Court File and Parties

COURT FILE NO.: CV-15-527178 and CV-16-560369 DATE: 20200504

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Arconti et al., Plaintiffs

– and –

Smith et al., Defendants

BEFORE: F.L. Myers J.

COUNSEL: Glenroy K. Bastien, for the Plaintiffs Sean Dewart and Mathieu Bélanger, for the Defendants

HEARD: May 1, 2020,

CASE CONFERENCE endorsement RE: REMOTE EXAMINATION

The Issue and Outcome

[1] This endorsement deals with the issue of whether the plaintiffs ought to be required to conduct an examination out-of-court by videoconference rather than in person.

[2] At the end of the case conference, I ruled that if the plaintiffs wish to take advantage of the opportunity to examine Ms. Fenton out-of-court, before the upcoming mini-trial, they must do so remotely by videoconference on May 6, 2020. They remain free to waive the opportunity to examine Mr. Fenton if they choose.

[3] These are my reasons for ordering the examination to occur by videoconference.

Background

[4] In 2013, after a 12-day hearing, the Ontario Securities Commission found that the plaintiffs had committed securities fraud.

[5] The plaintiffs appealed to the Divisional Court. Among their grounds of appeal, the plaintiffs asserted that their lawyer, Ian Smith, had provided ineffective representation that caused a miscarriage of justice (i.e. he caused them to lose). The plaintiffs made numerous allegations of impropriety against Mr. Smith including that he acted in conflict of interest by deliberately sacrificing his clients’ interests to curry favour with the OSC. They also argued that Mr. Smith negligently had them make formal admissions of fact without allowing them to explain the innocent context of the most damaging admissions.

[6] In a decision dated January 5, 2018, reported at 2018 ONSC 136, the Divisional Court rejected the plaintiffs’ arguments and held there was no miscarriage of justice. The court upheld the OSC’s findings of liability and rejected the allegations of ineffective assistance of counsel.

[7] By that time, the plaintiffs had already sued Mr. Smith and his partner Scott Fenton for negligence, breaches of duty, and other causes of action. Broadly speaking, they asserted two distinct grounds of liability. First, they alleged that Mr. Smith negligently or deliberately conducted the hearing in a manner that led them to be held liable unjustly. Second, the plaintiffs claimed that, prior to the hearing, Mr. Smith failed to properly bring home to the plaintiffs their substantial risk of being found liable. The plaintiffs claim that had they known that they were destined to lose the hearing, they would have settled the case and avoided at least some of the severe penalties imposed by the OSC.

[8] There were settlement negotiations conducted before the hearing. Mr. Smith alleges that the plaintiffs fully comprehended the risks and benefits at play and were resolute in their rejection of the settlement offers made by OSC staff. The details and adequacy of the lawyer’s explanation to the clients of the risks associated with the hearing and the state of their understanding when they decided to reject settlement and proceed with the hearing are factual issues in dispute between the parties.

[9] The defendants moved to strike the first ground of liability and moved for summary judgment on the second.

[10] By unreported reasons dated January 27, 2020, I dismissed under Rule 21 the claims asserting liability against the lawyers for mishandling the hearing leading to an unjust loss. Among other things, I ruled that the result of the hearing had been upheld by the Divisional Court and could not be impeached or characterized as “wrong” or “unjust” in subsequent civil proceedings. I also ruled that the doctrine of issue estoppel precluded the plaintiffs relitigating the issues they had already asserted as “ineffective assistance” before the Divisional Court. Harris v Levine, 2014 ONCA 608; Toronto (City) v CUPE, 2003 SCC 63, [2003] 3 SCR 77.

[11] On the second issue, concerning the plaintiffs’ assertion that Mr. Smith had not properly advised them during pre-hearing settlement negotiations, I ruled that a mini-trial was required to determine if summary judgment ought to be granted. While there was a very thorough evidentiary record, the evidence was not complete due to some pre-hearing refusals by the defendants. Moreover, the out-of-court cross-examinations of the experts did not provide me with the confidence needed to make findings under the enhanced powers provided in Rule 20.04(2.1).

[12] Accordingly, I determined that the most efficient, affordable, and proportionate resolution of the summary judgment motion was a focused mini-trial in which the experts would be cross-examined and the parties could provide some minor supplementation of their evidence.

[13] In a later case conference, I determined that the mini-trial would proceed despite the plaintiffs’ appeal of the Rule 21 motion. I agreed with Mr. Bastien who noted that the issues in the Rule 21 motion and the Rule 20 motion were distinct. Moreover, even if the Rule 21 holding was subsequently overruled, the production and examinations for the mini-trial would not be wasted duplication.

[14] I also agreed with Mr. Bastien that the plaintiffs should be entitled to some further examination for discovery of the defendants prior to the mini-trial. The plaintiffs have already cross-examined Mr. Smith on the summary judgment motion. They decided that they did not need to examine him again. But an examination for discovery of Mr. Fenton was ultimately scheduled for May 6, 2020.

[15] I also ordered the matter to be pre-tried before the mini-trial. A pre-trial conference is now scheduled for May 12, 2020. It will be held by videoconference pursuant to the Notice to the Profession dated March 15, 2020 as updated April 2, 2020.

May 1, 2020 Case Conference

[16] I convened a case conference to discuss trial readiness with counsel. At the case conference, I advised counsel that due to the corona virus pandemic the mini-trial is not proceeding on May 27, 2020 as scheduled. However, I indicated that as this is a short, focused proceeding, it will be rescheduled in the near term.

[17] During the case conference Mr. Bastien advised that his clients did not wish the examination for discovery of Mr. Fenton to proceed by videoconference. However, in light of the implementation of social distancing in response to the pandemic, conducting an in-person examination at this time is not possible. Therefore, they request a delay in the proceedings until the requirement for social distancing is ended.

[18] The plaintiffs object to a videoconference examination because they maintain: a. that they need to be with their counsel to assist with documents and facts during the examination; b. it is more difficult to assess a witness’s demeanour remotely; c. the lack of physical presence in a neutral setting deprives the occasion of solemnity and a morally persuasive environment; and d. the plaintiffs do not trust the defendants not to engage in sleight of hand to abuse the process.

Analysis

[19] In my view, the simplest answer to this issue is, “It’s 2020”. We no longer record evidence using quill and ink. In fact, we apparently do not even teach children to use cursive writing in all schools anymore. We now have the technological ability to communicate remotely effectively. Using it is more efficient and far less costly than personal attendance. We should not be going back.

[20] That is not to say that there are not legitimate issues that deserve consideration. Technology is a tool, not an answer. In this case, the parties cannot attend in the same location due to health concerns and governmental orders. So, the question is whether the tool of videoconference ought to be required to keep this matter moving or if the mini-trial ought to be delayed further due to the plaintiffs’ desire to conduct an examination for discovery in person.

[21] The Rules of Civil Procedure, RRO 1990, Reg. 194, that govern how lawsuits are conducted, have provided for videoconferencing for more than 20 years. In 1999, Rule 1.08 was added to the Rules as follows:

1.08 (1) If facilities for a telephone or video conference are available at the court or are provided by a party, all or part of any of the following proceedings or steps in a proceeding may be heard or conducted by telephone or video conference as permitted by subrules (2) to (5):

1. A motion (Rule 37).
2. An application (Rule 38).
3. A status hearing (Rule 48.14).
4. At trial, the oral evidence of a witness and the argument.
5. A reference (Rule 55.02).
6. An appeal or a motion for leave to appeal (Rules 61 and 62).
7. A proceeding for judicial review.
8. A pre-trial conference or case conference. O. Reg. 288/99, s. 2; O. Reg. 24/00, s. 1; O. Reg. 438/08, s. 3 (1).

(2) If the parties consent to a telephone or video conference and if the presiding judge or officer permits it, one of the parties shall make the necessary arrangements. O. Reg. 288/99, s. 2.

(3) If the parties do not consent, the court may, on motion or on its own initiative, make an order directing a telephone or video conference on such terms as are just. O. Reg. 288/99, s. 2; O. Reg. 438/08, s. 3 (2).

(4) The judge or officer presiding at a proceeding or step in a proceeding may set aside or vary an order made under subrule (3). O. Reg. 288/99, s. 2.

(5) In deciding whether to permit or to direct a telephone or video conference, the court shall consider, (a) the general principle that evidence and argument should be presented orally in open court; (b) the importance of the evidence to the determination of the issues in the case; (c) the effect of the telephone or video conference on the court’s ability to make findings, including determinations about the credibility of witnesses; (d) the importance in the circumstances of the case of observing the demeanour of a witness; (e) whether a party, witness or lawyer for a party is unable to attend because of infirmity, illness or any other reason; (f) the balance of convenience between the party wishing the telephone or video conference and the party or parties opposing; and (g) any other relevant matter. O. Reg. 288/99, s. 2; O. Reg. 575/07, s. 1.

[22] Initially, an order for the use of remote proceedings required the consent of all parties or, in the absence of consent, that a party bring a motion. In 2008, Rule 1.08(3) was amended to enable the court to require remote proceedings at the court’s own initiative. This reflects an evolution of the acceptance of the use and perceived value of remote communication technology whereby it can be ordered even where neither side asks for it or wants it.

[23] Rule 1.08(1) is written very broadly. It allows for the use of remote technology in any step in a motion, application, trial, etc. I have no hesitation finding that an examination for discovery ordered in association with a mini-trial of a summary judgment motion is a step in a motion and a trial.

[24] Looking at the factors in Rule 1.08(5), the general principle that evidence should be provided in court has never applied to examination for discovery or examination of a witness for a pending motion. Neither is demeanour a factor in this case. The transcript of an examination for discovery of Mr. Fenton can only be used by the plaintiffs. Discovery transcripts are used for admissions not for demeanour.

[25] I do not dismiss the concern for abuse of the technology by a party who might be so inclined. It would not be difficult, for example, to put a person or another computer screen outside the field of view of the camera that could enable improper prompting of the witness. I suppose with current Bluetooth technology, even where parties are in the same room, a witness can wear a hearing device and readily receive improper prompting. People can also send hand signals to witnesses in court as well.

[26] While it is important to remain vigilant against the risk of fraud and abuse, I do not believe that we have yet reached a point where we presume it either. This is especially the case where a lawyer is to be examined. While no one is immune from cheating, regulated professionals must maintain professional ethics and have their licenses at risk. Their professional reputations are their lifeblood. While the court remains open to receive evidence of abuse of any examination or other process in a lawsuit, and should deal strongly with any proven abuse, I do not think an amorphous risk of abuse is a good basis to decline to use available technology.

[27] Mr. Bastien makes a good argument that physical presence of lawyers, parties, and officials in a neutral location creates a solemnity and discomfort for the witness that is important to the examination process. A witness sitting in his or her favourite chair at home on video may not feel the same pressure of the occasion as a witness who is face-to-face with an adversarial lawyer in court or in a crowded examiner’s chambers. Mr. Bastien argues that the physical discomfort may focus the witness on the event, on the solemnity of the process, and create what he called a “morally persuasive environment”.

[28] Mr. Bastien also took some umbrage at Mr. Dewart’s desire to proceed remotely when he initially had opposed examining the plaintiffs’ expert remotely. Ultimately, Mr. Dewart travelled to Vancouver to cross-examine the witness while making his way to Whistler. Mr. Bastien attended that examination remotely.

[29] In Miller v. FSD Pharma, Inc., 2020 ONSC 2253, Morgan J. considered a request by the plaintiff to adjourn a two-day class proceedings motion at least partly on the basis that the use of remote technology would prejudice the plaintiff. Morgan J. wrote:

[5] Plaintiff's counsel are reluctant to proceed in this way. They point out that this will be a two-day hearing with a voluminous, multi-volume evidentiary record, which will create logistical difficulties for counsel. Foremost among these is that counsel will not be able to have their entire team together in the same room to provide the support required at the hearing. The leave motion can spell the end of the claim if it is not successful, and Plaintiff’s counsel do not want to put their client and putative class members to that risk in what would be a rather novel format for a complex and lengthy motion with a heavily documented record.

[6] I am anxious not to delay litigation any more than needed given the present court suspension and general societal lockdown. At the same time, I would not want to hold a hearing that in its very format raises due process questions for whichever party ends up being unsuccessful. I admire Defendant’s counsels’ enthusiasm, and would be willing to conduct the hearing via videoconference if both sides were willing to do so. However, I do not think it appropriate to compel the moving party to proceed under conditions where Plaintiffs’ counsel perceive that they may not be able to present the case as effectively as they would in person.

[30] Counsel’s desire to have his team with him is very similar to the plaintiffs’ concern in this case that they wish to be able to assist Mr. Bastien during the examination of Mr. Fenton.

[31] Justice Morgan expressed two concerns. First, he found that the use of remote technology would raise “due process concerns” for the unsuccessful party. Second, he expressed his discomfort requiring counsel to proceed where he or she perceives that they may not be able to present their case as effectively as they would in person.

[32] I respectfully do not find the presence of any “due process concerns” inherent in the format of a video hearing. All parties have the same opportunity to participate and to be heard. All parties have the same ability to put all of the relevant evidence before the court and to challenge the evidence adduced by the other side. The only possible “unfairness” is a lack of comfort by one counsel that he or she will be at their best in presenting evidence and making arguments using technology. That conflates the two concerns raised by Morgan J.

[33] In my view, in 2020, use of readily available technology is part of the basic skillset required of civil litigators and courts. This is not new and, unlike the pandemic, did not arise on the sudden. However, the need for the court to operate during the pandemic has brought to the fore the availability of alternative processes and the imperative of technological competency. Efforts can and should be made to help people who remain uncomfortable to obtain any necessary training and education. Parties and counsel may require some delay to let one or both sides prepare to deal with unfamiliar surroundings. I note that Morgan J. held the case conference last month not long after the Chief Justice announced the restriction of court operations, and that he adjourned the hearing of the motion to late June. Whether he is asked for or grants further adjournments at that time remains to be seen.

[34] In Capic v Ford Motor Company of Australia Limited, [2020] FCA 486, Perram J. of the Federal Court of Australia considered whether to adjourn a trial that was scheduled to commence during the pandemic. The trial was scheduled to take six weeks. Perram J. ordered the trial to proceed by remote technology.

[35] Perram J. recognized that not every case will be fit for remote hearing. He considered a number of issues such a variations in available internet connectivity, the omnipresent risk of software glitches, the difficulty preparing witnesses remotely, the difficulty of experts hot tubbing remotely, the risk of fraudulent coaching of witnesses, that not everyone has a computer, and more. I propose to deal with just two of the issues he raised.

[36] First, on the question of whether the examiner needs his or her team (and clients) together, Perram J. wrote: Secondly, senior counsel for the Respondent raised with me the real difficulty of the practitioners not all being together in one place for the trial. It is common for the people sitting behind counsel to convey useful and sometimes critical information to senior counsel via junior counsel and likewise junior counsel frequently are able to assist senior counsel on the storm-tossed seas. The ability to do this where everyone is in their own home is certainly degraded. However, in the hearing last month to which I have already referred senior and junior counsel who were isolated from each other communicated with one another and independently of me using WhatsApp. In the virtual hearings I have conducted I have communicated with my associates on an instant messaging platform which has worked well. There is the difficulty of document sharing over such a platform which I accept. Receiving whilst in full flight a WhatsApp message with a document attached is not the same experience as having one's gown tugged and a piece of paper thrust into one’s hands. Again, whilst I think this is a poor situation in which to have to run a trial I do not think it means that the trial will be unfair or unjust.

[37] In other words, just as all litigators have had to learn how to deal with juniors conveying information during an examination or argument in court, there are ways to do the same thing with technology. I note that the Zoom technology, that is currently among the brands being utilized in this court, includes “breakout rooms” in which counsel can meet privately with colleagues and clients. We are learning new ways to do things and they feel less “good” because we do not yet have the same comfort with the technology that we have with our tried and true processes.

[38] Perram J. then considered the question of whether one can cross-examine as effectively remotely as in person and wrote the following: The Respondent then submitted that the cross-examination of witnesses over video-link is unacceptable. I accept the Respondent’s submission that there are many authorities in this Court which underscore the unsatisfactory nature of cross-examination by video-link: see, eg, [citations omitted] However, those statements were not made in the present climate, nor were they made with the benefit of seeing cross-examination on platforms such as Microsoft Teams, Zoom or Webex. My impression of those platforms has been that I am staring at the witness from about one metre away and my perception of the witness’ facial expressions is much greater than it is in Court. What is different -and significant- is that the video-link technology tends to reduce the chemistry which may develop between counsel and the witness. This is allied with the general sense that there has been a reduction in formality in the proceedings. This is certainly so and is undesirable. To those problems may be added the difficulties that can arise when dealing with objections.

[39] Two points are of note. First, the great fears expressed in case law by those who have never actually used the technology may not be as significant as feared. I agree with this view. However, I also agree with Perram J. and Mr. Bastien, that currently, it does appear that there is some loss of solemnity and personal chemistry in remote proceedings. What is not yet known however, is whether, over time, as familiarity with new processes grows, we will develop solutions to these perceived shortcomings.

[40] As things stand at present, I do not doubt that there are perceived, and possibly very real shortcomings associated with proceeding remotely rather than in person. However, in this case at least, the benefits outweigh the risks. The most obvious benefit is that litigation will not be stopped in its tracks.

[41] In Association of Professional Engineers v. Rew, 2020 ONSC 2589 at para. 9, Corbett J. balanced similar concerns in this way: However, the materials and arguments presented by Mr. Schwisberg do no more than suggest that something may be lost in a video conferenced hearing. Something will be lost if court business does not continue, as best as can be managed, during the COVID-19 crisis, and I am not persuaded that any of the concerns raised by Mr. Schwisberg justify departing from the processes established under the Directions to the Profession for the continuation of court operations.

[42] Echoing a concern of Justice Morgan in FSD Pharma, in Capic, Perram J. concluded: Under ordinary circumstances, I would not remotely contemplate imposing such an unsatisfactory mode of a trial on a party against its will. But these are not ordinary circumstances and we have entered a period in which much that is around us is and is going to continue to be unsatisfactory. I think we must try our best to make this trial work. If it becomes unworkable then it can be adjourned, but we must at least try.

[43] I agree but with this proviso. In my view, much of the hesitancy and concern that led to the conclusions that the process is “unsatisfactory” or raises “due process concerns” stems from our own unfamiliarity with the technology. As noted above, it is just a tool. It does not produce perfection. But neither is its use as horrible as it is uncomfortable.

[44] In my view, the plaintiffs’ concerns with the prospect of conducting an examination remotely do not outweigh the desirability of proceeding with this matter and do not justify further delay. These actions have been outstanding for several years. The defendants are entitled to have their motion heard just as the plaintiffs are entitled to seek compensation. The plaintiffs’ concerns, in the main, are soluble either by creative alternatives or by increased familiarity with the technology. I do not accept that anything will be lost that is not more than offset by the proportionality of proceeding efficiently and affordably.

[45] I order that the examination for discovery of Mr. Fenton shall proceed by videoconference on May 6, 2020 unless the plaintiffs choose to waive their opportunity to conduct the examination.

Date: May 4, 2020