Tosti v. Society of the Madonna Di Canneto of Windsor Inc., 2011 ONSC 339

COURT FILE NO.: DC-10-17

Cence v. Society of the Madonna

COURT FILE NO.: DC-10-18

Cence v. Society of the Madonna

COURT FILE NO.: DC-10-19

2011 ONSC 339

DATE: 20110121

ONTARIO

SUPERIOR COURT OF JUSTICE

(DIVISIONAL COURT)

BETWEEN:

LUIGI TOSTI

Plaintiff /Appellant

– and –

SOCIETY OF THE MADONNA DI CANNETO OF WINDSOR INC.

Defendant/Respondent

AND BETWEEN:

NINO CENCE

Plaintiff /Appellant

• and –

SOCIETY OF THE MADONNA DI CANNETO OF WINDSOR INC.

Defendant/Respondent

AND BETWEEN:

NUNZIATA CENCE

Plaintiff/Appellant

• and –

SOCIETY OF THE MADONNA DI CANNETO OF WINDSOR INC.

Defendant/Respondent

Raymond G. Colautti, for the Plaintiff

Robert R. Istl, for the Respondent

Raymond G. Colautti, for the Plaintiff

Robert R. Istl, for the Respondent

Raymond G. Colautti, for the Plaintiff

Robert R. Istl, for the Respondent

HEARD: October 25 and 26, 2010

reasons on small claims court appeals

nolan j:

INTRODUCTION

1These three appeals arise from the judgment of Deputy Judge Gervais after four claims were heard together in Windsor Small Claims Court over a five day period in 2009. The written judgment was released on December 17, 2009. Three of the four plaintiffs in the original trials are the three appellants in these appeals. They were all members of the defendant, The Society for the Madonna Di Cannetto (the Society), the respondent on these appeals. This Society was established by members of the Ciociaro Club, a social club whose members or their ancestors emigrated from the region of Ciociaria in Italy. The purpose of the Society is to promote devotion to the Madonna Di Cannetto, a shrine in the region of Ciociaria. It was the intention of the members to build a chapel in which a statue of the Madonna could be honoured at an annual festival.

2It was the building of this chapel which resulted in various Directors and members of the Society being asked to “advance funds” to the Society to pay certain bills connected with the construction. The Chapel was being built on lands owned by the Ciociaro Club. In 2000, one of the contractors was threatening to register a lien under the Construction Lien Act if the bill was not paid. This created a financial crisis for the Society and lead to the request for funds.

3Four of the members of the Society who advanced funds to the Society at that time asserted that those funds were interest free loans, not donations, and requested that their funds be returned. The Society refused. The four members sued the Society in four separate claims in Small Claims Court.

4The four claims heard together by the deputy judge dealt with whether funds advanced by each of the plaintiffs to the Society in 2000 were loans as each of the plaintiffs claimed or donations as asserted by the Society.

5A central problem for all the parties at trial was that Cesidio Acchione, the treasurer of the Society from its inception in 1992 died in 2001. He had been the treasurer in 2000 when the directors and members of the Society were requested to make loans and/or donations to meet the financial difficulties of the Society. Mr. Acchione was the keeper of the books and records relating to financial matters for the Society and it was the interpretation of the meaning and intent of those documents, along with the financial statements of the Society, which lay at the root of the determination to be made by the deputy judge.

6One plaintiff, Giovanni Cence, was successful in establishing that the funds he advanced were a loan and the funds were ordered returned to him. The deputy judge ruled that the funds of the other plaintiffs were donations and dismissed

their claims. The three unsuccessful plaintiffs who are the appellants on these appeals assert that the deputy judge made multiple, palpable and overriding errors of fact and law and that, as a result, his decision ought to be reversed and judgment awarded to them, or, in the alternative, a new trial ordered. The Society contends that the appeals should be dismissed. All three appeals were heard together.

7It is both ironic and tragic that efforts by the directors and members of the Society to raise money for a religious purpose which could have strengthened and enhanced the sense of community and solidarity of the members of the Society has had the opposite effect, creating bitter dissention and most likely irreparable differences between former friends and colleagues.

POSITION OF APPELLANTS

8The appellants allege that the deputy judge erred in law in a number of areas including, failing to apply the law of spoliation in regard to certain documents in the possession of the respondent Society; by failing to draw an adverse inference against the respondent Society for their failure to call as witnesses at trial any members of the board of directors who were in office at the relevant time although they were on the defendant’s list of potential witnesses; by refusing to allow the plaintiffs/appellants to call Enrico Malazia, who had been on the board of directors of the Society at the material time, as a rebuttal witness at trial on the grounds that his evidence would be hearsay; by allowing the defendant/respondent to call a handwriting expert after the plaintiffs/appellants had closed their case and in circumstances where the report had not been delivered prior to the commencement of the trial in accordance with the Rules of the Small Claims Court; by ignoring the rule in Browne v. Dunn; by failing to properly apply the law of mistake and the equitable remedy of recession; by excluding evidence of business documents made by the deceased Mr. Acchione when they were admissible as a principled exception to the hearsay rule or, in the alternative, as a business documents exception; by failing to take into account extensive extrinsic and contemporaneous conduct which supported the conclusion that the funds were a loan and not a donation; and, by failing to apply clear principles of corporate liability and the law of agency to bind the defendant/respondent in respect of the acts and admissions of the late Mr. Acchione concerning the repayment to the appellants of the funds advanced by them.

9The appellants further assert that the deputy judge made palpable and overriding errors of fact. For example, he ignored uncontroverted and cogent evidence that exhibit 1, “List of Money to be Returned” was written by the late Mr. Acchione; by finding as a fact that the accountant Mr. Mancini did not personally check data to confirm that the funds were loans and not donations when there was clear and

cogent evidence to the contrary; by making findings of fact, unsupported by evidence, an example of which was finding that the Society gave promissory notes to persons who lent money and that the Society had sufficient funds to pay a creditor who was threatening to lien the property from two other donors who were not part of the lawsuits. In addition, the appellants allege that the deputy judge made palpable and overriding errors of fact by ignoring evidence of the plaintiffs/appellants that they had not claimed the alleged “donations” as deductions on their income tax in any of the relevant years. Finally, the appellants assert that the conduct of the trial by the deputy judge raised a reasonable apprehension of bias against them.

POSITION OF THE RESPONDENT

10The defendant/respondent Society opposed the appeal on a number of grounds but argued that if the plaintiffs/appellants were successful, the appropriate remedy was to order a new trial. For its part, the respondent Society disagreed with a number of the factual assertions contained in the appellant’s factum in support of the alleged errors in law and/or in fact.

11With respect to specific allegations of errors of law, counsel for the respondent argued that the appellant’s position regarding spoliation was founded on an erroneous premise, that is that the Society had the “black book” in its possession and refused to produce it at trial or, in the alternative, that the Society had in the past been in possession of the “black book” and had destroyed it. The issue of the “black book” should have been dealt with prior to trial. In that regard, the plaintiffs/appellants had brought a motion to compel its production but that motion had been dismissed. The order dismissing the motion was not appealed.

12As well, the respondents argued that there was nothing preventing the appellants from serving a summons to witness on any of the Society’s board members and requiring that the witness attend the trial and bring the “black book” with him or her if the Society still possessed it, or to explain, under oath, what had happened to it, if such a fact was known. It would be thus unfair and unjustified, argued the respondent Society, to draw a negative inference against the Society based on the appellants’ allegations with respect to the “black book.”

13With respect to drawing an adverse interest against the Society for not calling members of the board of directors as witnesses, rule 53.07 of the Rules of Civil Procedure, which supplement the Small Claims Court Rules, allow for the summons of an adverse party or its representative to be cross-examined. It was, therefore, open to the appellants to summons any witness any of them believed were critical to their case, obtaining an undertaking that they would be called or seeking the court’s leave to cross-examine them. Given the options available to

the appellants, the respondent asserted it would be inappropriate to draw an adverse inference against the respondent Society for not ultimately calling witnesses that it may have originally contemplated calling.

14With respect to the deputy judge’s alleged failure to apply the legal concept of mistake and to apply the remedy of rescission based thereon, the respondent Society asserted that the deputy judge was only required to do so had he accepted the evidence of the appellants that they had loaned money to the Society, rather than making a donation. The trial judge did not accept their evidence in that regard and accordingly, there was no basis on which to apply the principle of mistake and grant any remedy that would flow from the application of that principle. Similarly, the Society argued that the Rule in Browne v. Dunn is not an absolute Rule that requires counsel to address each and every detail of the evidence. The Ontario Court of Appeal in R. v. McNeil (2002), 2000 4897 (ON CA), 48 O.R. (3d) 212 endorsed that the appropriate remedy for failure to follow the Rule was to permit the recalling of witnesses, a remedy that was granted to the appellants.

15With respect to the treatment by the deputy judge of Exhibit 1, referred to earlier in this endorsement, the Society asserted that the deputy judge was entitled to give it little weight as there was no concrete evidence with respect to the timing of or the circumstances surrounding the creation of the list. In those circumstances, the document could not meet the requirements of contemporaneous creation of the entries to qualify as an exception to the business records and hearsay rules. Again, any corroborative evidence was that of the appellants which the deputy judge chose not to accept.

16With respect to the position of the appellants regarding the alleged error of the deputy judge regarding the evidence provided by the appellants about their income tax returns and the fact that they had not claimed the monies advanced to the Society as a donation, the Society argued that because the plaintiffs /appellants had refused to produce their complete income tax returns, the deputy judge was entitled to make that finding. The fact that the alleged loans were not shown as donations on the schedule of charitable donations attached to the actual income tax returns was not conclusive of the fact that the advance of funds were loans. The Society argued that there could be many reasons why such deductions would not be claimed and only the production of the complete income tax returns could clarify that argument. Therefore, according to the respondents, the deputy judge did not err in that regard.

17As for the evidence of the accountant, Mr. Mancini, the Society argued that the deputy judge was entitled to give it little weight because all of Mr. Mancini’s information originated from another witness, Ms. Fiori, a witness that the deputy judge found not to be credible.

18With respect to the allegation that the deputy judge made an error of law by failing to properly apply the principles of corporate liability to the actions of the Society, it was asserted that, as in relation to the issue of mistake and rescission, for the principles of corporate liability to apply, one must proceed on the basis that the appellant’s evidence respecting the nature of the advance of money was accepted by the deputy judge, which it was not.

19Additionally, the Society argued that neither Mr. Mancini nor Ms. Fiori attended board or general meetings of the Society to review the records, and thereby establishing the corporate ratification of the “loans” set out in the records.

20As for the allegations of apprehension of bias, the Society basically argued that the deputy judge had treated the Society’s counsel and witnesses in the same manner that he had treated counsel for the plaintiffs/appellants and the plaintiffs’ witnesses. The Society also pointed out that because the deputy judge had granted judgment to the fourth plaintiff, Giovanni Cence, he was appropriately impartial and based his decisions on the evidence.

21With respect to findings of fact in the judgment that the appellants asserted did not have an evidentiary base, the Society acknowledged that there were such errors of fact but that these the facts were not determinative of the primary issue as to whether the advances of funds were loans or donations. Therefore, these errors do not reach the level of a “palpable and overriding error” and thus, do not amount to reversible error. The Society submitted that there was evidence upon which the deputy judge could make the critical findings of fact that he made and draw the inferences he drew and that his legal conclusions, therefore, were correct in the circumstances.

THE LAW

22There was no dispute between the appellants and respondent regarding the standard of appellate review: An appellate court should not interfere with a trial judge’s finding of fact in the absence of “palpable and overriding error” that is an error that is “plainly seen” and “determinative with respect to that factual issue.” With respect to errors of law, the standard is that of correctness and on a question of pure law, the basic rule with respect to the review of the trial judge’s finding is that an appellate court is free to replace the opinion of the trial judge with its own. At the same time, it is not the role of an appellate court to retry a case or to substitute its views for those of the trial judge. An appellate court is to uphold the trial decision unless the palpable errors leading to a wrong result has been made by the trial judge. Also, the trial judge does not have to resolve every bit of conflicting evidence or address every matter exhaustively for his or her decision to withstand appellate review.

23In R. v. Shepphard (2002), 2002 SCC 26, 162 C.C.C. (3d) 298 (S.C.C.) the Supreme Court of Canada held that parties are entitled to be given sufficient reasons for a decision from a trial court so that the decision can be reviewed by an appellate court and the reasons are sufficient to inform the losing party as well as the community of the basis for the decision. At the same time, deficiencies in a trial judge’s reasons do not automatically constitute a reversible error. Rather, one must apply a functional interpretation of the reasons. This functional approach was articulated by the Court of Appeal in both R. v. Ahmed (2002), 2002 695 (ON CA), 170 C.C.C. (3d) 27 and R. v. Stewart, [2003] O.J. No. 347.

ANALYSIS

24I have reviewed the transcript of the trial, including the submissions of counsel, and the judgment of the deputy judge. I have heard the able submissions of counsel on the appeal and have considered the applicable law referred to in the facta of counsel. For the reasons set out below, it is my respectful view that the appeals must be granted and a new trial ordered.

25I will not deal with all the grounds of appeal advanced by counsel for the appellants. Success on one ground is sufficient for me to order a new trial. I will address only several of the grounds in detail as together they demonstrate the significant errors of law and fact identified in the decision and the deputy judge’s “they said, they said” simplistic approach to what were complicated factual and legal issues. At the end of the day, the trial judge essentially relied on the word “donation” written on the receipt stub to resolve the issue when the complicated and contradictory evidence in the Society’s own records should have been considered as a whole and weighed so as to clearly identify which facts/documents/testimony led to an objective evaluation of all of the admissible evidence and how it established, on the balance of probabilities, that the funds advanced to the Society by the plaintiffs/appellants were donations.

26The deputy judge also summarily dismissed the evidence of Mr. Mancini, the chartered accountant and concluded that he prepared the financial statements identifying the funds as “loans to shareholders” and that he “did so without any meaningful inquiry.” The deputy judge went on with his criticism of Mr. Mancini that he accepted the word of the bookkeeper, Ms. Fiori who was “the only link” to Exhibit 1 “Money To Be Returned,” a witness who the deputy judge had already dismissed as not being credible. Having made that statement, the deputy judge continued: “the Court concludes that that piece of heresay [sic] evidence is not reliable and does not carry any weight.” Although the deputy judge earlier in his decision said uncategorically that he “accepts the findings and conclusion of the expert witness Robert Kullman,” and Mr. Kullman expressed the opinion that

Exhibit 1 was written by Mr. Acchione, the deputy judge discounted the importance of that document. He said at page 2 of the decision:

The problem with Exhibit 1 is that it is directly contradictory to Exhibit 8, the receipt stubs written by Acchione. Most of the subsequent evidence of the plaintiffs tendered in support of their claim that it was a loan not a gift all flow from Exhibit 1. No one saw Acchione write it. No one testified when he wrote it. Marianne Fiori, the volunteer bookkeeper, who once a year gathered the relevant information from Acchione, and who prepared the trial ledger, could not even remember what year he wrote it.”

27The deputy judge went on to summarize the evidence of Ms. Fiori as to when she got Exhibit 1. She said she gathered the information in the fall of 2000 and she attended at the Society to get the financial records. Mr. Acchione gave her Exhibit 1 directly and she gave it to Mr. Mancini. Mr. Mancini testified he got it from his records of 2000. The deputy judge misapprehended the evidence which was that it was received in 2000, the year the funds were advanced. He made an error of fact by concluding that no one knew when it was written by Mr. Acchione.

28The deputy judge also failed to explain how he considered Exhibit 1 to be hearsay and inadmissible yet he made it an exhibit at the trial.

29The deputy judge failed to appreciate and adequately address the issue of the missing “black book” in which Mr. Acchione recorded all the money received. It was an official record of the Society and not produced at trial by the respondents. While it would have been open to him to address the issue and make a finding, it appears that the deputy judge did not appreciate the evidentiary rule related to spoliation of evidence or address the issue of the rebuttable presumption that is raised when an important document is not produced or alleged to be missing. The fact that it was not ordered produced at a pre-trial motion does not mean that the issue of the missing book and the significance of it not being produced should not have been addressed at the trial. It appears that the deputy judge failed to appreciate the significance or the legal principles to be applied to the fact that this important black book was missing. This is evidenced by the comments made by the deputy judge when the issue came up on the first day of trial. The deputy judge stated that “I am not even going there in my mind” when it was suggested by counsel that the respondent had somehow ensured that the book was not available for trial. He went on to say that he could “only decide this case on the evidence proffered in his courtroom.” (Transcript of September 28, 2009, page 33, lines 1 to 12.) The refusal of the judge to turn his mind to the issue of spoliation and apply the proper principles to the issue was an error of law.

30With respect to allowing the introduction of the handwriting expert’s report after the appellants had closed their case, the deputy judge failed to appropriately

address the issue. During a period of adjournment which had been granted because of a family emergency of counsel for the Society, the Society’s counsel obtained an expert report from a handwriting expert. Rule 18.02 in the rules of Small Claims Court provide that such reports are to be served at least 30 days before the trial date “unless the trial judge orders otherwise.” [Emphasis added.]

31On the morning when counsel for the Society sought to introduce both the report and the witness, counsel for the plaintiffs argued that the admission of the expert report and permitting the witness to testify would cause irreparable prejudice to the plaintiffs because it was coming at such a late date and the plaintiffs had no opportunity to review it before they gave their evidence. Before the counsel for the plaintiffs had finished making her submissions and as she was handing another case to the deputy judge, he said at page 15, line 28 of the transcript of December 3, 2009:

See I do not buy any of your prejudice arguments. To me, this is the most appropriate evidence that the court should hear because remember how this thing worked out. It started with your people saying it is not his handwriting and for me, it is relevant and is relevant to the court to know whether it is or is not. Now I do not know why it is so late coming in but surely you must have anticipated that your own client should have said that. They are the ones who said it was not his handwriting.

32The deputy judge continued, starting at line 15 of page 16 of the same transcript to comment on the evidence of the plaintiffs:

Now there is no ambush here. Brown and Dunne says that the witness needs to state his position. The witness stated his position; he says it is not his [Mr. Acchione’s] handwriting. All three of them were quick to do that. The third one actually goes along and starts explaining how the n’s are at the n’s and the d’s are at the d’s. Again I do not see where anybody is being ambushed. I see that you do not want the evidence in because it is going to hurt your case, that is what I see.

33Counsel for the plaintiffs again attempted to complete her submissions and expressed to the deputy judge in a respectful way that she thought it would a palpable and overriding error for the court to admit the expert report at that late date because of its highly prejudicial nature and the late delivery of the report. The deputy judge did not permit the plaintiffs’ counsel to complete her submissions before expressing his opinion that he was not accepting the position she was taking. It is also not clear on which legal principles he decided to exercise his discretion to admit the report and hear from the witness. Although the deputy judge permitted plaintiff’s counsel to recall the witnesses, the deputy judge made

it clear that the case for the plaintiff’s had been “hurt,” even though he had not yet heard any explanation from them. When they testified several months earlier, the report had not even been ordered. The reason for the rules requiring reports to be filed before trial is so there is not “trial by ambush.” At the very least, the deputy judge should have offered an adjournment to the plaintiffs. I find that this is an error of law and requires that the decision of the deputy judge be set aside.

34In spite of permitting the defendants to serve and file the expert report and the expert to testify, the deputy judge refused to permit the plaintiffs to call as a reply witness Mr. Enrico Malazia, who was a board member at the time that the funds were advanced by the plaintiffs to the Society and who may have been able to give an explanation for Exhibit 1. The reason the deputy judge gave for refusing to permit this testimony was because he said the evidence would be hearsay evidence. Once the deputy judge heard the evidence of the expert and heard that Mr. Acchione had written both the stubs and the document entitled “Money to be Returned,” he should have allowed Mr. Malazia to be called in fairness to the plaintiffs. The deputy judge appeared to not understand or appreciate the principled approach to the admission of hearsay evidence. At the very least, he should have held a voir dire on the admission of the evidence. At a voir dire, he could have explored the relevancy and reliability of any information Mr. Malazia may have had. The proposed evidence met the “necessary” test since Mr. Acchione was dead. It was also relevant. The voir dire could have explored the reliability of the evidence. The deputy judge would then have a principled basis on which to permit or refuse to permit the testimony of Mr. Malazia. His failure to do so was an error in law and the plaintiffs were prejudiced by the refusal to permit Mr. Malazia to testify without having a voir dire.

35The deputy judge also failed to consider the issue of mistake and the equitable remedy of rescission, an argument made by counsel for the plaintiffs. It is clear from his decision that the deputy judge failed to determine whether there was a meeting of the minds between the plaintiffs and the Society when the money was advanced by them to the Society.

36The deputy judge also made an error in law when he concluded that Exhibit 1, “Money to be Returned,” was simply a piece of hearsay evidence and, therefore, not reliable and did not carry any weight. He appears to have not taken into account that this may have been a business document made by the deceased as treasurer of the Society or, in the alternative, erred in failing to consider this evidence pursuant to the principled exception to the hearsay rule.

37The deputy judge appeared to misapprehend the evidence of the accountant who testified under oath that he conducted due diligence in preparing the year end documents for the Society and would have followed the steps required of him as a Chartered Accountant in fulfilling his duties. The deputy judge discounted the evidence of the loans that were reported over a three year period in the financial

statements of the Society because Mr. Mancini had not attended at any board meeting to present the reports and did not assure himself that there was an appropriate by-law that permitted the Society to borrow funds. The deputy judge had heard no evidence from any other accountant that Mr. Mancini had not acted in accordance with his professional obligations as a chartered accountant, in particular with regard to attendance at board meetings to present the report and to ensure an appropriate borrowing by-law was in place. It appears that the deputy judge imposed his own view of what Mr. Mancini should have done in the absence of any evidentiary basis for such a conclusion.

38The deputy judge made a palpable and overriding error of fact by finding that there was promissory note from the Society to Maria Di Gioia when it was admitted by her husband, Ercole Di Gioia, that there had not been a promissory note. The deputy judge also found, again in error, that the Society provided promissory notes to people who loaned them money when the evidence was that there were never promissory notes provided to members of the Board of Directors who advanced funds to the Society. In arriving at this decision, the deputy judge appears to have put significant weight on both charitable receipts being evidence of donations and promissory notes being evidence of loans.

39The appellants allege that a reasonable apprehension of bias was created by the deputy judge during the trial when he failed to control the conduct of counsel for the defendant, and in the circumstances where he assisted the defendants’ counsel by doing his own cross-examination of some of the plaintiff’s witnesses, by allowing the defendant to enter the expert report after the closing of the plaintiff’s case and by putting a reverse onus on the plaintiffs to call members of the board of the defendant Society after specifically refusing to allow the plaintiffs to call Mr. Malazia as a witness even though he had been on the board of directors at the relevant time. While the interventionist approach taken by the deputy judge appeared at times to assist the defendants, for example, when he conducted his own cross-examination of a number of the witnesses for the plaintiffs after he or she had been cross-examined by counsel for the Society and had been re-examined by counsel for the plaintiffs, I find that this conduct did not rise to the level required to find bias based on the test for such a finding set out in Authorson (Litigation Guardian of) v. Canada (Attorney General), [2002] 32 C.P.C. (5th) 357.

40Before concluding my analysis, I wish to comment on the role of the deputy judge in permitting the evidence of one of the witnesses called by the Society. Although not raised as a ground of appeal and would not, on its own, result in overturning the decision of the deputy judge, it highlights the need for judges to play a “gatekeeper” role in relation to the admission of evidence. For some reason that was not made clear in the record, the deputy judge permitted the Society’s counsel to call one Antonio Di Bartolomeo, an individual who was employed by the Canada Revenue Agency (CRA) as an automotive specialist. Mr. De Bartolomeo

made it clear he was not testifying as a representative of that Agency, nor was he a member or Director of the Society nor did he have any independent knowledge of the issue before the court. His sole qualification appeared to be that he had sat on various non-profit boards. In spite of not being qualified by the court as an expert by way of a voir dire, and no such qualification was requested, he proceeded to give opinions on the matter before the court in relation to how and when charitable receipts are given. In addition to telling the court about his own role on various boards, his evidence consisted of reading from a CRA website about the requirements for charitable receipts, and examining and expressing opinions on the validity of the receipts given by the Society. He also testified about the advice he had given to Mr. E. Di Gioia, the representative of the Society who had not yet testified. When counsel for the plaintiffs objected to the documents from the CRA being made part of the record, and also questioned the qualifications of Mr. Di Bartolomeo to testify, the court agreed that it was not appropriate to make the website information an exhibit. The deputy judge said, starting at page 55, line 21 of the transcript of December 3 “and we started out with Mr. Di Bartolomeo not being a representative of Revenue Canada. So at best, he has had experience with charities. So I am not concerned nor do I want to read these . . . just, I will hear his testimony.”

41While counsel for the plaintiffs appeared to object to the witness testifying at all, she, regrettably, did not make it a formal objection which would have required a formal ruling. Nevertheless, the deputy judge, while at times acknowledging that Mr. Di Bartolomeo was not an expert, permitted him to express an opinion as to the consequences that could be imposed on a charitable organization by CRA for improperly issuing charitable receipts if the funds were a loan and not a donation, that being losing its charitable status.

42After hearing that opinion, the deputy judge and counsel had the following exchange at page 56 starting at line 56:

Counsel for Plaintiffs: Your honour.

The Court: What qualifications . . . .

Counsel for Plaintiffs: Exactly.

The Court: Again, it is one thing we went through all of this with the handwriting.

Counsel for Defendant: Sir, he’s the best we can get for Revenue Canada . . . .

The Court: Well he may be the best you can get, but the point is he is not an expert. He’s not being preferred [sic] as an expert.

43Cross-examination of Mr. Di Bartolomeo made it clear that he was the person from whom Mr. E. Di Gioia had initially sought advice on behalf of the Society regarding any obligation or ability of the Society to return the funds. He testified that he was subpoenaed as a witness “to give my opinion based on my experience with charities as volunteers and board members.” At page 58, line 28 of the transcript of December 3, Mr. Di Bartolomeo clarified both the question he had been asked and the answer he had given to Mr. Di Gioia when he was consulted:

The question was asked in the general - general terms as to if a charity issues a receipt, can the charity give the money back and if there is a tax receipt as a gift and I recommended not to give the money back.

44He acknowledged that Mr. Di Gioia had shown him certain receipts and that based on what he was told, he advised that the Society should not give the money back. He then agreed that if funds were not meant to be given as a gift and were really a loan, they could be given back. He also acknowledged that he had no knowledge of the terms and conditions under which the plaintiffs had advanced money.

45Dr. Di Bartolomeo was then re-examined by counsel for the Society. Starting at page 62, line 31 the following exchange occurred:

Q. – Is a charitable donation receipt evidence of a donation?

A. – Yes.

Q. – And in that case, would the Society have been able to give back the monies?

A. – You cannot give back a donation, no.

46Although counsel for the plaintiffs could have been more direct in making her objection, the deputy judge had the obligation to act as “gatekeeper” in the interests of ensuring a fair trial and to hold a voir dire on the evidence that counsel for the Society was attempting to elicit through Mr. Di Bartolomeo. Mr. Di Bartolomeo had no direct connection with the matter before the court. It is clear that the only reason he was called was to give an opinion; to do so, he had to be qualified as an expert by way of a voir dire. If he could not be so qualified, the

deputy judge should not have permitted him to testify at all. Even before the Goudge Commission (Commissioner Stephen P. Goudge, “Report of the Inquiry into Pediatric Forensic Pathology in Ontario” (Ontario: Queen’s Printer for Ontario, October 1, 2008)), Courts of Appeal and the Supreme Court of Canada were warning judges about their obligations in this regard.

47In R. v. J. (I.), [1999] O.J. No. 1192 (Ont. C.A.) Justice Rosenberg ordered a new trial on other grounds, however at para. 27, the court emphasized that the expert evidence should not have been admitted without proper scrutiny at a voir dire (David M. Paciocco, “Context, Culture and the Law of Expert Evidence”, (2001) 24 Advocates’ Quarterly, 42 at p. 45). The trial judge remains the gatekeeper, responsible for determining admissibility.

RELIEF SOUGHT

48The appellants seek an order whereby, on account of the palpable and overriding errors of law and errors of fact made by the deputy judge that I substitute my decision for that of the deputy judge and find that the monies each provided to the Society were loans as opposed to donations. In my view, that would be inappropriate in this case. While the deputy judge failed to apply the correct legal principles to much of the evidence, it is my view that the appropriate relief is a new trial. It is rarely appropriate for an appeal court which has not had the benefit of hearing the evidence from the witnesses directly to be able to assess credibility in relation to each witness.

ORDER

49Accordingly, the decisions of the deputy judge is set aside, including the orders for costs and a new trial is ordered.

50Costs shall be to the appellants in an amount to be agreed upon by the parties or determined by me after receipt of written submissions, no longer than five pages in length submitted in the following manner:

1. Counsel for the appellants will serve on counsel for the respondents the written cost submissions within 21 days.

2. Within a further 14 days, counsel for the respondent shall serve his response.

3. Within a further seven days counsel for the appellants will serve any reply and then immediately forward to me through the trial coordinator a copy of all of the submissions.

Original signed “Mary Jo M. Nolan”

Mary Jo M. Nolan

Justice

Date: January 21, 2011

COURT FILE NO.: DC-10-17

Cence v. Society of the Madonna

COURT FILE NO.: DC-10-18

Cence v. Society of the Madonna

COURT FILE NO.: DC-10-19

2011 ONSC 339

DATE: 20110121

ONTARIO

SUPERIOR COURT OF JUSTICE

(DIVISIONAL COURT)