Court File and Parties

COURT FILE NO.: D/966/96 DATE: 2016/04/28 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Joseph Rosati and Linda Rosati, Applicants AND: Laura Reggimenti, Respondent

BEFORE: Turnbull, J.

COUNSEL: Devon Kinch, Agent for the Applicants Gary Joseph and Ryan Kniznik, Counsel, for the Respondent

HEARD: February 23, 2016

Endorsement

Nature of the Motion:

[1] The respondent, Laura Reggimenti (“Laura”), has brought a motion, seeking various grounds of relief pertaining to the trial in this matter now scheduled to continue on November 7, 2016. On January 25, 2016, I ordered as follows:

If counsel wish to bring a motion for further directions with respect to any of the evidentiary orders and rulings made by Carpenter-Gunn, J. they may do so by motion returnable before me on a date to be fixed with the trial coordinator. Such motions shall be argued on or before February 24th, 2016.

[2] Specifically, the relief sought relates to Laura being recalled to provide evidence in chief at trial, to file the expert report of John H. Loukidelis dated October 22, 2013, and to revisit the rulings of Carpenter-Gunn J., former trial judge, with respect to disqualifying Laura’s expert Christine Minelli as both an expert witness (November 15, 2013 ruling) and fact witness (November 18, 2013 ruling), and with respect to amending Laura’s Particulars of Fraud for trial (November 5, 2013 ruling).

[3] Pursuant to that endorsement, the respondent seeks four major heads of relief on this motion:

a. a request to reconsider the order of Carpenter-Gunn J. excluding the expert and lay evidence of Ms. Minelli, an accountant retained to provide opinions of income of the applicant Joe Rosati. b. a request to permit the evidence of an expert, Mr. Lakouditis to be given at the trial of this action despite late service of his report which is dated October 22, 2013. c. request to permit the respondent to amend the particulars of fraud alleged in her pleadings. d. a request to permit the respondent to again testify in these proceedings.

[4] I reserved my decision on those motions. I will deal with each of the issues raised in the same order as they are listed in paragraph 1.

Overview of the Action:

[5] The trial in question commenced on November 4th, 2013 before Carpenter-Gunn, J. It involved a request for relief setting aside the order of Steinberg, J. dated January 24th, 2007 which incorporated Minutes of Settlement dated October 22, 2006. The respondent alleges that her agreement to the Minutes of Settlement was founded on the fraud of the applicants (Joe and Linda).

[6] During the trial sittings in November 2013, Carpenter-Gunn, J held a two day voir dire relating to qualifying the respondent’s expert witness, Christine Minelli, to provide opinion evidence in forensic investigation, in determination of income for the calculation of support in family law litigation and in identifying relevant professional standards in her profession. Carpenter-Gunn, J exercised her discretion and for reasons given, declined to qualify Ms. Minelli to provide evidence in any of the proposed areas of expert testimony. The learned judge also ruled Ms. Minelli could not be called as a lay witness in the proceeding.

[7] Justice Carpenter-Gunn presided over 11 days of evidence and on November 21st, 2013 the trial was adjourned to March 24th, 2014 for a further 15 days of testimony.

[8] The trial did not reconvene on March 24th, 2014 due to court scheduling conflicts.

[9] The respondent then brought a motion for an order that Justice Carpenter-Gunn recuse herself from the trial on the basis of bias, an order for a mistrial and an order that the adverse ruling with respect to Ms. Minelli as an expert witness and fact witness be reconsidered.

[10] The motion with respect to whether or not Justice Carpenter-Gunn should recuse herself was heard on July 21st, 2014 and July 22nd, 2014. The learned judge dismissed the motion for recusal based on bias but she did grant a motion for a mistrial. She declared the mistrial given the “real danger of prejudice to the litigants and a danger of miscarriage of justice.” Her Honour stated that the trial was one of “complexity” and was not suitable to be “tried by installment.” Her schedule was, according to Carpenter-Gunn, J, so heavily booked that her unavailability would result in a significant delay in completing the trial.

[11] The applicants Joseph Rosati and Linda Rosati then obtained leave to appeal the decision of Carpenter-Gunn, J to the Divisional Court. By order dated the 25th of March 2015 the appeal against the decision of Carpenter-Gunn, J to grant a mistrial was dismissed. However, the court directed that the case should be then placed back on the long trial team list in the Central South Region and directed as follows:

[4] “This court orders and directs that unless the Regional Senior Justice or the assigned trial judge orders otherwise:

a) All evidence taken at trial until the date of the order for mistrial shall be transcribed and shall constitute evidence in the new trial. b) All exhibits entered at trial until the date of the mistrial order shall be trial exhibits in the new trial. c) All evidentiary and other rulings made by Carpenter-Gunn, J to the date of the mistrial order shall apply in the new trial.”

[12] When this matter appeared before the court, I exercised my discretion to appoint myself as the trial judge for this trial. I heard a motion for directions and a motion for summary judgment in December 2015. The extract of my ruling of January 25th, 2016 contained in paragraph 1 of this endorsement led to this motion.

Issue #1: Motion for Ms. Minelli’s Evidence to be Admitted

[13] I have reviewed the oral reasons given by Carpenter-Gunn J. on November 15, 2013 refusing to permit Ms. Minelli to testify. The learned trial judge did not have available to her the decision of the Supreme Court of Canada in White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, [2015] 2 S.C.R. 182 (WBLI), a recent Supreme Court of Canada case on qualifying experts when an expert’s independence and impartiality is at issue. Because this trial is still in process, I feel it is appropriate to consider its direction to the court in this matter.

[14] Justice Carpenter-Gunn found that Christine Minelli was not a properly qualified expert because she was reasonably perceived as not independent. She felt that Ms. Minelli had a financial interest in the outcome of the litigation because her client Laura could only afford to pay back the over $200,000 in fees she owed if she was successful in the litigation against the Rosatis. Further, the learned judge determined from reviewing her affidavits filed in this matter, Ms. Minelli had essentially become an advocate for Laura.

Summary of Justice Carpenter-Gunn’s decision

[15] Justice Carpenter-Gunn denied Laura’s application to have Christine Minelli qualified as an expert in forensic investigation, in determining income for support in Family Law, and in professional standards in accounting (see transcript at p. 1, lines 9-13). Justice Carpenter-Gunn accepted Joe and Linda’s argument that Minelli “is not independent and has a conflict of interest” (p. 1, lines 20-21).

[16] Justice Carpenter-Gunn concluded Minelli was not independent and therefore not a properly qualified expert because she had a financial interest in the litigation and became an advocate for Laura. She held that “Ms. Minelli has a financial interest in this matter which would affect directly or indirectly the ability or reasonably perceived ability of Ms. Minelli to provide such services in an independent manner” (p. 13, lines 20-25). This was based on her finding that Laura owed Minelli in excess of $200,000 in fees (p. 1, line 21) and the only way Laura could repay Minelli was if Laura succeeded in her litigation (p. 8, lines 27-29). Justice Carpenter-Gunn concluded “the only way that that amount would get paid is if the respondent is successful on this litigation” (p. 8, lines 27-29) because she found Minelli, by reading transcripts of proceedings before Justice Steinberg, knew Laura had little to no income from 2004-2006 (p. 3-4) and Laura signed an irrevocable direction directing Minelli’s fees to be paid from “final settlement proceeds” (p. 7-8). Because Justice Carpenter-Gunn found Minelli would only be paid if Laura succeeded in litigation, she found the agreement between Minelli and Laura was “a form of contingency fee agreement” (p. 9).

[17] Justice Carpenter-Gunn also found Minelli was not independent because she “became an advocate” in the affidavits she swore for Laura (p. 16). Justice Carpenter-Gunn went through a number of statements within the affidavits where she felt that Minelli had become an advocate:

• “I have been told by Ms.Reggimenti and verily believe that Ms. Reggimenti relied on financial information produced by Mr. Rosati and statement made by him concerning the quantum of his income available for support when she signed minutes of settlement between the parties on October 22, 2006” (taken from para. 3 of a May 24, 2009 affidavit; see p. 4, line 25 of Justice Carpenter-Gunn’s decision);
• “I have been told by Ms. Reggimenti and verily believe to be true that Ms. Reggimenti was unable to go through the boxes of material provided, and that she did not have the money to pay for additional financial expert review” (taken from para. 19 of the same affidavit; see p. 16, line 27 of Justice Carpenter-Gunn’s decision);
• “I do not know whether Justice Steinberg’s decision in January 2007 would have been the same had Justice Steinberg been aware of my conclusions in this matter” (taken from para. 19 of the same affidavit; see p. 17, line 25 of Justice Carpenter-Gunn’s decision).

Framework for considering expert evidence when independence and impartiality is at issue

[18] In the case of R. v. Mohan [1994] SCR 9, the Supreme Court of Canada set out a two-step test for determining whether to qualify and admit the evidence of a proposed expert (see WBLI, at para. 20). The two-step test is paraphrased as follows:

1. The proponents of the evidence must establish the proposed expert evidence meets four threshold requirements: a. Relevance, b. Necessity in assisting the trier of fact, c. Absence of any exclusionary rule, and d. Proffered by a properly qualified expert; and,
2. If the four threshold requirements are met, the trial judge retains discretion to exclude the evidence if he or she concludes the evidence’s prejudicial effect outweighs its probative value (‘gatekeeper’ stage).

[19] WBLI addressed how and where in the Mohan test concerns about a proposed expert’s independence and impartiality should be considered:

1. Concerns about independence and impartiality should first be considered as a basic threshold requirement as part of the “properly qualified expert” stage in the Mohan framework.
   • At para. 53 the court stated, “concerns related to the expert’s duty to the court and his or her willingness and capacity to comply with it are best addressed initially in the ‘qualified expert’ element of the Mohan framework. A proposed expert witness who is unable or unwilling to fulfill this duty to the court is not properly qualified to perform the role of an expert.”
   • At para. 50 the court described the standard to be applied at this threshold stage in the following language: “The concept of apparent bias is not relevant to the question of whether or not an expert witness will be unable or unwilling to fulfill its primary duty to the court. When looking at an expert’s interest or relationship with a party, the question is not whether a reasonable observer would think that the expert is not independent. The question is whether the relationship or interest results in the expert being unable or unwilling to carry out his or her primary duty to the court to provide fair, non-partisan and objective assistance.”
   • At para. 49 the court explained “This threshold requirement is not particularly onerous and it will likely be quite rare that a proposed expert’s evidence would be ruled inadmissible for failing to meet it. … I emphasize that exclusion at the threshold stage of analysis should occur only in very clear cases in which the proposed expert is unable or unwilling to provide the court with fair, objective and non-partisan evidence. Anything less than clear unwillingness or inability to do so should not lead to exclusion, but be taken into account in the overall weighing of costs and benefits of receiving the evidence.”
2. If the judge concludes the expert is properly qualified at the basic threshold stage he or she can still consider concerns with the expert’s impartiality and independence when deciding whether or not to admit the evidence at the gatekeeper stage.
   • The court described this stage at para. 54: “Consistent with the structure of the analysis developed following Mohan which I have discussed earlier, the judge must still take concerns about the expert’s independence and impartiality into account in weighing the evidence at the gatekeeping stage. At this point, relevance, necessity, reliability and absence of bias can helpfully be seen as part of a sliding scale where a basic level must first be achieved in order to meet the admissibility threshold and thereafter continue to play a role in weighing the overall competing considerations in admitting the evidence. At the end of the day, the judge must be satisfied that the potential helpfulness of the evidence is not outweighed by the risk of the dangers materializing that are associated with expert evidence.”

[20] Although WBLI does not focus on this issue, some obiter noted that after the judge has decided to admit the expert evidence, the trier of fact can still consider concerns about an expert’s independence and impartiality when determining what weight to ultimately ascribe to the evidence:

• “I conclude that the dominant approach in Canadian common law is to treat independence and impartiality as bearing not just on the weight but also on the admissibility of the evidence” (para. 40); and
• “I would hold that an expert’s lack of independence and impartiality goes to the admissibility of the evidence in addition to being considered in relation to the weight to be given to the evidence if admitted” (para. 45).

[21] In my view, Justice Carpenter-Gunn considered the independence and impartiality test at the correct stage of the Mohan test, but applied a different and more restrictive test than the one WBLI adopts.

[22] Carpenter-Gunn J. seems to have considered concerns about the proposed expert’s independence and impartiality as a consideration under whether the proposed expert is properly qualified. At p. 19, Justice Carpenter-Gunn states, “the proposed expert witness is not a properly qualified expert as per Mohan, due to her lack of independence …” Following WBLI, this is the correct stage at which to consider the proposed expert’s independence and impartiality.

[23] However, Justice Carpenter-Gunn appears to have applied the apparent bias test that WBLI rejected. At p. 13, Justice Carpenter-Gunn stated, “I find Ms. Minelli has a financial interest in this matter which would affect directly or indirectly the ability or reasonably perceived ability of Ms. Minelli to provide such services in an independent manner.”

[24] WBLI determined that assessing bias from the perspective of the “reasonable observer” was too stringent. Instead, WBLI applied a more relaxed test of whether the interest or relationship with a party results in the proposed expert being unable or unwilling to carry out his or her duty to provide the court fair, non-partisan and objective evidence (see paras. 49-50). In particular, “it is the nature and extent of the interest or connection with the litigation or a party thereto which matters, not the mere fact of the interest or connection; the existence of some interest or relationship does not automatically render the evidence of the proposed expert inadmissible” (para. 50).

[25] On the law as it presently stands, I find that the test applied by Carpenter-Gunn J. was inappropriate.

[26] On review of the oral reasons given by the learned judge, I am also not satisfied that she considered whether the potential helpfulness of the evidence was not outweighed by the risk of the dangers materializing that are associated with expert evidence. If she did, it is not articulated in her reasons. Clearly the evidence of Ms. Minelli was very important to the respondent in this trial and potentially very helpful to the court.

[27] Hence, I am prepared to grant leave to the respondent to attempt to requalify Ms. Minelli as an expert in this trial.

Issue #2: Should Mr. Loukadelis be Permitted to Testify

[28] During the trial before Carpenter-Gunn J., leave was sought for Mr. Loukadelis to testify.

[29] Mr. Loukidelis, who is a tax lawyer and author of materials pertaining tax related issues, prepared an expert report dated October 22, 2013, with accompanying Form 20.1 Acknowledgement of Expert’s Duty, analyzing Joseph Rosati’s 2002 to 2004 (inclusive) income tax reassessments, issued on September 5, 2008. The report was not served within the required timelines under the Family Law Rules prior to the commencement of the trial.

[30] Laura requested Carpenter-Gunn J. to grant leave to alter the time for filing and leave to file the expert report of John H. Loukidelis dated October 22, 2013. It had initially been served on the Applicants’ prior to the start of the trial before Carpenter-Gunn J. in November 2013.

[31] The foregoing relief was initially requested in Laura’s Notice of Cross-Motion dated February 10, 2014, returnable before Carpenter-Gunn J. on February 14, 2014. The Motion was adjourned to July 21, 2014 and July 22, 2014, however, the issue of leave to file the expert report ultimately did not form part of the motion before Carpenter-Gunn J., thus her Honour’s Order dated July 22, 2014 is silent on this issue.

[32] Mr. Joseph seeks leave to qualify Mr. Loukadelis as an expert to give evidence at the continuation of this trial in November 2016.

[33] This request is resisted by counsel for Joe and Linda. They submit that Rule 23(23)(a) of the Family Law Rules provide that the report of an expert must be served at least 90 days before the start of the trial. Rule 23(27) further provides that if a party does not comply with that notice period, a party may not call that witness unless the trial judge allows otherwise”. Counsel has noted that there was non-compliance with the Rules and because the trial has already begun, the court should not grant leave.

[34] Counsel for Joe and Linda, Mr. Kinch, has further noted that Justice Carpenter-Gunn has considered this issue and stated in her oral reasons that the “relief was withdrawn by the moving party.”

[35] In his able submissions, Mr. Kinch submitted that if the court gives leave to permit Mr. Loukidelis to testify, it will be prejudicial and costly to the applicants and as the relief sought will likely require them to hire another expert to ensure the totality of the evidentiary record.

[36] I am granting leave to the applicants to attempt to qualify Mr. Loukadelis as an expert witness during the continuation of this trial. It is not improper for a party to withdraw a motion and then re-apply for the same remedy later in a trial. In the extraordinary circumstances of this protracted litigation and trial, the applicants will have sufficient time to have an expert review the proposed report and if need be, to prepare a responding expert’s report. I recognize that the report was not served at least 90 days before the start of the trial but I am prepared to exercise my discretion to permit those time periods to be abrogated so that this action can be adjudicated with the benefit of a full evidentiary record.

[37] In doing so, I am mindful of the words of Laskin J.A. in Finlay v Van Paassen, 2010 ONCA 204 at para. 14: “the Rules and procedural orders are construed in a way that advances the interests of justice, and ordinarily permits the parties to get to the real merits of their dispute”.

Issue #3: Should the Respondent be permitted to Amend her Particulars of Fraud?

[38] Justice Carpenter-Gunn made a ruling November 5, 2013 dismissing the respondent’s motion to amend the particulars of fraud.

[39] A document entitled The Particulars of Fraud was entered in as Exhibit 2 at the trial before Carpenter-Gunn J., and purports to summarize and outline the applicant’s misrepresentations by positive statement and omission, and false representations made during the time period of 1999 to October 22, 2006 (the date of the Minutes of Settlement) and October 22, 2006 to January 23/24, 2007 (hearing before Steinberg J. incorporating Minutes of Settlement).

[40] Laura’s counsel (not present counsel) brought an oral motion on November 5, 2013, before Carpenter-Gunn J., to amend the Particulars of Fraud. Mr. Chaimovitz, Laura’s former trial counsel, suculars we’re looking to add and to show you that they’re really isn’t anything that the Rosati’s are not aware of. What we’re talking about is their own materials and the allegations that come from it” (Transcript dated November 5, 2013, p. 3, l: 5-10). Mr. Chaimovitz further submitted that the trial “doesn’t have to be adjourned because…the information that Mr. Jaskot (former counsel for the applicants) needs to respond to is readily available…it was provided to him with the, with the particulars that we sent him at the beginning of September which was two months ago” (Transcript dated November 5, 2013, p. 5, l: 25-32). He also submitted that the “more particulars you can establish and increase the quantum of the fraud, you’re increasing the quality of the fraud” (Transcript dated November 5, 2013, p. 25, l: 21-30).

[41] In her oral ruling in which she dismissed the respondent’s motion to amend, Carpenter-Gunn J. quite properly focused on the leave requirement to amend the particulars of fraud. She stated: “I’m not getting into any of the substantive part without you dealing with the leave issue” (Transcript dated November 5, 2013, p. 9, l: 27-30). She also expressed concern that this trial was originally to start before Sloan J. in 2012. At that time it was adjourned and Justice Sloan ordered the respondent to provide all particulars at that time. It was not done until September 2013, just less than 60 days before the trial before Carpenter-Gunn J. was to commence. Counsel for the applicants understandably resisted the amendments to the pleadings due to the short time prior to the trial.

[42] Carpenter-Gunn J. gave oral reasons dismissed the motion. The thrust of Carpenter-Gunn J.’s ruling was that “the motion should have been brought earlier” (Transcript dated November 5, 2013, p. 33, l: 15-17). She noted that the amendment would mean at the very least that the applicants would have to have their experts review the particulars and possibly provide a further report or possibly they would have to retain another expert. She did not feel that the prejudice caused by the amendments could be compensated for by an adjournment or by costs.

[43] With the passage of time and the period before the recommencement of this trial, I find that the concerns addressed by Carpenter-Gunn J. can be accommodated if I grant the relief sought. As I understand the issue, the Particulars of Fraud alleged by the respondent and the response to those allegations are contained in Exhibit 2. If I am wrong in that respect, counsel should advise me immediately. If I am correct, the pleadings should be amended to reflect those allegations and denials without the evidence supporting them being included. I concur with the reasons of Sloan J. in his endorsement of August 14, 2012 when he wrote “it is the court’s hope that [the particulars of fraud] document could be used as a road map to assist the court in dealing logically with each and every allegation.

[44] It is ordered that the respondent serve and file an amended pleading giving particulars of alleged fraudulent acts of the applicant(s) on or before May 15, 2016. The applicants shall serve and amend an amended pleading on or before Jun 15, 2016.

[45] I am acutely aware of the history of this matter and the extraordinary costs which have been incurred by each of the parties. As cited from the case of Finlay v. Paassen, supra, the court needs to allow the parties to get to the real merits of their dispute. Rule 2 of the Family Law Rules prescribes the primary objective of the Rules as enabling the court to deal with cases justly. That requires the court to ensure the procedure is fair to all parties and saving time and expense. The last thing either party needs is the Court of Appeal to rule that an amendment should have been granted and that the matter should be remitted for a new trial. The applicants have a good idea from Exhibit 2 and of the essence of the respondent’s particulars of fraud and hence they are not going to be significantly prejudiced.

Issue #4: Should the Respondent be permitted to further testify?

[46] I grant leave to the respondent to be recalled to testify with respect to the amended pleading only to the extent that she can give additional evidence relative to matters in the amended pleading which were not earlier canvassed in the first portion of the trial before Carpenter-Gunn J. This will allow both parties to be fully heard by the court to allow a just and balanced judgment to be rendered on a full evidentiary record.

[47] In making this decision, I am conscious of the fact that the respondent has not yet closed her case and the evidence of only three witnesses has been provided (excluding the voir dire hearings of Ms. Minelli). The applicants will have full right of cross-examination on her “continued evidence”. She will have the opportunity to testify as to certain particulars of fraud and evidence that she was not given the opportunity to testify about at trial due to her former trial counsel not taking her through certain documents as he anticipated to lead these through Ms. Minelli. I am also conscious of the fact that it will give me an opportunity as the “new” trial judge to observe the respondent testifying at trial in order to aid with making the decision in this complex case.

Costs:

[48] I recognize that the respondent has been substantially successful on this motion and in the ordinary course, she would be entitled to her costs. However, this motion has been necessitated by the failure of the respondent to amend her pleading in a timely manner as ordered by Sloan J. in 2012. Even before Carpenter-Gunn J., there was not a proper Notice of Motion and supporting affidavit filed when the motion was brought. In the circumstances, I order that each party shall bear their own costs of this motion.

Released: April 28, 2016 Turnbull, J.