ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 08-CV-350045PD3
DATE: 20120719
BETWEEN:
THOMAS HOUGH Plaintiff – and – AMER SPORTS CANADA INC., AMER GROUP PLC. And SQUIRE JOHN INCORPORATED, c.o.b. under the name and style “SQUIRE JOHN’S” Defendants
N. Searles, for the Appellant/Defendant Squire John
Bruce Hutchison for Respondent/Defendant Amer Sports
William A. McMaster, for the Respondent/Plaintiff
HEARD: July 17, 2012
goldstein j.
[ 1 ] In 2006 the plaintiff, an experienced skier, was injured while skiing in Snowmass, Colorado. The plaintiff sued Amer, the manufacturer of the skis and bindings he was using, as well as Squire John, the sporting goods store that sold and installed the equipment. He pleads that one of his bindings unexpectedly and suddenly released, causing him to crash. The skis, boots, and bindings were tested in January, 2011 pursuant to an agreement between counsel. Barry Cleator is a ski technician retained by the defendant Squire John as an expert tester of ski equipment. He is of the view that further testing is necessary as there might have been an internal mechanical failure. The contemplated testing will likely damage the binding housing. Further testing is also necessary to determine whether or not the binding was subject to a recall by the defendant Amer, although it is common ground between the parties that such testing would not damage the binding.
[ 2 ] In October, 2011, the defendant Squire John brought a motion pursuant to Rule 32.01(1) of the Rules of Civil Procedure for an order permitting further testing and inspection of the ski binding. The defendant Squire John filed an affidavit of Hans J.B.A. Dickie, a lawyer, that referenced information received from Mr. Cleator regarding the further testing.
[ 3 ] Amer and the plaintiff resisted the motion on the grounds that further testing would reveal nothing, and that Mr. Cleator did not have sufficient expertise to provide an opinion. In this, they relied on the affidavit of Ray Berens, the general counsel of Amer. They also argued that they required the intact binding for the purposes of demonstrative evidence at trial.
[ 4 ] Master Graham dismissed the motion, holding that the prejudicial effect of the testing outweighed the probative value. The learned Master also found that there must be direct expert evidence to substantiate the need for such testing. He found that since there was no direct evidence from Mr. Cleator, and that Mr. Cleator was not qualified to recommend or conduct the testing, it was fatal to Square John’s motion. Squire John now appeals to this court.
[ 5 ] The test to be applied to an appeal from a master is set out in the decision of the Divisional Court in Zeitoun et. al. v. The Economical Insurance Group (2008), 91 O.R. (3d) 131 (affirmed by the Court of Appeal at 2009 ONCA 415, 96 O.R. (3d) 639):
40 The appellant argues that the appropriate standard of review of a master's order, whether it be final or interlocutory, should be in accordance with that expressed by the Supreme Court in Housen v. Nikolaisen, supra, and by the Court of Appeal in Equity Waste Management such that the decision will be interfered with only if the master made an error of law or exercised his or her discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error.
41 I would agree with that submission. There is, in my view, no compelling reason for adopting differing standards of review on appeal depending solely on the place in the judicial hierarchy occupied by the decision maker whose decision is under appeal. Such an approach is anachronistic and irreconcilable with the presumption of fitness. Rather, similar kinds of decisions and similar kinds of errors ought to be treated similarly, and for that reason, I would hold that where the master has erred in law, the standard of review should be correctness whether the decision be final or interlocutory and whether or not it is vital to the disposition of the lawsuit. The danger in doing otherwise is the potential for the development of straying lines of authority with resulting confusion.
[ 6 ] The standard of review is helpfully summarized in Paul v. Pizale, 2011 ONSC 3490 by Strathy J.:
19 The standard of review on appeal from the Master was set out by the Divisional Court in Zeitoun v. Economical Insurance Group (2008), 91 O.R. (3d) 131 (Ont. Div. Ct.), aff'd, (2009), 2009 ONCA 415, 96 O.R. (3d) 639 (Ont. C.A.): the decision should not be interfered with unless the Master made an error of law, exercised his or her discretion on the wrong principles or misapprehended the evidence such that there was a palpable or overriding error. Where there is an error of law, the standard of review is correctness, whether the order is final or interlocutory. Where there is an error in the exercise of discretion, it must be established that the discretion was based on a wrong principle or that there was a palpable or overriding error in the assessment. See also Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (S.C.C.).
20 A Master's decision concerning relevance is a question of law: Republic National Bank of New York (Canada) v. Normart Management Ltd. (1996), 31 O.R. (3d) 14 (Ont. Gen. Div.).
[ 7 ] The parties both rely on Peel School District No. 19 v. 553518 Ontario Ltd., [2000] O.J. 3581 (Sup. Ct.) where Quinn J. set out the test for a motion under Rule 32.01:
16 As I have said, Clayton wishes to cut out a section of the cable, temporarily take possession and subject it to examination under an electron microscope. Essentially, this is a test. "Tests" are specifically allowed under rule 32.01(2)(c); and "temporary possession" is permitted by rule 32.01(2)(a). In deciding to exercise my discretion in favour of the defendant, I have taken the following approach:
(a) The proposed test must be one which, in the words of rule 32.01(1), "appears to be necessary for the proper determination of an issue in a proceeding."
(b) "Necessary" has been held to mean "useful" or "probative of an issue": see Bennett v. D.C. Jones Circle V Ranches Ltd. (1987), 20 C.P.C. (2d) 213 (Alta. Q.B.). Therefore, in my view, to establish "necessity" the moving party must show that there is a reasonable possibility the proposed test will reveal something useful for the trier of fact (that is, something which will assist the trier of fact in determining an issue in the proceeding).
(c) Even if "necessity" is established, the court is not bound to authorize the test, since the opening words of rule 32.01(1) bespeak a discretion in this regard.
(d) Rather than be concerned with whether the proposed test will "destroy" the property, I think the better question is: Will the proposed test impair the integrity of the property such that the party in possession of the property will be prejudiced at trial?
(e) If the party in possession will be so prejudiced, this fact must be balanced with the benefit to be derived from the test by the trier of fact.
[ 8 ] See also Farhi v. Wright (1987), 26 C.P.C. (2d) 88 (Ont.H.C.) at p. 91 where Potts J. held that an application for inspection “should be decided on the very simple principle that Rule 32 ought to be liberally interpreted.” This principle is in keeping with the policy that appears to animate Rule 32, namely that a trier of fact ought to have the evidence “necessary for the proper determination of an issue in a proceeding.”
[ 9 ] The learned master, in his endorsement, stated that “the court’s role on the motion under r. 32.01 for an order allowing inspection and testing of the ski binding that is the subject of the action is to balance the potential probative value of the proposed testing against any possible prejudice to another party.” That is obviously an element of the test, but before balancing probative value vs. prejudicial effect the learned master was required to determine whether there was a “reasonable possibility the proposed test will reveal something useful for the trier of fact.” He needed to go through the first step in the test in order to determine how probative the evidence would be. Without doing so, he could not have properly conducted the balancing analysis.
[ 10 ] Regrettably, the learned master appears to have been led into making an error of law by exercising his discretion based on a wrong principle. The master required that direct expert evidence from the moving party be filed to substantiate the need for further testing. The learned master also appears to have misapprehended the evidence.
[ 11 ] In this case, the learned master rejected the evidence of Mr. Cleator, as brought forward on the information and belief of Mr. Dickie, essentially holding that there was no evidence whatsoever on the motion. The learned master certainly had the discretion to reject the evidence as insufficient to support the main function of the court on a rule 32 motion. In other words, he could have found that the evidence advanced by Squire John did not show that the testing was necessary for the proper determination for an issue in a proceeding. If he had done this, there would be no basis for this court to intervene with that finding, even if I disagreed with his evaluation of the evidence. Instead, the learned master simply rejected it on the grounds that direct expert evidence was required. It is clear that on a motion of this nature hearsay evidence is admissible: Rule 39.01(4). In Inco Ltd. v. Minister of Finance (2002), 61 O.R. (3d) 561 (Sup.Ct.), Lane J. stated:
[ 12 ] I am asked to strike out the affidavit of Mr. Murphy because it is based on information and belief and deals with contentious issues, thus being in breach of rule 39.01(5). The deponent is an accountant with many years of experience in the mining industry. He deposes, inter alia, that hedging is a common practice in the mining industry as a strategy to fix the future revenues from the sale of product and that under GAAP the results of hedging transactions must be booked as sales revenue, in contrast to the proceeds from speculative dealings in the commodity market which are treated differently. Based on the affidavit of Mr. Hurley, he deposes that the activities of Inco in the relevant years are similar to those used by other mining companies in the ordinary course of business. He reviews the GAAP criteria for identifying hedging, as opposed to speculative trading, and based on Mr. Hurley's affidavit, opines that they are met by Inco. He also reviewed the allegations made by Placer Dome in its litigation as to its activities and concludes that if those allegations are correct, then Placer Dome was not engaged in hedging, unlike Inco. Both Mr. Murphy and Mr. Hurley were cross-examined.
[ 13 ] In my opinion, there is nothing objectionable about this. Mr. Murphy is not attempting to prove contentious facts; rather, he is expressing a professional opinion based on the facts set out in the affidavits of others. Such opinions are almost always based on facts provided by others and the rule is that the opinion is only as good as the proof of the underlying facts. To the extent that Mr. Murphy relies on his years of experience in putting forward evidence as to facts in the industry generally, that is personal knowledge, not hearsay. I decline to strike out his affidavits.
[12] Paragraph 39.01(5) deals with applications and requires that affidavits contain statements of information and belief “with respect to facts that are not contentious”; paragraph 39.01(4) deals with motions. It is identical to paragraph 39.01(5) except for the requirement that the facts not be contentious. I am aware that in Inco Mr. Murphy provided an affidavit, while in this case Mr. Cleator is a sub-affiant. Nonetheless, I believe that the principle set out by Lane J. applies. Thus, the master exercised his discretion with regard to the evidence based on a wrong principle. Direct evidence may well have been better, but it was not “required”.
[13] The master also found that expert evidence was required on the motion. The parties agreed before me that expert evidence is not required to support a motion pursuant to Rule 32.01(1), and no authority was provided to me that such evidence is necessary. That proposition makes sense. All that is required is that the court make an order for inspection “where it appears to be necessary for the proper determination of an issue in a proceeding.” The logical course of action is that expert reports would flow from the inspection, not the other way around. Thus, the learned master exercised his discretion with regard to expert evidence based on a wrong principle: again, such evidence may well have been better, but it was not “required”.
[14] The learned master also misapprehended the evidence. I agree with Mr. Hutchison, counsel for Amer, that much of Mr. Dickie’s affidavit is simply argument and opinion. Amer filed an affidavit of Ray Berens, Amer’s general counsel. With respect, Mr. Berens’ affidavit is considerably more deficient than Mr. Dickie’s affidavit. All of Mr. Dickie’s technical assertions are supported on information and belief from Mr. Cleator. Mr. Berens’ affidavit, in contrast, references information in one paragraph of his affidavit from Jason Shealy, an engineer who participated in the January 2011 testing. The rest of Mr. Berens’ affidavit consists of technical assertions. None of those technical assertions are based on information or belief from a person with technical or engineering skill. Mr. Berens is also critical of the need for further testing set out in Mr. Dickie’s affidavit. Those criticisms are also unreferenced to any person having any technical or engineering skill. It is not obvious that as a lawyer Mr. Berens is qualified to make technical assertions. I appreciate that it could be argued that Mr. Berens relied on Mr. Shealy, but that is not what his affidavit states. Mr. Shealy is only referenced in relation to the January 2011 testing. The learned master accepted these unreferenced criticisms.
[15] The learned master further found that Mr. Cleator was not a properly qualified expert with respect to the design and construction of ski bindings. Mr. Berens argued in his affidavit that: “As a technician, neither Mr. Cleator’s training nor experience, as described in his attached CV, indicate that he has any expertise in the design and manufacture of bindings.”
[16] The master accepted of Berens’ bald statement, without analysis. In doing so, he misapprehended the evidence. The statement has no obvious foundation. Again, it is not clear that as a lawyer he is qualified to make this bald technical assertion. As well, there is no evidence to suggest that many years of training experience as a binding technician disqualify Mr. Cleator from being able to perform the test.
[17] I also note that the plaintiff did not file any material, either before me or before learned master. Mr. McMaster indicated that the plaintiff was not in a better position than Amer to submit material, and it was open to him to take that position. That said, Mr. Berens’ affidavit addressed the issue of prejudice to the defendant Amer, but there here was no specific evidence of any prejudice to the plaintiff, other than the generalized position taken by Mr. Berens that there would be no demonstrative evidence available.
[18] It should also be noted that the learned master did not address the issue of testing to determine whether the binding was subject to a recall, although both parties agreed that the testing necessary to resolve that issue could be carried out without causing damage to the binding.
[19] Thus, the learned master erred in law, exercised his discretion regarding the evidence based on wrong principles, and misapprehended the evidence. Having found that the master erred, the parties agree that I can make the order that should have been made.
[20] It seems to me that the evidence supports a finding that testing should be granted. The two affidavits essentially take an opposite position on whether or not further testing will reveal whether there was a defect. It is seems obvious that a mechanical examination of the binding in question might well resolve the issue of whether or not it was defective. I accept that it might not, but in my view there is a reasonable possibility that the proposed test will reveal something that will assist the trier of fact in determining an issue in the proceeding. Certainly the recall issue can be resolved, which is a live issue.
[21] I turn now to the issue of prejudice. Absent error, the master was entitled to accept that the probative value of the testing was outweighed by the prejudicial effect on the defendant, which is said to be the inability to use the binding as demonstrative evidence before a trier of fact. This Court would otherwise be required to defer to the master’s ruling. Having erred in law, however, I am required to deal with that issue. In my view, while the destructive effect of the testing is real and not to be minimized, the probative value of the testing outweighs the prejudicial effect. There are obviously modern technical means to record a demonstration that will minimize the prejudice.
DISPOSITION
[ 22 ] The appeal is allowed. Counsel may submit an order that both approve of as to form and content to allow the testing. If the parties are unable to agree on costs, I would be pleased to receive a brief costs submission from counsel for Squire John within 14 days, and responding costs submissions from counsel for the plaintiff and Amer within 10 days thereafter.
Goldstein J.
Released: July 19, 2012
COURT FILE NO.: 08-CV-350045PD3
DATE: 20120719
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
THOMAS HOUGH Plaintiff – and – AMER SPORTS CANADA INC., AMER GROUP PLC. And SQUIRE JOHN INCORPORATED, c.o.b. under the name and style “SQUIRE JOHN’S”
REASONS FOR JUDGMENT
Goldstein J.