked breath, a matter in writing would be of no greater authority than . . . [the] matter of fact. . .

What in fact you are saying is, “What is the good of written documents?”

While it is quite clear that, “There is no freestanding obligation by a lender [such as The Toronto-Dominion Bank] to provide independent legal advice to a . . . [borrower].” That is ultimately the court of Appeal decision of National Bank of Greece v. Trinity Pictures Inc., [2006] O.J. No. 2271 Ontario Court of Appeal.

With respect to the counterclaim, it is nothing but bald statements that the defendants have suffered at the hands of the bank employee, they say, because of the way she handled this matter. There is no cogent admissible evidence to support the contentions of the defendants, Bukin, on the counterclaim. (emphasis added)

30The trial judge went on to grant judgment on the claim, dismiss the counterclaim, hear submissions as to costs and award costs.

31At the outset of his reasons, the trial judge made 4 findings of fact: the agent for the Bank told the defendants that they would be financially responsible for the loan if Pasterkiewicz did not pay; the defendants failed to make reasonable inquiry as to the ability of Pasterkiewicz to pay; the defendants are familiar with borrowing and signing documents; and they knew or ought to have known what they were signing.

32The first of those findings is critical. The evidence on behalf of the Bank was in contradiction to the evidence by Mr. Bukin and Mrs. Bukin. The trial judge summarized their evidence at page 61 of the transcript. He indicated his understanding that Mr. Bukin and Mrs. Bukin went to the bank as a character reference and that no one told them they would be financially obligated if the Pasterkiewicz didn’t pay the loan; that the bank officer failed to inform them adequately of their responsibility; and that they asserted that they did not know what they were signing.

33The trial judge did not assess the evidence of Mr. Bukin and Mrs. Bukin that was in conflict with the Financial Advisor at the TD Bank on that key point. The evidence of Mr. Bukin and Mrs. Bukin had to be assessed. They said they did not know that the Bank had refused to advance credit to Pasterkiewicz. That evidence was not contradicted. Indeed, the evidence of the Financial Advisor that she was not permitted to disclose information about one customer to another supports that evidence. They said that they had had experience with loans but only their personal loans, not in the capacity as co-signor or guarantor. That evidence was not contradicted. The Financial Advisor and Mr. Bukin and Mrs. Bukin agree that the conversation that day was in Polish while the documents were in English. Mrs. Bukin went on to describe that the Financial Advisor did not explain in Polish or in English what the documents were and what their obligations would be. That evidence was contradicted.

34In the reasons for decision of the majority at paragraph 14, there is a suggestion that the trial judge made findings of credibility. As indicated from the quotation above of the entirety of the reasons for decision, it is apparent that he made no findings of credibility. Being “satisfied” of the existence of a fact is not a finding of credibility.

35In the reasons for decision of the majority at paragraph 14, 13 evidentiary points are summarized. Many of them were contradicted:

(a) contradicted: Pasterkiewicz applied for a loan and was declined. She was advised she would require co-signers. Mrs. Bukin did not challenge the fact that Pasterkiewicz applied, was declined and was told she needed a co-signer. She insisted that she did not know that when she went to the Bank for a character reference.

(b) contradicted: Pasterkiewicz brought the Bukins to the Bank for the purpose of co-signing on their loan application. The Bukins were advised by Wardzinska that they would be personally liable for any outstanding balance under the loan.

(c) contradicted: The Bukins understood that Pasterkiewicz could not obtain approval for a loan without the Bukins as co-signers.

(d) not contradicted: The Bukins were required to provide financial support documents, including income verification statements.

Contradicted: Mrs. Bukin said that the income verification was provided in relation to their own loan which was transferred to this branch approximately three months later.

(e) not contradicted: Upon review of the Bukins financial documents, TD approved the Bukins as co-signers and the loan application was approved.

(f) contradicted: Wardzinska explained the terms and obligations of the loan agreement to the Bukins in English and in Polish.

(g) contradicted: Wardzinska testified that the Bukins then read and signed the Loan Agreement and that they appeared to understand the terms and obligations of the Loan Agreement.

(h) contradicted: The Bukins were provided with a copy of the Loan Agreement before they signed it but chose not to read it.

(i) not contradicted: The Bukins never requested any information about the Pasterkiewicz’s credit history, nor did they ask TD for any advice about the transaction, or at all.

(j) not contradicted: The Bukins were never forced to sign the Loan Agreement.

(k) contradicted: The Bukins had signed previous loan agreements with TD on substantially the same terms. The documentary evidence related to one previous loan agreement and a mortgage and oral evidence referred to “loans”.

(l) not contradicted: The Bukins were familiar with signing bank documents, having signed several loans before the Loan Agreement. However, neither Mr. Bukin nor Mrs. Bukin had been involved in co-signing or guaranteeing a loan.

36By summarizing those points from the evidence, the reasons of the majority make it appear that the trial judge had performed the same function. His analysis of the evidence and the law is quoted in full at the outset of these dissenting reasons. He did not analyze the evidence in the manner suggested by the majority.

37In the face of conflicting evidence on a key issue, the trial judge must assess the evidence and make findings of credibility. While it is not necessary for the trial judge to give reasons for every factual finding, reasons are required to enable meaningful appellate review.

38The question of the sufficiency of reasons has been the subject of many decisions. On the sufficiency of reasons where findings of credibility are involved, I rely on the decision in Diamond Auto Collision Inc. v. Economical Insurance Group, 2007 ONCA 487, [2007] O.J. No. 2551 at paras. 10 – 13:

10. The standard for measuring the adequacy of reasons is derived from the decision of the Supreme Court of Canada in R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, 162 C.C.C. (3d) 298. . . .

11. In Sheppard, Binnie J. described the three functions of reasons for judgment at the trial level at para. 24. They are: 1) explaining to the losing party why he or she lost; 2) enabling informed consideration as to whether to appeal; and 3) enabling interested members of the public to see whether justice has been done. A shorthand way of describing reasons that fulfill these functional requirements is to say that the reasons permit meaningful appellate review.

12. The determination as to whether reasons permit meaningful appellate review is a contextual one which takes into consideration a number of factors including the positions of the parties, implicit findings, and the extent to which the reason for the trial judge’s conclusion is patent on the record. See e.g. Lawson v. Lawson, 2006 26573 (ON CA), [2006] O.J. No. 3179 (C.A.) at para. 13. Standing alone, conclusory and generic reasons, in the sense that they could apply equally to any other case, do not permit appellate review. In order for the court to determine whether there has been a proper application of legal principles, the pathway to the result is necessary: R. v. Minuskin (2003), 2003 11604 (ON CA), 68 O.R. (3d) 577 (C.A.) at paras. 2-4.

13. One further comment on a trial judge’s rejection of the evidence of a key witness, such as an accused person in a criminal case or the plaintiff in a civil contest, may be helpful. A judge owes the losing party an explanation for rejecting the evidence of a key witness and the absence of any explanation for rejecting that key witness’s evidence may go a long way to putting the reasons beyond the reach of meaningful appellate review. However, the outcome of the appeal still turns on the overarching principle of whether the reasons permit meaningful appellate review. . . (emphasis added)

39Being “satisfied” of certain facts is conclusory and generic. The trial judge correctly identified that there was a conflict in material facts. The failure of the trial judge to assess the evidence and make findings of credibility constitutes a palpable and overriding error. As a result of that failure, the three functions of reasons have not been fulfilled: the defendants have no idea why their evidence was rejected and hence why they were unsuccessful; the reasons did not enable informed consideration as to whether to appeal; and interested members of the public are not able to assess whether justice has been done.

40As a result of this error, I would have set aside the judgment on the claim and ordered a new trial.

41At the outset of the trial and subsequently, there is reference to the Request to Admit Facts. In his reasons, he noted that “even without those admissions”, he was able to find liability. The contents of the Request to Admit Facts (which were deemed admitted for failure to respond and specifically admitted by Mrs. Bukin at the trial) are, as my colleagues have noted above, clear and unambiguous. But they were irrelevant to the outcome of the trial. Those admissions include the following: a loan contract was entered into with specified installments; if there was a failure to make monthly payments the agreement would fall into default; the agreement did fall into default; anyone who signed the contract was jointly and individually liable; if there was default, the bank was entitled to demand the full amount without notice; the co-borrowers on the loan would have to pay all of the bank’s costs to recover payment. Those admissions relate to the fact that things were done and what the documents say. None of the admissions relate to the central issue in the trial which was the knowledge and understanding of Mr. Bukin and Mrs. Bukin as to whether they were providing character references or were fully liable.

42Counsel for the appellants also argued that the trial judge interfered unnecessarily with the evidence and the hearing. Counsel read, with considerable emphasis, passages in which the reader might consider that the trial judge demonstrated early on that he had made up his mind. Having read the transcript three times, I agree that the trial judge did interrupt, he did ask questions, and he did focus the issues. On page 7 he said that the internal policies of the TD Bank (which the defendants wanted to rely on as having been breached) were “not relevant to the issue” although he had not yet heard evidence or argument as to how they might be relevant. In some passages, he may have appeared impatient. But reading the entirety of the transcript does not lead me to the conclusion that his interruptions and directions were unnecessary or undue. Mr. Bukin and Mrs. Bukin appeared without counsel. The trial judge allowed the amended statement of defence and counterclaim to be filed that day. He was careful to describe for them at the outset how the trial would proceed. He was cautious about whether an interpreter was required. He ensured that they understood the implications of the Request to Admit. He interrupted all witnesses either to clarify or to focus. But considering the transcript of the three hour hearing in totality, I agree with my colleagues in the majority that an apprehension of bias is not demonstrated. I would not have allowed this ground of appeal.

43In the counterclaim, Mr. Bukin and Mrs. Bukin also allege negligence, negligent misrepresentation and failure to disclose a conflict of interest. It was in this context that the defendants alleged that the Financial Advisor had violated the Bank’s internal code of conduct. As indicated above, the trial judge dismissed that claim. Having found for the plaintiff on the claim, it was understandable why he would have rejected the counterclaim outright. If a new trial were ordered, I would expect due consideration of those allegations.

44In the appellants’ factum and in submissions, an assertion was made that the defendants had also alleged breach of fiduciary duty. Such a claim is not found in the amended statement of defence and counterclaim.

45I agree with counsel for the appellants that, having found the defendants liable, there was evidence on which the trial judge could have granted judgment on the crossclaim against Pasterkiewicz. However, since I would set aside the judgment, there would be no basis for awarding judgment on the crossclaim.

Kiteley J.