Court File and Parties
COURT FILE NO.: CV-12-00461724 DATE: 20160415 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
WILLIAM ALGUIRE Plaintiff – and – THE MANUFACTURERS LIFE INSURANCE COMPANY c.o.b. as MANULIFE FINANCIAL Defendant
Counsel: Warren S. Rapoport, for the Plaintiff Robert Harrison and Fida Hindi, for the Defendant
HEARD: April 14, 2016
Endorsement
DIAMOND J.:
Overview
[1] A summary of the main issues in this proceeding is set out in paragraphs 1-2 of my Reasons for Decision released on March 1, 2016 and need not be repeated here. I shall continue to use the same identified terms in my said Reasons throughout the balance of this Endorsement.
[2] The plaintiff’s Amended Amended Statement of Claim has now been issued in accordance with my Reasons, and the trial of this proceeding is scheduled to resume on Monday, April 18, 2016. At that time, the plaintiff intends to call its last witness W. Steve Prince (“Prince”) for the purpose of giving opinion evidence as to, inter alia, the “commercial viability” of the policy in question.
[3] The defendant now brings this motion in advance of the trial resuming for an order precluding Prince from testifying. The primary ground relied upon by the defendant in support of its motion is that Prince’s opinion evidence is not necessary or relevant to the issues to be decided at trial.
Expert Evidence – Gatekeeper Function
[4] Both parties are in substantial agreement with the governing jurisprudence. As recently held by the Supreme Court of Canada in White Burgess Langille Inman v. Abbott and Haliburton Co. 2015 SCC 23, the Court is to determine the admissibility of expert opinion evidence through a two-step analysis:
a) the proponent of the evidence must establish the threshold Mohan requirements of admissibility (relevance, necessity, absence of an exclusionary rule and a properly qualified expert), and
b) the Court then balances the potential risks and benefits of admitting the evidence in order to decide whether the potential benefits justify the risks.
[5] Relevance at the first stage refers to logical relevance. Both relevance and necessity remain threshold requirements.
[6] As stated in White Burgess, the second stage “balancing exercise” requires the court to be satisfied that the expert evidence is “sufficiently beneficial to the trial process to warrant its admission despite the potential harm to the trial process that may flow from the admission of the expert evidence.”
[7] Traditionally, as held by the Court of Appeal for Ontario in Alfano v. Piersanti 2012 ONCA 297, the appropriate test for necessity is whether the expert is capable of assisting the Court by providing information likely to be beyond the Court’s knowledge and experience. The defendant relies upon the more recent decision of the Court of Appeal for Ontario in Meady v. Greyhound Canada Transportation Corp. 2015 ONCA 6:
“There has been growing recognition of the responsibility of the trial judge to exercise a more robust gatekeeper role in the admission of expert evidence – see: Lisa Dufraimont, “New Challenges for the Gatekeeper: The Evolving Law on Expert Evidence in Criminal Cases” (2012) 58 C.L.Q. 531; and Report of the Inquiry into Pediatric Forensic Pathology in Ontario (Toronto: Queen’s Printer for Ontario, 2008), vol. 3, c. 18: “Role of the Court”. This observation holds true for both civil and criminal contexts. Although much of the discussion has focused on increasing scrutiny of threshold reliability at the gatekeeper stage, it is equally important to ensure the evidence is genuinely necessary.
There are compelling rationales underlying this approach. Unnecessary expert evidence distracts the trier of fact from the issues at hand, complicates the proceeding, prolongs the trial and increases the cost of litigation. In Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27, [2011] 2 S.C.R. 387, Rothstein J. stated at para. 77:
“If a trial judge concludes that proposed expert evidence is unnecessary or irrelevant or will distract from the issues to be decided, he or she should disallow such evidence from being introduced.”
The Expert Opinion
[8] I note that I have yet to hear any evidence from Prince at this trial. The defendant has tendered the written report of Prince and I am proceeding on the assumption that Prince’s testimony will adopt or repeat the contents of his report (subject to potential cross-examination).
[9] In his report, Prince was asked to address three issues:
a) the interpretation of various insurance terms (“face amount”, “basic coverage”, “paid up insurance” and “inflation protection”),
b) whether life insurance companies in the early 1980s (ie. when the plaintiff’s policy was issued) would typically have offered special quotes or pricing on their products and if so in what circumstances, and,
c) whether it would have been reasonable for an insurance company to issue an insurance policy with the paid up values set out in the plaintiff’s policy given the interest environment and other actuarial factors that existed in 1982.
[10] While the defendant argues that Prince’s entire report is unnecessary and irrelevant, during the hearing of the motion most of the defendant’s submissions were focused upon the third issue in Prince’s report.
The Defendant’s Position
[11] To begin, the defendant submitted that the Prince report was unnecessary as the task of interpreting the policy was clearly a function reserved to me as the trial judge. As held by the Court of Appeal for Ontario in Kentucky Fried Chicken Canada v. Scott’s Food Service Inc. 1998 ONSC 4427, the standard of commercial reasonableness is akin to a mode of reasoning which must be done objectively, and may not even require the consideration of any evidence – extrinsic, opinion or otherwise.
[12] The defendant submitted that Prince assessed the commercial reasonableness/viability of the policy (ie. its profitability) from the perspective of a “typical insurance company operating in a manner typical of the time with a risk-assessed expectation of profit”, and not with regard to the perspectives of either the plaintiff or the defendant.
[13] The defendant objected to the numerous assumptions that Prince made in connection with the policy (including the probability that the plaintiff would have stopped paying premiums at various intervals), and these assumptions render Prince’s conclusions to be ultimately based upon a policy other than the one issued to the plaintiff.
[14] Finally, the defendant stressed the fact that the Prince report was created in a “factual vacuum” without any reference to the plaintiff’s own evidence or regard to the core issue of whether the policy was issued in error or not.
Decision
[15] I dismiss the defendant’s motion. While the necessity of Prince’s opinion evidence may end up being marginal, I cannot conclude at this stage that it is irrelevant. I say this for two reasons.
a) While the defendant has consistently taken the position at trial that the plaintiff’s “story” (ie. why and how he sought the policy to guard against inflation, etc.) ought not to be believed, the defendant has also advanced the buttressing position that it – and indeed no insurance company – would have structured any policy to provide for inflation protection in 1982. The defendant has described the imbedding of inflation protection within an insurance policy to be “absurd”.
The defendant is relying upon the evidence of its own actuarial expert Michael Kavanagh (“Kavanagh”, who delivered evidence when this proceeding was still an application). While I agree with the defendant that Prince’s report does not truly respond to Kavanagh’s opinion, in coming to his conclusions that the policy was “clearly issued in error”, Kavanagh testified that (i) there has never been any reliable algorithm to predict inflation for the purpose of pricing a policy as allegedly requested by the plaintiff, (ii) there was no such thing in the 1982 marketplace as a life insurance policy which guarded against inflation, and (iii) the mere request to an actuary to prepare and produce a guaranteed inflation protection quote “makes no sense to him.”
Prince’s evidence is that such a product was apparently possible, and in fact profitable from the perspective of the insurance company. While his opinion is obviously based upon certain assumptions and inferences, in my view it was the defendant which dipped its proverbial toe in the water when Kavanagh characterized the presence of the plaintiff’s policy in the 1982 marketplace as absurd, and as a result Prince ought not to be prevented from jumping in.
I note that there is no dispute that the plaintiff’s policy was a special actuarial quote, and therefore by its nature not a typical product offered by the defendant at the time. The question of whether the policy was atypical or an error is still to be determined by me at the conclusion of the trial. Until then, the disposition of whether or not the plaintiff’s version of events has the “air of reality” can be informed, even marginally, by Prince’s opinion evidence.
b) If at the end of trial I find that the policy was issued in error, there remains the issue of whether the defendant requires the legal remedy of rectification to correct that error. The plaintiff maintains that rectification is indeed necessary, while the defendant requests that the policy be “interpreted to correct for the obvious mistake” without resorting to rectification.
Rectification is available in cases of unilateral mistake. As stated by Justice Binnie in Performance Industries Ltd. v. Sylvan Lake Golf and Tennis Club, 2002 SCC 19 (emphasis in bold):
“Rectification is predicated on the existence of a prior oral contract whose terms are definite and ascertainable. The plaintiff must establish that the terms agreed to orally were not written down properly. The error may be fraudulent, or it may be innocent. What is essential is that at the time of execution of the written document the defendant knew or ought to have known of the error and the plaintiff did not. Moreover, the attempt of the defendant to rely on the erroneous written document must amount to "fraud or the equivalent of fraud". The court's task in a rectification case is corrective, not speculative. It is to restore the parties to their original bargain, not to rectify a belatedly recognized error of judgment by one party or the other.”
If I find that the policy was issued by the defendant in error, and rectification proves necessary, I will likely be asked to assess the potential unconscionability of allowing the policy to remain in place. The commercial viability, or lack thereof, of the policy would then be a relevant consideration, and thus Prince’s evidence could still assist the Court in such a determination.
[16] As with the plaintiff’s motion to amend, costs of this motion shall be reserved to me as the trial judge.