Osterbauer v. Ash Temple Ltd.

63 O.R. (3d) 697

[2003] O.J. No. 948

Docket No. C37463

Court of Appeal for Ontario

O'Connor A.C.J.O., Charron and Feldman JJ.A.

March 18, 2003

Civil procedure -- Trial -- Trial judge -- Bias -- Trial judge in constructive dismissal action interjecting comment that action ought to be settled as only live issue was length of reasonable notice period -- Comments by trial judge appearing to indicate he had prejudged issue of liability and merits of defendant's counterclaim -- Comments giving rise to reasonable apprehension of bias.

The plaintiff brought an action for damages for constructive dismissal. There was an issue between the parties as to whether, under the terms of his employment, the plaintiff was obliged to repay any excess draw over earned commissions. The defendant counterclaimed for the overdraw in commissions and for losses arising out of a joint venture. At the conclusion of the examination-in-chief of the first witness, the plaintiff, the trial judge expressed his opinion that the case ought to be settled and that the only live issue was the length of the reasonable notice period. During cross-examination of the plaintiff on the losses arising out of the joint venture, the trial judge again interjected to indicate that he did not think this was a live issue. Towards the end of the trial, the trial judge made another reference to his earlier statement about live issues. The action was allowed and the counterclaim was dismissed. The defendant appealed, arguing that it was denied the opportunity to fairly present its defence and counterclaim as a result of the trial judge's premature determination of the merits of the case and his numerous interventions.

Held, the appeal should be allowed.

The test for bias is as follows: What would an informed person, viewing the matter realistically and practically, and having thought the matter through, conclude? Would he think that it was more likely than not that the decision-maker, whether consciously or unconsciously, would not decide fairly? In this case, the trial judge's interjections gave the impression that he had prejudged both the issue of liability on the constructive dismissal claim and the merits of the counterclaim before the plaintiff had finished giving his testimony. This appearance of pre-judgment was further apparent from the trial judge's comment towards the end of the trial. Furthermore, the defendant was effectively prevented from fully canvassing some of the issues by reason of the trial judge's repeated characterization of the subject-matter as irrelevant. The cumulative effect of the exchanges and interventions relied on by the defendant met the test for reasonable apprehension of bias. [page698]

APPEAL from a judgment allowing an action for constructive dismissal and dismissing a counterclaim.

Cases referred to Committee for Justice and Liberty v. National Energy Board, 1976 2 (SCC), [1978] 1 S.C.R. 369, 68 D.L.R. (3d) 716; R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, 161 N.S.R. (2d) 241, 151 D.L.R. (4th) 193, 218 N.R. 1, 477 A.P.R. 241, 118 C.C.C. (3d) 353, 10 C.R. (5th) 1

Craig R. Colraine, for plaintiff (respondent). Gavin J. Tighe, for defendant (appellant).

[1] BY THE COURT : -- The appellant, Ash Temple Limited, appeals from the trial judge's award of damages to the respondent, George E. Osterbauer, for the wrongful termination of his employment. The appellant raises a number of grounds of appeal in relation to the trial judge's findings at trial. However, the main ground of appeal concerns the conduct of the trial. The appellant contends that it was denied the opportunity to fairly present its defence and counterclaim as a result of the trial judge's premature determination of the merits of the case and his numerous interventions in the process.

[2] The test for reasonable apprehension of bias is well- established. It was reiterated recently by the Supreme Court of Canada in R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, 118 C.C.C. (3d) 353 as being that set out by de Grandpré J. in Committee for Justice and Liberty v. National Energy Board, 1976 2 (SCC), [1978] 1 S.C.R. 369, 68 D.L.R. (3d) 716, at p. 394 S.C.R.:

. . . [T]he 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. . . . [T]hat 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.

[3] The Supreme Court in S. (R.D.) also reiterated (at para. 99) the well-established principle that, "if actual or apprehended bias arises from a judge's words or conduct, then the judge has exceeded his or her jurisdiction. This excess of jurisdiction can be remedied by an application to the presiding judge for disqualification if the proceedings are still underway, or by appellate review of the judge's decision. In the context of appellate review, . . . the conclusion that there is a reasonable apprehension of bias will ordinarily lead inexorably to the decision that a new trial must be held." [page699]

[4] Regrettably, we must conclude upon review of the record that the trial judge's conduct did in fact give rise to a reasonable apprehension of bias. Consequently, there must be a new trial. Our reasons can be stated briefly.

[5] In light of our conclusion, we find it neither necessary nor advisable to set out the facts beyond describing the main issues between the parties.

[6] The respondent was employed by the appellant from January 1, 1994 until the end of April 2000. It was his position at trial that he was constructively dismissed from his employment when in April 2000 the appellant for the first time sought repayment from him of commissions that he had been paid over several years. The disagreement between the parties was whether under the terms of his employment, the respondent was obliged to repay any excess draw over earned commissions. The claim for the over draw in commissions formed part of the appellant's counterclaim.

[7] The parties had also been involved in a joint venture that had failed, resulting in a considerable loss. The respondent alleged that after the loss occurred, the respondent had agreed and, as a consequence, was obligated to compensate the appellant for 10 per cent of the loss. This claim also formed part of the counterclaim.

[8] In his oral reasons, delivered at the conclusion of the trial, the trial judge held that the respondent had been constructively dismissed. He found that at the time of his dismissal, the respondent was earning a guaranteed monthly income consisting of his full salary and full draw on commissions without need for repayment. He held that the appropriate notice period was eight months, and added three months because of the conduct of the employer. After taking into account employment income earned by the respondent in November and December of 2000 as mitigation, the trial judge awarded the respondent damages for wrongful termination of his employment. He dismissed the counterclaim for unearned commissions on the ground that he had already found that the respondent was not required to repay any of his monthly advance commissions. He also dismissed the counterclaim with respect to the loss on the business venture.

[9] The appellant relies on two statements made by the trial judge early in the trial as well as numerous interventions throughout the trial in support of his contention that the trial judge had pre-judged the merits of the case before the appellant had any chance to present its case. He submits that this is most apparent from the following exchange which took place at [page700] the conclusion of the examination-in-chief of the first witness, Mr. Osterbauer:

THE COURT: Okay. This case should be settled.

MR. TIGHE: Many cases ought to be, sir.

THE COURT: But this one especially. I think the only live issue is what is the amount of proper notice. That shouldn't be too hard to resolve.

MR. TIGHE: Well, sir, I think it would be useful to hear the rest of the case.

THE COURT: I'll hear the rest of the case. All I'm saying it seems to me from what -- I think if you just step back from this case and say and ask yourself what is the probable likely result of this case? What it probably comes down to, what is the appropriate notice?

[10] We agree with the appellant that the trial judge's comment on the probable result of the trial was improper. Although the trial judge was probably attempting to assist counsel, the comment suggested a pre-judgment on the issue of liability and the counterclaim at a point in the trial when the cross-examination of the plaintiff had not even commenced. Counsel for the respondent fairly concedes that this exchange is problematic but submits that the trial judge was merely expressing a preliminary tentative view of the evidence. The problem raised by this exchange was compounded by what followed.

[11] The next exchange that is relied upon heavily by the appellant occurred during the course of the cross-examination of Mr. Osterbauer. Counsel for the appellant was interrupted during the course of questioning Mr. Osterbauer on his position with respect to the alleged obligation to repay 10 per cent of the loss resulting from the joint business venture. The following exchange took place:

THE COURT: Do you recall what I said yesterday what I thought to be the live issue in this case.

MR. TIGHE: I recall it vividly, Your Honour.

THE COURT: Maybe this one is D-E-A-D.

[12] Counsel for the respondent again fairly concedes that this exchange is unfortunate. He submits however, that it was open to the trial judge to express a tentative view on the merits of the counterclaim given the absence of any documentary support for it.

[13] It is noteworthy that the appellant's counterclaim for 10 per cent of the loss was based on an alleged oral agreement and that, at this early stage of the trial, the defence had not yet opened its case on the counterclaim. [page701]

[14] Given these exchanges, we must unfortunately agree with the appellant's submissions that the trial judge appeared, in effect, to have pre-judged both the issue of liability on the claim for constructive dismissal, and the merits of the counterclaim before the plaintiff had finished giving his testimony. This appearance of pre-judgment was further apparent from another comment by the trial judge towards the end of the trial when counsel for the appellant was examining a witness in chief about whether the appellant was prepared to reinstate the respondent. The trial judge said:

THE COURT: Counsel, you don't listen when I say what are the live issues in this case, and if counsel will recall I think the first day of this trial I tried to persuade both counsel to realize that I thought the only live issue in this case was what?

[15] Counsel for the appellant relies on a number of interventions by the trial judge in support of his further contention that the trial judge improperly curtailed his cross- examination of witnesses on relevant issues that went to the core of the litigation. The respondent, on the other hand, submits that the interventions in question were warranted given the tenuous nature of many of these issues. He submits further that the appellant was not prevented from fully canvassing the issues in question.

[16] With respect, we disagree with the respondent's position. While some of the trial judge's interventions, had they occurred in isolation, could be interpreted simply as mistakes on his part about the relevance of the evidence, we must conclude otherwise having regard to their context and cumulative effect. In our view, the issues being canvassed by counsel at the relevant times could only be considered as irrelevant by the trial judge if indeed he had already concluded against the position advanced by the appellant. Furthermore, we are satisfied that the appellant was effectively prevented from fully canvassing some of the issues by reason of the trial judge's repeated characterization of the subject matter as irrelevant. It is noteworthy that some of the matters that counsel for the appellant was prevented from exploring further on the basis that they were irrelevant later formed part of the basis of the trial judge's ultimate findings in his reasons for judgment.

[17] We are satisfied that the cumulative effect of the exchanges and the interventions relied upon by the appellant meet the test for reasonable apprehension of bias. An informed observer, viewing the matter realistically and practically, would more likely than not conclude that the trial judge, whether consciously or unconsciously, would not decide the issues fairly. [page702]

[18] In light of our conclusion on this ground of appeal, it is neither necessary nor advisable to consider the additional grounds of appeal.

[19] We would therefore allow the appeal, set aside the judgment and order a new trial. On consent of the parties, any award in respect of the costs of the first trial and the appeal is left at the discretion of the presiding judge at the second trial. If an award is made in respect of the costs of this appeal, those costs are fixed at $5,000.

Appeal allowed.