Court File and Parties

COURT FILE NO.: CV-06-CV305132-0000 DATE: 2016-07-07

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

MARK COUPER Plaintiff – and – NU-LIFE CORP., NU-LIFE NUTRITION LTD., VITAQUEST INTERNATIONAL LLC, AND KEITH FRANKEL Defendants

Counsel: Mr. John J. Adair, for the Plaintiff Mr. Kenneth E. Jull, for the Defendants

Reasons for Decision

J. MACDONALD, J.

[1] The defendants and their counsel request me to modify my Reasons for dismissing the defendants’ mistrial motion. They ask me to delete my statements which disapproved of them making certain of their mistrial submissions.

Background

[2] The plaintiff sued the defendants for breach of various agreements, deceit, fraudulent and negligent misrepresentation, unjust enrichment and oppressive conduct contrary to both section 248 of the Ontario Business Corporations Act, R.S.O. 1990, c. B. 19 and section 241 of the Canada Business Corporations Act, R.S.C., 1985, c. C-44. The plaintiff sought millions of dollars in damages. The trial consisted of three weeks of evidence followed by written and oral argument.

[3] During the evidence, I conducted midtrial conferences which did not include settlement discussions. The midtrial conferences were conducted with the agreement of the parties and pursuant to undertakings given by counsel. I will address the nature of the agreements and undertakings at a later point in these Reasons.

[4] Following the completion of oral argument [1] the defendants moved for a mistrial, alleging that a reasonable apprehension of bias arose from some of my comments and questions during oral argument. The defendants also relied on some of my statements during the midtrial conferences.

[5] In dismissing the mistrial motion, I referred to the agreements of the parties and to the undertakings of counsel pursuant to which I had conducted the midtrial conferences, and I disapproved of the defendants’ reliance on what had transpired therein, based on the defendants’ agreement and Mr. Jull’s undertaking as counsel.

[6] Subsequently, when I heard the defendant’s limitation argument, Mr. Jull requested me to amend my Reasons for dismissing the mistrial motion by deleting my disapproving statements.

[7] I have delivered Reasons for Judgment and I now rule in respect of the requested amendment of my Reasons for dismissing the mistrial motion.

The Agreements and Undertakings in Respect of Midtrial Conferences

[8] In the past, judges often conducted midtrial conferences in trials they were hearing in order to discuss the nature and weight of the evidence, and to explore settlement. While there were advantages in counsel knowing the trial judge’s preliminary impressions of the evidence which had been presented, there were also disadvantages and difficulties. Trial judges who expressed their views about part of the evidence when there was more to be heard, or who engaged in settlement discussions, ran the risk of being seen as prejudging the case or as favouring a particular litigant.

[9] As a result, at the present time, if a trial judge conducts a midtrial conference in a trial which he or she is hearing, generally it will be in respect of procedural issues and the judge will refrain from discussing either the evidence presented, or settlement. The appearances of justice are thereby protected from any perception of prejudgment or bias. However, the parties lose the benefit of knowing the impact of evidence, on a preliminary basis. They are deprived of an important factor in assessing whether to settle and if so, on what basis, at a critical point in the litigation.

[10] In this relatively long and multi-faceted trial, I gave the parties a choice. If they wanted me to be only the trial judge, I would do that. If they wanted me to conduct midtrial conferences in which I would express my preliminary views of the evidence presented to that point, I would do that, subject to specific agreements and terms. They chose the latter course.

[11] The mistrial motion contained evidence about the agreements of the parties and about counsel’s undertakings. The plaintiff filed the evidence of Mr. Gord McGuire, one of the plaintiff’s counsel. The defendants’ evidence did not mention these agreements and undertakings. I accepted Mr. McGuire’s uncontradicted, firsthand evidence and, in the mistrial decision, I found the agreements and undertakings to be as follows. I did not go beyond the evidence filed in the mistrial motion because of the nature of the motion. However, the agreements of the parties were more extensive than indicated in Mr. McGuire’s evidence.

• Counsel attended in my chambers during the trial. I raised with counsel the possibility of a midtrial settlement conference before another judge and also the possibility of sharing my preliminary views of the evidence with counsel and/or the settlement conference judge for the purpose of facilitating their settlement discussions.
• I emphasized to counsel that I would share my preliminary views of the evidence as aforesaid only if the parties consented and only if counsel agreed expressly that the parties would not later raise that as a basis for any bias motion. While Mr. McGuire’s affidavit evidence did not mention it, I also stated that, to express my preliminary views of the evidence presented, it would be necessary for the parties to agree that my preliminary views would not be regarded by them as indicative of a closed or biased mind.
• I made clear that I did not want my words in chambers and anything I might say to the settlement conference judge to compromise the integrity of the trial process.
• I repeatedly emphasized that the proposed process of sharing my preliminary views was for the parties’ benefit. It would only happen if counsel and the parties wanted it and it should not be construed as being indicative of a closed or biased mind. I stated that the trial was not over, that there was a lot of evidence to be heard, and that I would keep an open mind.
• On behalf of the defendants, Mr. Jull stated they wanted to hear my preliminary views, and he agreed to the terms which I said were required, if I were to voice those views.
• Shortly thereafter, in a second chambers meeting, counsel for all parties advised that they had spoken with their clients and,
  1. the parties wished to receive my preliminary views of the evidence. Mr. McGuire’s affidavit evidence did not mention it, but counsel also stated that the parties agreed to the terms and conditions I had proposed;
  2. counsel gave their undertakings that my preliminary views would not subsequently be the basis for arguing that I was demonstrating pre-judgment or bias, and;
  3. the parties wanted a midtrial settlement conference before another judge.

[12] In meetings with counsel, I expressed my preliminary views of the evidence and stated that my views were preliminary, there was more evidence to be heard, I would keep an open mind in the respect of the evidence and as a result, my preliminary views may well change. I arranged for another judge to conduct a midtrial settlement conference.

My Ruling in the Mistrial Motion in Respect of Midtrial Conference Issues

[13] In the mistrial motion, the defendants took the position that, while the motion was not “based in any way on in-chambers comments or events”, nonetheless statements made by me about the evidence during midtrial conferences provided context to my statements during oral argument and thus, they supported the submission that bias was reasonably apprehended in my comments and questions during argument.

[14] In dismissing the mistrial motion, I ruled as follows, referring to the defendants as the applicants:

It is therefore clear that the applicants’ present usage of my chambers statements as evidence in respect of a reasonable apprehension of bias, whether directly, contextually, or in any other way is in violation of their agreement and undertaking. Their agreement and undertaking induced me to share my preliminary views, to assist them in their settlement discussions. Having induced me to do so in this fashion, it is not appropriate to resile from their agreement and undertaking that my chambers statements would not be the basis of allegations of prejudgment or bias. In my opinion, the applicants are estopped from relying upon my aforesaid statements as “context” for their submission that a reasonable apprehension of bias exists herein.

Nonetheless, the interests of justice are of primary importance. Now that I face an allegation that my conduct of this trial gives rise to a reasonable apprehension of bias, I will not hold that the applicants are estopped from raising their issues. I will address the applicants’ assertions that my chambers statements are some evidence of a reasonable apprehension of bias, and I will take them into account in deciding this mistrial motion.

The Defendants’ Position

[15] In requesting the withdrawal of my critical conclusions, Mr. Jull submitted that he had filed the affidavit evidence which addressed my midtrial conference statements in sealed form and that I had directed that it be unsealed. As I understood Mr. Jull, his submission was that the filing of that evidence in sealed form and my direction that it be unsealed meant that I had no basis for concluding that it was inappropriate to rely on the midtrial conference evidence in support of the mistrial motion.

The Sealed Affidavit

[16] It was Mr. Jull’s decision to file sealed evidence. I did not have prior knowledge that this procedure would be used herein. I received sealed evidence and assumed that, at the hearing of the mistrial motion, Mr. Jull would make submissions about the use to be made of whatever was sealed. I did not read the sealed material.

[17] The mistrial motion came on for hearing but the parties were not ready to proceed. The motion was adjourned. Mr. Jull took that opportunity to address the sealed material. He stated that the sealed material was an affidavit dealing with matters that occurred in chambers and that his intention was that I should read and review it before the hearing in order to decide if it would be unsealed.

[18] When Mr. Jull stated I should read the sealed material before the hearing, I asked why the material was sealed. Mr. Jull replied that “we wanted to produce some evidence about what happened in chambers”. He stated that he was concerned about presenting evidence about something in chambers which was not in court and, therefore, not on the record. He advised that the Law Society of Upper Canada had suggested sealing the affidavit to “allow the judge to make a decision. If the judge wants to put it on the record, that’s up to the judge”.

[19] I sought further clarification about what information was sealed, and why. Mr. Jull stated that his concern in sealing the affidavit was that the midtrial conferences had taken place in chambers. Nonetheless, he wanted to rely on the sealed evidence about what I had said there, in support of the mistrial motion.

[20] During his submissions, I suggested to Mr. Jull that, in conducting the midtrial conferences, I acted as a judge and that I am accountable for what I did even if that process was, for other purposes, off the record. Mr. Jull replied, “Well, having heard what you just said, Your Honour, it seems to me based on that, and I agree, that we should not seal the affidavits”.

[21] I explored that concept further, and Mr. Jull stated, “In the way you have described it, Your Honour, and I agree, that your comments being even behind closed doors you’re exercising a judicial function. Given that… then it seems to me that the affidavits can be properly unsealed and ought to be filed. I – the only reason I sealed the affidavits was out of an abundance of caution, following guidance that I received from the Law Society.”

[22] My Ruling was that, even though the midtrial conferences which I conducted took place in chambers, I was accountable for my conduct because I was acting as the trial judge when conducting midtrial conferences in respect of the case I was trying. That meant that it was in the interests of justice that I be as accountable for whatever I said and did there as I would be if I were conducting only the trial. I, therefore, concluded that I “saw no reason” why the evidence in issue should be sealed.

[23] The affidavit in issue was then unsealed and was considered in the mistrial motion.

[24] Mr. Jull argued the mistrial motion on behalf of the defendants.

Conclusions

[25] Initially, Mr. Jull agreed to the terms which I required if I were to discuss my preliminary views of the evidence. Those terms were:

1. The parties must consent to me doing so, and must agree that my preliminary views of the evidence would not be regarded by them as indicative of a closed or biased mind;
2. Counsel must agree expressly that the parties would not later raise that as a basis for any bias motion.

[26] Shortly thereafter, Mr. Jull advised that he had spoken with the defendants and;

1. the defendants wished to receive my preliminary views of the evidence, thereby consenting to me expressing them, and they agreed to the terms and conditions I had mentioned;
2. Mr. Jull gave his undertaking as counsel that my preliminary views of the evidence would not subsequently be the basis for arguing that I was demonstrating prejudgment or bias.

[27] The mistrial motion was brought by Mr. Jull on the defendants’ behalf and was based on reasonable apprehension of bias. Mr. Jull argued the motion and presented the defendants’ submission that my preliminary views of the evidence were not in themselves grounds for a mistrial but they provided “context” to the contention that bias was reasonably perceived in my comments and questions during final argument.

[28] In my opinion, Mr. Jull’s usage of my preliminary views of the evidence to support the mistrial motion was contrary to the agreement which he communicated on behalf of the defendants and also contrary to the undertaking which he gave to the court as counsel, and thus as an officer of the court. That contextual usage was intended to help prove that my comments and questions during final argument were improper. As such, my preliminary views expressed in the midtrial conferences were part of the basis upon which the defendants argued that my conduct demonstrated prejudgment or bias.

[29] The defendants submitted that the filing of a sealed affidavit which mentioned my preliminary views of the evidence, taken together with my conclusion that I saw no reason why the evidence should be sealed, relieved the defendants from their agreement and relieved Mr. Jull from his undertaking. I do not accept that submission for the following reasons.

[30] In Mr. Jull’s submissions about the sealed affidavit and how the court should deal with it, his argument was entirely about chambers, where the midtrial conferences were conducted, and what that might mean about usage in evidence of statements made there by a judge. On two occasions, Mr. Jull confirmed that the fact that my statements were made in chambers was the reason why the affidavit was sealed. Importantly, Mr. Jull also did not raise the agreement of his clients or his undertaking either as a reason for sealing the affidavit or as a subject upon which he wanted me to rule.

[31] Mr. Jull also abandoned the position that the affidavit should be sealed. I have already mentioned Mr. Jull’s acceptance that the affidavit could be unsealed and filed, and his statement that the only reason he had sealed the affidavit was out of the abundance of caution. It was after Mr. Jull’s abandonment of sealing that I ruled that I saw no reason for the affidavit to be sealed.

[32] Do my conclusions that I am accountable for what I said as the trial judge conducting midtrial conferences and that I saw no reason for sealing the affidavit relieve either the defendants from their agreement or Mr. Jull from his undertaking? I think not. There was no explicit conclusion to that effect in my ruling. There was also no implicit conclusion because neither the agreement nor the undertaking was a basis for the ruling which the defendants requested, those subjects were not addressed in my ruling and the ratio of my ruling was entirely different. Consequently, nothing in my ruling addressed, nullified, set aside or relieved from compliance with either the defendants’ agreement or Mr. Jull’s undertaking.

[33] Trial judges are accountable for what they say and do in conducting a trial. When they conduct midtrial conferences in respect of that trial, they do so as the trial judge, in my opinion, and are also accountable for what they say and do there.

[34] It follows that the agreement of the defendants and the undertaking of counsel such as those herein afford little or no protection to the trial judge. Transparency and accountability are necessary to ensure public confidence in the administration of justice.

[35] In this case, I took a risk in attempting to assist the parties in finding their own resolution of issues which had existed between them for approximately eleven years and which had been in litigation for approximately eight years. In taking that risk, I relied primarily upon the good faith of counsel. I relied also on the parties’ acceptance that my preliminary views of the evidence did not detract, and would not be seen as detracting from my impartial consideration of all of the evidence. I took that risk because, in a number of other civil cases which I have tried, this has been an effective means not only of assisting the parties in considering the merits of settlement at a critical point in the litigation, but also an effective means of avoiding allegations of prejudgment or bias. Nonetheless, I recognized that, ultimately, whatever I said in providing my preliminary views of the evidence should be able to withstand scrutiny, or it should not be said.

[36] When litigants choose to enter into such an agreement or counsel choose to give such an undertaking, they are also accountable. If they choose to elicit by these means a trial judge’s preliminary impressions of the evidence in order to assist them in determining whether to settle, and then choose also to rely on the trial judge’s preliminary impressions of the evidence in an attempt to compromise the trial judge in the very way which they agreed or undertook not to do, their conduct is deserving of judicial disapproval.

[37] In almost twenty five years of using this process, this is the first time that this has happened, and it happened in a case in which my midtrial conference statements themselves were not said to be prejudgmental or biased.

Disposition

[38] The defendants breached their agreement. Mr. Jull breached his undertaking to the Court when he used my statements in midtrial conferences as part of the basis for his argument that a reasonable apprehension of bias existed. I decline to amend my Reasons for dismissing the mistrial motion.

Footnote:

[1] except for a limitations issue which arose for the first time during oral argument and which was adjourned for subsequent argument.

Dated at Toronto this ______ day of July, 2016. Mr. Justice John Macdonald

Released: July 7, 2016