COURT FILE NO.: 615/06
DATE: 20080214
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
VFC INC.
Ronald Lachmansingh, for the Plaintiff/Respondent
Plaintiff/Respondent
- and -
MARLENE BALCHAND
John Weingust, Q.C., for the Defendant/Appellant
Defendant/Appellant
HEARD at Toronto: February 11, 2008
M. DAMBROT J.
[1] Marlene Balchand appeals to the Divisional Court pursuant to s.31(a) of the Courts of Justice Act from the judgment of Deputy ]udge Godfrey of the Ontario Superior Court of Justice, Toronto Small Claims Court, dated December 5, 2006, in which he held that the Appellant was liable to the Respondent under a Bill of Sale and Conditional Sales Contract for the purchase of a motor vehicle. I heard this appeal as a single judge of the Divisional Court pursuant to s.21(2)(b) of the Courts of Justice Act.
[2] During the course of the trial, the trial Judge admitted in evidence business records and other hearsay tendered by the Respondent. At the close of the Respondent's case, the Appellant elected to call no evidence and brought a motion for non-suit. The trial judge found that the Respondent had established a prima facie case against the Appellant by virtue of the Bill of Sale and Conditional Sale Contract which bore the Appellant's apparent signature, and found, on a balance of probabilities, that the Appellant was liable to the Respondent under the Conditional Sales Contract.
[3] At the end of the hearing, I dismissed the appeal with reasons to follow. These are those reasons.
THE PROCEEDINGS AT TRIAL
[4] The only witness called by the plaintiff at trial was David Robinson, the supervisor of the legal department of the Respondent. He testified that the Respondent is a corporation that provides high-risk auto financing on the sale of motor vehicles to individuals possessing a poor credit rating. When a dealership sells a car to a purchaser, the Respondent provides the dealership with funds in the amount of the purchase price on the purchase of the vehicle. The purchaser and the dealership then execute a conditional sales contract, which is forwarded by the dealership to the Respondent, along with the bill of sale for the purchased automobile. The Respondent is not a signatory to the Conditional Sales Contract but, pursuant to the terms of the Conditional Sales Contract, all of the dealership's rights under the contract are assigned to the Respondent.
[5] Mr. Robinson testified that on December 13, 2002, the Appellant and Valour Campbell purchased an automobile from Chancery Lane Motors for $12,051, and signed a Bill of Sale and a Conditional Sales Contract. The Bill of Sale and Conditional Sales Contract were made exhibits at trial. According to the terms of the contract, the purchasers paid a deposit of $1,000, and agreed to repay the "indebtedness" defined as the amount to be financed, the cost of borrowing and certain other amounts, by making fifty consecutive monthly payments of $354.55. In addition, as a part of the contract, the purchasers consented to the assignment of the vendor's rights under the contract to the Respondent, and acknowledged the receipt of notice of the assignment to the Respondent and that their payments were required to be made to the Respondent. They also acknowledged that in the event of any default, at the vendor's option, the entire indebtedness would become due. In addition, the Appellant, but not Mr. Campbell, authorized the Respondent to withdraw the payments from her bank account as they fell due. Both purchasers signed a specific acknowledgement that they had read the contract and agreed to its terms.
[6] Mr. Robinson was not present when the Bill of Sale and Conditional Sales Contract were signed. After execution, the documents were faxed to the Respondent's office, following which the originals were forwarded to the Respondent. Mr. Robinson first saw the documents when the originals were forwarded to the Respondent. The originals were placed in storage.
[7] Mr. Robinson testified that after the execution of the Conditional Sales Contract, the Appellant was contacted on numerous occasions by the Respondent and its representatives, by ordinary mail, registered mail and by telephone. Whenever the Appellant was contacted by phone by one of the Respondent's employees, the telephone conference and its contents would be logged into a database. The database was unalterable once an entry had been made into the system. On some of these occasions the Appellant acknowledged her indebtedness to the Respondent. A copy of the database was made an exhibit at trial.
[8] With respect to the written communications with the Appellant, Mr. Robinson testified that the Respondent wrote to the Appellant on December 17, 2002, welcoming her as a VFC client and reminding her of the monthly payments. This letter was field as an exhibit.
[9] Counsel for the Appellant did not object when the Bill of Sale and Conditional Sales Contract were tendered in evidence. He did object when the database and the letter of December 17, 2002, was tendered, on the basis that they were hearsay. The trial Judge admitted the database and letter over his objection.
[10] On December 2, 2004, the Respondent wrote to the Appellant advising her that as of that date, $11,645.51 remained outstanding on her loan account, and that as a consequence of default, the Respondent demanded that she bring the account up to date by paying the arrears and charges. This letter was also filed as an exhibit, as was a payment history of the loan showing the payments and defaults of the purchasers to January 13, 2005. No payments have been made since that date.
[11] The Respondent commenced action against the Appellant and Mr. Campbell to enforce the contract. The Respondent had obtained default judgment against Mr. Campbell prior to the commencement of this trial.
[12] At the close of the Respondent's case, the Appellant elected to call no evidence and moved for a non-suit. In his argument, counsel for the Appellant pointed to the fact that the various documents proffered by the Respondent were hearsay, and submitted that there was insufficient evidence to establish that the Appellant had any obligation to the Respondent to pay for a motor vehicle.
[13] The trial Judge dismissed the application for a non-suit, and gave judgment for the Respondent in the amount of $10,000. He ruled that Bill of Sale and the Conditional Sales Contract bearing the apparent signature of the Appellant made out a prima facie case against her. In the absence of evidence that the signature was not the signature of the Appellant, the trial Judge was satisfied on the balance of probabilities that that the Appellant was a party to the contract and that the amount owing by her was the amount claimed by the Respondent.
THE ISSUES
[14] The Appellant argued the following issues on this appeal:
The Bill of Sale, Conditional Sales Contract and the other exhibits filed by the Respondent at trial, as well as some of the oral evidence of the Respondent's sole witness, Mr. Robinson, were all inadmissible hearsay.
The evidence adduced by the Respondent was incapable of establishing the liability of the Appellant to the Respondent.
ANALYSIS
- WAS THE HEARSAY EVIDENCE TENDERED BY THE RESPONDENT ADMISSIBLE?
[15] This appeal originally came on for hearing before my colleague Archibald J. Counsel for the Appellant had argued in his factum that the trial Judge had wrongly relied on hearsay evidence to find that the Appellant was liable to the Respondent under a Conditional Sales Contract. In response, counsel for the Respondent, in his factum, pointed to s.27(1) of the Courts of Justice Act, and a line of decisions commencing with the judgment of Steele J. in Central Burner Service Inc. v. Texaco Can. Inc. (1989), 36 O.A.C. 239 (Div. Ct.). Section 27(1) permits the Small Claims Court to admit as evidence at a hearing and act upon any oral testimony and any document or other thing, so long as the evidence is relevant. In Central Burner, Steele J. concluded that s.80(1) of the Courts of Justice Act, the predecessor of s.27(1), allows relevant hearsay evidence to be admitted and relied upon in a Small Claims Court trial even in relation to a critical issue. His decision has been followed in a number of cases, including the judgment of Lane J. in Sathaseevan v. Suvara Travel Canada Inc., [1998] O.J. No. 1055 (Div. Ct.).
[16] Archibald J. was concerned, however, that none of the cases had considered the significance of s.27(3)(b) of the Courts of Justice Act. Section 27(1), which permits hearsay to be admitted into evidence, is, by its terms, subject to subsections (3) and (4). Subsection (3) provides that nothing is admissible in evidence at a hearing that is inadmissible by reason of privilege, or that is "inadmissible by any Act". He went on to note that s.2 of the Ontario Evidence Act provides"This Act applies to all actions and other matters whatsoever respecting which the Legislature has jurisdiction." Neither party, he continued, had addressed in their factums what the relationship is between s.2 of the Ontario Evidence Act and s.27(3) of the Courts of Justice Act., and, more specifically, whether hearsay is admissible "absent compliance with the Evidence Act." As a result, he adjourned the hearing of the appeal to give the parties an opportunity to address the issue.
[17] When Archibald J. referred to compliance with the Evidence Act, he obviously had in mind s.35 of the Act, which deals with business records. It may be helpful to set out that section in its entirety. Section 35 provides:
(1) In this section"business" includes every kind of business, profession, occupation, calling, operation or activity, whether carried on for profit or otherwise;
"record" includes any information that is recorded or stored by means of any device.
(2) Any writing or record made of any act, transaction, occurrence or event is admissible as evidence of such act, transaction, occurrence or event if made in the usual and ordinary course of any business and if it was in the usual and ordinary course of such business to make such writing or record at the time of such act, transaction, occurrence or event or within a reasonable time thereafter.
(3) Subsection (2) does not apply unless the party tendering the writing or record has given at least seven days notice of the party's intention to all other parties in the action, and any party to the action is entitled to obtain from the person who has possession thereof production for inspection of the writing or record within five days after giving notice to produce the same.
(4) The circumstances of the making of such a writing or record, including lack of personal knowledge by the maker, may be shown to affect its weight, but such circumstances do not affect its admissibility.
(5) Nothing in this section affects the admissibility of any evidence that would be admissible apart from this section or makes admissible any writing or record that is privileged.
[18] The parties filed supplementary factums in an effort to address this issue.
[19] Having considered the matter, I have concluded that there is nothing in the Ontario Evidence Act to call into question the admissibility of hearsay at a Small Claims Court trial, even when the hearsay is contained in business records.
[20] Plainly, if a party to any proceeding governed by the Ontario Evidence Act proposes that a business record be received in evidence pursuant to s.35(2), the proponent of the evidence must comply with the section. It must be shown that the record was made in the usual and ordinary course of business as described in s.35(2), and notice must have been given in accordance with s.35(3).
[21] But if Archibald J. was of the view that, by virtue of s.2 and s.35 of the Ontario Evidence Act, the requirements of s.35 must be complied with before any business record may be admitted into evidence in a Small Claims Court trial, then I must, respectfully, depart company with him. In particular, there is nothing in the business record provision in s.35 that leads to such a result.
[22] Prior to the liberalizing impact of the decision of the Supreme Court of Canada in Ares v. Venner, [1970] S.C.R. 608, the common law rules governing the admissibility of business records were widely felt to be completely out of line with the ever-increasing complexity of business organizations.[^1] As Wigmore put it"The application of the older law gradually developed a mass of detailed petty limitations that had no relation to the practical trustworthiness of the document offered."[^2] The business record provision of the Ontario Evidence Act was first enacted in 1966, prior to the decision in Ares v. Venner, at a time when common law solutions to the problem were felt to be unlikely, particularly having regard to the extremely restrictive approach to exceptions to the hearsay rule taken by the House of Lords in Myers v. Director of Public Prosecutions, [1965] A.C. 1001. The business record provision of the Ontario Evidence Act was intended to remedy the shortcomings of the common law.
[23] The object of s.80(1) of the Courts of Justice Act , the predecessor of s.27(1) of the Act, was also remedial. As stated by Steele J. in Central Burner"The object of s.80 is to avoid technical procedures and the additional cost of calling extra witnesses in cases involving small claims." The monetary jurisdiction of the Small Claims Court has grown considerably since 1989 when Central Burner was decided, and small claims today might not always seem to be so small, at least to the litigants. But so also have concerns about access to justice and the high cost of civil litigation grown. The underlying rationale for s.27(1) described by Steele J. remains as valid today as it was in 1989.
[24] Having regard to the policy underpinnings of both s.35 and s.27(1), it would seem odd, to me at least, if one remedial provision (s.35) had the effect of trumping another (s.27(1)), and narrowing its effect. Happily, in my view, as will be seen, there is no basis to reach that conclusion.
[25] It has always been understood that s.35 of the Ontario Evidence Act is an enabling provision, not a prohibition. It provides a new mechanism for the admission of business records into evidence, if its prerequisites are complied with. It does not purport to preclude either pre-existing statutory or common law authority to admit business records, or the enactment or development of additional statutory or common law authority to do so. Should there be any doubt about this, then I would point to s.35(5) of the Act, set out above, which makes clear that nothing in s.35 affects the admissibility of any evidence that would be admissible apart from this section.
[26] If judicial authority is needed for this proposition, then I note the long line of cases to the same effect in reference to the similar business record provision found in s.30 of the Canada Evidence Act. While the federal provision is broader than the Ontario provision, and differs from it in some respects, like s.35 it provides a statutory mechanism for the introduction of business records into evidence. Section 30(11) of the federal Act, like s.35(5) of the provincial Act, although quite differently worded, makes clear that the section is in addition to, and not in derogation of other statutory and common law authority to admit business records. Despite s.30(11), the argument has frequently been made, as it has been here, that the provision places a roadblock across other avenues of admissibility. The courts have uniformly rejected this argument.
[27] The issue first arose as early as 1973, remembering that s.30 came into force only in 1970, in R. v. Bloomfield (1973), 10 C.C.C. (2d) 398 (N.B.S.C., App. Div.). The trial judge in that case had excluded two documents tendered by the Crown in evidence on the basis that seven days notice as required by s.30 of the Canada Evidence Act had not been given. One of the documents was a motel registration card produced by the registration clerk that was signed by Bloomfield. The other was a customs invoice seized from the possession of a co-accused. The Court of appeal concluded that the trial judge was in error.
[28] Limerick J.A. stated, for the Court:
This section when passed enabled certain matters to be proven by the production of records kept in the ordinary course of business or by sworn copies thereof which previously could only be established by viva voce evidence. Seven days notice to the opposite party is required by the section before its provisions may be utilized. This section is not intended to apply and does not apply where a document or record tendered in evidence is admissible under any other rule of evidence or statutory provision. Any document made out by a party to a civil or criminal proceeding and signed by him is, subject to certain exceptions, if relevant, admissible in evidence against him and was so admissible before the enactment of said s. 30; so also is a document found in the possession of a party, if relevant.
[29] This argument arose again in R. v. Monkhouse (1987), 1987 ABCA 227, 61 C.R. (3d) 343 (Alta. C.A.). In that case, counsel for the accused argued on appeal that a payroll manager of the appellant's employer should not have been permitted to give oral evidence of entries in the company's payroll records that had been extracted from more extensive payroll records without compliance with s.30. The witness had no personal knowledge of the information in the records, and did not produce the originals. The appeal was dismissed.
[30] Laycraft J.A. stated, for the Court:
Much of the argument presented on this appeal dealt with the admissibility of this evidence under Section 30 of the Canada Evidence Act. That section is not, however, mandatory or exclusive; evidence which is admissible under the common law rules may be accepted even though it does not meet the requirements of section 30.
[31] Finally, if Ontario authority be needed, I refer to my own judgment in United States of America v. Quintin (2000), 73 C.R.R. (2) 237. In that case, I admitted a variety of business records into evidence as a principled exception to the hearsay rule, over the objection of counsel for the persons sought. I stated, at para. 75:
The persons sought take objection to my taking into consideration most of the government documents, bank documents, and business records included in the affidavit material, on the basis of non-compliance with s. 30 of the Canada Evidence Act, the business record provision. Of course, failure to comply with s. 30 is not a bar to admissibility. Section 30 is permissive. There are many other ways that business records can be introduced, particularly in an extradition case, including application of the new principled approach to hearsay, focusing on necessity and reliability.
[32] Having regard the language of s.35 of the Ontario Evidence Act, the policy underlying it and s.27(1) of the Courts of Justice Act, and the cases interpreting these and similar provisions, I conclude that the trial Judge did not err in law in admitting into evidence Mr. Robinson's oral and documentary hearsay.
- WAS THE EVIDENCE ADDUCED BY THE RESPONDENT CAPABLE OF ESTABLISHING THE LIABILITY OF THE APPELLANT?
[33] In my view, the evidence adduced by the Respondent was easily capable of establishing the liability of the Appellant.
[34] The Bill of Sale and the Conditional Sales Contract were easily capable of establishing that one Marlene Balchand signed those documents, was a co-purchaser of a motor vehicle from Chancery Lane Motors for $12,051; that the purchasers paid a deposit of $1,000, and agreed to pay the remainder of the purchase price and associated costs by making fifty consecutive monthly payments of $354.55; that the vendor's rights under the contract were assigned to the Respondent; that the purchasers consented to the assignment of the vendor's rights to the Respondent; that the purchasers acknowledged receipt of notice of the assignment to the Respondent; that the purchasers acknowledged that their payments were required to be made to the Respondent; and that the purchasers also acknowledged that in the event of any default, at the vendor's option, the entire indebtedness would become due.
The database filed in evidence was easily capable of establishing that the Appellant was the Marlene Balchand in question. In addition, if confirmation is necessary, I note that in paragraph 5 of her Defence filed in the Small Claims Court, Ms. Balchand admitted signing the Conditional Sales Contract, although she also raised various defences that she did not advance at trial.
[35] The payment history of the loan was easily capable of establishing the alleged default, which continued to the trial.
[36] The letter to the Appellant dated December 2, 2004 was easily capable of establishing that a demand had been made to her to pay the arrears.
[37] In the absence of the Appellant disputing any of the above, or raising any other defence, judgment against her was inevitable. There is no merit to this ground of appeal.
DISPOSITION
[38] The appeal is dismissed. I have already awarded costs to the Respondent in the amount of $3,500.
M. DAMBROT J.
Released: February 14, 2008
COURT FILE NO.: 615/06
DATE: 20080214
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
VFC INC.
Plaintiff/Respondent
- and –
MARLENE BALCHAND
Defendant/Appellant
REASONS FOR JUDGMENT
M. DAMBROT J.
Released: February 14, 2008
[^1]: See Documentary Evidence in Canada, Ewart, (Toronto, Carswell Legal Publications, 1984).
[^2]: Wigmore on Evidence, (Chadbourn Revision, Little Brown & Co., Boston, 1974).