Court File and Parties

COURT FILE NO.: CV-11-430193 DATE: 20160426 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Health Genetic Center Corp. et al., Plaintiffs -and - New Scientist Magazine et al., Defendants

BEFORE: F.L. Myers J.

COUNSEL: J. Melekhovets and A. Zeilikman, for the plaintiffs S. Barton and M. Hines for the defendants

HEARD: April 25, 2016

Pre-Trial Conference Endorsement

[1] I heard the first of a multi-stage pre-trial conference today to try to move this matter toward an efficient and organized trial. I am concerned that the plaintiffs have embarked upon a very substantial legal proceeding with no clear sense as yet of whether they will be able to prove damages at a level that will justify the expenditures. I recognize that money is not the sole motivating criterion in a defamation action. Reputation matters. However, the publication at issue in this proceeding occurred in December, 2010. The case might come to trial in 2017 although given the current projected length of the proposed trial, 2018 is probably more realistic. If Dr. Melekhovets has not by then had success in establishing the validity of his genetic tests in the market place and regained the reputation that he alleges he lost in 2010, then I question whether a decision of the court will be of much value to his reputation or to the sales of the plaintiffs’ tests. If accompanied only by a modest damages award, a victory will surely be pyrrhic. The plaintiffs must focus closely therefore on proof of damages to justify the extensive cost and time commitment of proceeding to trial.

[2] I am not for a moment suggesting that the plaintiffs are unlikely to succeed in the lawsuit. I have no idea who will be proven successful on the merits. I am concerned however to ensure that civil justice be done. Whether a seven or eight year delay followed by a lengthy trial can be regarded as efficient, timely, affordable, and proportionate civil justice is a question that weighs on the court. I think it is incumbent upon the court to assist the parties to hold as brief and efficient a trial as will result in a just outcome and be fair to all parties. This should also assist in helping to ready the trial to be scheduled for the earliest possible realistic date.

[3] The plaintiffs have provided a lengthy list of possible witnesses. They currently propose to call two experts to deal with the scientific issues (the scientific validity of the plaintiffs’ genetic tests). One expert’s report is ready. The other is under way.

[4] For their part, the defendants have several scientists whom they consulted to provide their own genetic testing to compare test results against results allegedly provided by the plaintiffs to five of their patients. One of those experts will be providing a full report on the scientific issues.

[5] As discussed at the pre-trial conference, damages for mental distress and other general damages are generally fairly modest in defamation cases in Canada. The plaintiffs are collecting materials for a financial expert to opine on special damages or provable loss of profits suffered by the corporate plaintiff. Proof of those damages is the big ticket item in the case.

[6] The plaintiff also intends to call as witnesses a number of employees or former employees to attest to the manner in which the business was conducted including lab protocols at the relevant date. They also intend to call a number of internationally based sales brokers who marketed the plaintiff’s tests abroad to testify as to the decline in sales suffered after the defendants published the impugned article.

[7] The plaintiffs have produced only unaudited financial statements to date to support their damages claims. This is obviously insufficient. Their experts will require far more data which will have to be properly listed in the experts’ reports and disclosed in supplemental affidavits of documents as required by the appropriate rules. The sales brokers’ records and any other sales records for years before and after the publication of the impugned article will be relevant. Calculation of profit turns on both sales and expenses. So, the defendants are likely to want to see further or other documents to test the plaintiffs’ theory of the case and their experts’ evidence deriving actual and projected profits. If the plaintiffs have not yet turned their minds to production of documents to prove damages, they should do so quickly. As alluded to above, damages is the key element in the case from the plaintiffs’ perspective. The plaintiffs will live or die on their protocols and science as it existed. Dr. Melekhovets is obviously well-positioned to testify on the science and to arm experts to do likewise. But, damages are not a mere detail or afterthought. It can be very difficult to prove loss of profits in a going concern. Substantial information is required over a number of years especially to prove causation and to negative or undermine the effect of realistic alternative causes of loss of profits or a failure to meet future projected profits. This issue needs to be fully prepared before trial.

[8] The plaintiffs should also take a good look at whether it needs evidence of as many as seven former employees. Is the protocol that was in place in the plaintiffs’ lab really contested? It is solely within the plaintiffs’ knowledge. Moreover, is the fact that the plaintiffs can find a number of patients who are happy with their test results really relevant? Perhaps it is. But, at least at a 10,000 foot overview, the defendants seem to be calling their five patients to support the concern that led them down the road toward writing the impugned article. I do not see how evidence of several happy customers undermines the point that the defendants are trying to make – that some number of patients might have been provided with incorrect results. I make no comment on whether the defendants will be able to prove their defences. That requires an assessment of the evidence. I am simply noting that from trial preparation point of view, it is not clear to me that evidence of patients on the plaintiffs’ side is particularly relevant or probative of the issue for which the defendants will be presenting their evidence concerning their five patients.

[9] The defendants propose to call a large number of witnesses – perhaps near 20 – who are the scientists and others to whom the author spoke prior to or while writing the impugned article. This evidence will go to the author’s due diligence and good faith belief and possibly also to the defence of justification. Most or all of these proposed witnesses live abroad. Most will testify to having had one or a few brief interactions with the author. They may have contemporaneous notes of the interactions. While the general practice is that trial testimony is given live, orally in open court, other factors appertain in this case. To borrow from the Prime Minister, it is 2016. Technology is now routinely used for efficiency. Few of these witnesses will individually be providing evidence of a key disputed fact. It is the thoroughness of the author’s investigation and perhaps the cumulative effect of the witnesses’ testimony that is most in issue. Apart perhaps from one or two key advisors to the author, the third party evidence will not likely turn on credibility or require personal observations by the judge that cannot be made by video conference, Skype, or the like. Moreover, the cost and the risk of logistical disruption by making 20 people come to Toronto for brief testimony will risk much delay with no upside.

[10] The defendants do not know as yet whether they will need to call a financial expert.

[11] In order to try to make this trial as brief, organized, and ready to begin as early as reasonably possible, several directions are in order. I have authority to make such directions under Rule 50.07 and 20.05 as incorporated therein. These directions are subject to the discretion of the trial judge if he or she finds it necessary to order otherwise to prevent injustice under Rule 50.07(2):

a. All evidence chief will be provided by affidavit with the exception of Dr. Melekhovets. The affidavits and a thorough, signed willsay providing the substance of all of the proposed evidence of Dr. Melekhovets, are to be exchanged on or before December 30, 2016;

b. The affidavits and willsay will attach as exhibits all documents that will be relied upon in chief by the parties. By February 28, 2017, each side will advise the other of which documentary exhibits of the other they admit as to authenticity only and those which they admit for the truth of their contents. For each document not admitted both for authenticity and truth, the basis for refusing to do so shall be stated with particularity.

c. The default position will be that other than parties, the warm-up examination in chief, the cross-examination, and re-direct examination of all witnesses who do not reside in Canada will be done by video conference, Skype or like technology. A party may move to require the attendance of specific witnesses in person on good grounds being shown to me or to the trial judge. Whether a letter of request may be required and who should bear the costs of the process to summons a foreign witness will be determined then. A desire to compel the attendance of foreign witnesses risks delaying the available start date of the trial.

d. The plaintiffs will deliver their expert reports with proper certification and copies of all documents relied upon by the experts by August 31, 2016. The defendants shall, by September 30, 2016, provide a written list of any further documents that they wish to have produced by the plaintiffs. Counsel shall meet with their experts present, without prejudice, before October 14, 2016 to try to agree on any further documents to be produced. The experts should be able to explain to their counterparts what they want to see and why. The lawyers shall not refuse production where the experts are content that a request is sensible when considered from the point of view of their fields of expertise. The experts are to recall their obligations to be independent and objective as certified to the court. If the parties cannot agree on the scope of further production, I will deal with the issue summarily at a Case Conference pursuant to Rule 50.13(6) before the end of October, 2016.

e. The defendants will deliver their scientific expert’s report(s) by October 30, 2016. They will deliver their financial expert’s report, if any, within 45 days of production to them of the documents referred to in para (d) above. All of the defendants’ experts’ reports are to be delivered with proper certification and copies of all documents relied upon by the experts.

f. Once the parties have exchanged experts’ reports, each pair of competing experts will meet without prejudice under Rule 20.05(2)(k) to produce a list of agreed facts to assist the trial judge understand the acknowledged scientific background facts and the context in which any disagreement(s) arise. They will also produce a list of the points where they disagree; setting out, in very brief, point form only, their respective opposing views.

g. Counsel will exchange written opening statements by February 28, 2017;

h. Counsel for the parties will meet in February, 2017 to produce by February 28, 2017, a chart showing the proposed time proposed for the examination of each and every witness. The default position for fact witnesses will be that they will be examined in chief for no more than 15 minutes as a warm-up. Dr. Melekhovets’s evidence in chief will be given orally. Counsel will estimate the time needed by each of them to deal with his evidence. The default position for experts’ evidence in chief will be for no more than 20 minutes. If counsel are unable to agree on the location or timing of one or more witness, both sides’ positions shall be noted on the chart for resolution by me or the trial judge once appointed.

i. The plaintiffs continue to seek the identities of the persons that are the subject of the redacted reports listed in the defendants’ affidavits of documents. If the parties cannot agree to acceptable confidentiality provisions to govern the release of this information, I will deal with the matter summarily at a Case Conference pursuant to Rule 50.13(6).

j. In addition to any case conferences to be held hereunder, a further pre-trial conference is to be booked through the Trial Coordinator’s office for March, 2017 before me to deal with both trial management and settlement. Rule 50 will apply fully to that part of the pre-trial conference.

[12] I will endeavour to have a trial judge appointed after the pre-trial conferences are completed but well prior to the commencement of the trial.

F.L. Myers J Date: April 26, 2016