CITATION: Paul v. Sasso, 2016 ONSC 7488
COURT FILE NO.: CV-15-522279
DATE: 2016-12-01
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Russell G. V. Paul and Doreen G. Downs Paul, Plaintiffs/Respondents
AND:
William V. Sasso, Sutts, Strosberg LLP, Ben Lansink and Lansink Appraisals and Consulting (also known as Wellington Realty Group Inc.), Defendants/Moving Parties
AND BETWEEN:
Lansink Appraisals and Consulting (also known as Wellington Realty Group Inc.), Plaintiff by Counterclaim
AND:
Russell G. V. Paul and Doreen G. Downs Paul, Defendants by Counterclaim/Respondents
BEFORE: S. F. Dunphy, J.
COUNSEL: Roger Horst, for the Moving Party Defendants/Plaintiff by Counterclaim Ben Lansink and Lansink Appraisals and Consulting Inc.
Russell G. V. Paul and Doreen G. Downs Paul, Self-Represented
HEARD: November 14, 2016
ENDORSEMENT
[1] Does the immunity our courts extend to witnesses as regards their testimony in court extend to a suit against a party’s own expert witness?
[2] The moving party defendants, Mr. Ben Lansink and his company Wellington Realty Group Inc. (operating as “Lansink Appraisals and Consulting”) have brought this motion for summary judgment to dismiss the negligence claim brought against them by the plaintiffs. The plaintiffs claim that Mr. Lansink breached his professional duties to them in providing expert evidence at a trial. The trial judge considered but ultimately rejected substantially all of Mr. Lansink’s conclusions regarding the valuation of the plaintiffs’ shares and made adverse comments regarding his lack of objectivity. The moving parties are asking me to dismiss the action in light of their claimed witness immunity. Wellington is also seeking summary judgment in respect of outstanding invoices totaling $24,086.81 in regards to Mr. Lansink’s testimony at trial.
[3] For the reasons that follow, I am allowing the motion in part and dismissing it in part. The central thrust of the moving parties’ position – that as witnesses they are entitled to immunity for their testimony - is well-founded in my view. The immunity of witnesses in Ontario has been accepted by for important reasons of public policy. I can find no principled reason to depart from that policy in the case of a plaintiff suing his or her own expert witness. The plaintiff’s unhappiness with the verdict at trial notwithstanding, the question of the value of the plaintiffs’ shares has now been determined and cannot be changed except by way of a properly constituted appeal.
[4] However, while I would dismiss the plaintiffs’ claim as against the moving parties, I cannot grant the moving party’s counterclaim. None of the public policy constraints that have led to the immunity of witnesses in a proceeding applies to permit those witnesses to enforce their own contractual claims for payment despite claimed breaches of duty. The public policy in favour of immunity is sufficiently vindicated by recognizing the inability to pursue witnesses for consequential damages and need not be extended to prohibit a defendant from pleading services were negligently rendered in response to a claim brought for payment of services by a witness. In my view, the plaintiffs have raised triable issues in respect of the counterclaim at least.
Overview of facts
[5] The plaintiffs were shareholders in a company known as 1433295 Ontario Limited. In that capacity they brought a claim against 1433295 and its majority shareholder invoking, among other things, their dissent and appraisal rights. The central issue in the claim was the value of the plaintiff’s shares in 1433295, itself a company owning and operating a hotel.
[6] The background to that prior proceeding was reviewed by the Divisional Court in Paul v.1433295 Ontario Limited, 2015 ONSC 3588 as well as in the trial decision of Nolan J. is to be found at Paul v. 1433295 Ontario Limited, 2013 ONSC 7002. I shall not repeat it here.
[7] The plaintiffs (sometimes hereafter referred to as “the Pauls”) retained Mr. Lansink and his company Wellington on December 11, 2011 to provide expert evidence for purposes of the trial. The retainer agreement is contained in a series of emails exchanged between the Pauls, Mr. Lansink and the Paul’s lawyer for the litigation, Mr. Sasso. The email exchange by which Mr. Lansink and Wellington were retained makes no mention of the defendant by counterclaim TCB Realty Ltd. as being a client.
[8] Two reports were produced by the moving parties: an “Appraisal Report and Technical Review, Retrospective Market Value Estimate as of March 18, 2008 for the real property 17 Cumberland Street North, Community of Port Arthur, Municipality of Thunder Bay, Ontario” dated February 24, 2012 and “Technical Review Report of a report authored by Stefania D’Antonio and Monique Rosszell” dated February 2, 2013. In essence, the first report represented Mr. Lansink’s own appraisal of the property and business while the second report contained Mr. Lansink’s commentary on the report produced by 1433295’s experts. Both reports specifically identify the “Client” as being Mr. Sasso and the Pauls. Neither report identifies TCB as a client.
[9] The trial was heard by Nolan J. over a total of 13 days between February 19 and May 27, 2013. Mr. Paul gave his own evidence of value of the hotel business in addition to three other experts (including Mr. Lansink). Nolan J. commented on the valuation evidence before her as follows in her reasons for judgment (at paras. 55 and 56):
“[55] The court was presented with three different opinions of value of the Hotel as of Valuation Day prepared by experts qualified to give such opinions. Every valuation used either an income approach or combined income and market comparison approach. As referred to earlier in this judgment, Mr. Paul prepared his own valuation of the Hotel even though he is not a qualified appraiser. In my view, it was presumptuous of him to take that approach to providing the court with evidence required to determine a proper share valuation. His report was not helpful and the presentation of his “opinions” resulted in a considerable waste of court time, both in terms of direct and cross-examinations. While Mr. Paul is an experienced real estate broker who has considerable knowledge about the buying and selling of hotels, his views as an interested party are of no value to the court. The fact that he assigned the highest value to the Hotel was not surprising, given his interest in the outcome.
[56] Mr. Paul’s presentation of a report had another unfortunate result. His own expert, Mr. Lansink, made reference to various aspects of Mr. Paul’s “findings” in his technical report prepared to respond to the defendants’ experts’ reports to rebut their opinions. In doing so, it brought Mr. Lansink’s objectivity into serious question.”
[10] The Paul’s were not successful at trial. The value of the shares found by Nolan J. was, with minor adjustments, the amount determined by the defendants’ experts. Mr. Lansink had suggested a global value of $6.14 million; Ms. Rosszell suggested $4.2 million while PKF Consulting (Mr. Stanford and Mr. Raymer) suggested $4.1 million, the latter number being the one accepted by Nolan J. Mr. Paul’s figure had been considerably higher ($8.0 million).
[11] In the present proceeding, the plaintiffs complain that as lay people they did not know or appreciate that their participation in the appraisal process would invalidate the testimony of Mr. Lansink. Mr. Lansink and Wellington are said to have been negligent and to have breached the terms of their engagement as well as the terms of the Canadian Uniform Standards of Professional Appraisal Practice in failing to provide an unbiased and professional technical review report. Mr. Lansink was also alleged to have lied to the trial judge about the extent of his discussions with the plaintiffs, an entirely extraneous allegation to which I shall return in more detail below. The damages sought from Mr. Lansink and Wellington are $506,000 almost all of which represents the difference between the share value as found by Nolan J. and the value ascribed to those same shares by Mr. Lansink in his expert report.
[12] The statement of claim also makes allegations about Mr. Sasso and his firm that are not before me on this motion. My conclusions on this motion apply solely to the parties to the motion being Mr. Lansink and Wellington as moving parties and the Pauls and TCB as responding parties.
Issues to be decided
[13] Are the moving parties entitled to claim the benefit of witness immunity as against their own client?
[14] Should the counterclaim for the professional fees of the plaintiff by counterclaim be allowed?
Discussion and analysis
(a) Are the moving parties entitled to claim the benefit of witness immunity as against their own client?
[15] In my view, the moving parties are entitled to a dismissal of the claim as against them.
[16] Our courts have long held as a fundamental principle that witnesses and parties are entitled to absolute immunity from subsequent liability for their testimony in judicial proceedings since the proper administration of justice requires the full and free participation of witnesses unhindered by fear of retaliatory suits: Reynolds v. Kingston (Police Services Board), 2007 ONCA 166, 84 O.R. (3d) 738 at para. 14. The privilege extends to evidence orally or in writing, it includes documents properly used and regularly prepared for use in the proceedings and is not limited to defamation actions but extends to any action, however framed: Samuel Manu-Tech Inc. v. Redipac Recycling Corporation, 1999 CanLII 3776 (ON CA) at paras. 19-20 and Salasel v. Cuthbertson, 2015 ONCA 115. The privilege has been applied in particular to expert reports and evidence given based upon the report at trial: Fabian v. Margulies, 1985 CanLII 2063 (ON CA).
[17] I can see no principled reason why the privilege should be confined to adverse witnesses. The policy of the common law to ensure that all witnesses are able to give their evidence free of fear of retaliatory law suits is not diminished when considered from the perspective of a party’s own expert witness. To the contrary, the very strong policy of the common law has been that a party’s own expert must be objective and not become a “hired gun”. Rule 53.03(2.1) of the Rules of Civil Procedure requires an expert to certify his or her understanding of the duties of an expert.
[18] The harm that could follow from allowing parties to pursue their own experts for alleged breaches is amply illustrated by the facts of this case. Nolan J. has made a binding determination of the value of the shares of 1433295 formerly owned by the plaintiffs. That decision is binding upon them and has not been set aside or reversed on appeal. Substantially the entire subject matter of the plaintiff’s case amounts to a de facto appeal of the decision of Nolan J. The damages sought are based on the value of the shares not found by Nolan J. and the costs to the plaintiff of that unsuccessful litigation. Nolan J. had the issue of value before her and weighed the testimony of all of the witnesses. Her determinations bind the plaintiffs and cannot be questioned through the back door by means of a subsequent civil suit. The principle of finality strongly supports the application of the common law immunity in this case. The question of what the result would have been if Mr. Lansink had been accepted as fully independent can neither be asked nor answered in another proceeding.
[19] This finding does not mean that the question of whether Mr. Lansink’s alleged breach of contract and of duty to be fully independent is not justiciable. As shall be seen below, I have concluded that the alleged breach of contract and duty may well sustain a defence to the counterclaim in this case. It does not follow that Mr. Lansink’s immunity from civil suit confers upon him a question-free right to be paid for his services in all circumstances. However, the immunity principle does mean that damages claims that are directly or indirectly premised upon the results of the trial before Nolan J. and what might have been had it gone otherwise cannot proceed. Since the claim against Mr. Lansink and Wellington in the plaintiffs’ action is based upon that premise, the claim cannot succeed and these two defendants are entitled to judgment releasing them from the action to that extent at least.
[20] Accordingly, I find that the moving parties Mr. Lansink and Wellington are entitled to judgment dismissing the action as against them.
(b) Should the counterclaim for the professional fees of the plaintiff by counterclaim be allowed?
[21] The counterclaim has been brought by the defendant Wellington Realty Group Inc. carrying on business as Lansink Appraisals. The named defendants by counterclaim are Mr. Russell Paul, Ms. Doreen Downs Paul and their company TCB Realty Ltd. Wellington seeks the payment of $24,086.81 being the amount of certain invoices delivered but not paid in respect of Mr. Lansink’s services.
[22] The counterclaim alleges that the defendants contracted with the Pauls and TCB to perform the appraisal work represented on the invoices. The defence to the counterclaim admits that Wellington “was retained by the Pauls” a term defined to mean the two individual defendants by counterclaim and the corporation TCB. However, the defence also specifically denied that TCB “is a party to the proceedings at stake”, a specific denial that I view as derogating from the general admission via an overbroad defined term.
[23] I am satisfied that the defence to counterclaim fairly read as a whole does not admit that TCB was a party to the retainer agreement with Wellington. Were it necessary to grant leave to amend the defence to counterclaim in order to clarify the point, I should do so on my own motion. I do not think that step is necessary here.
[24] The defence to counterclaim (i) denies that TCB is a party; (ii) pleads negligence and breach of contract in the performance by Mr. Lansink of the services provided; and (iii) pleads that Mr. Lansink testified at trial over four days only.
[25] I shall review the adequacy of each of these defences separately.
Is TCB a proper party to the contract?
[26] Mr. Lansink’s evidence on the motion provides no evidentiary foundation for having included TCB as a party-defendant to the counterclaim. The chain of emails that Mr. Lansink testified constitute the retainer of his firm by the Pauls contains no reference to TCB as client but does refer to the Pauls and Mr. Sasso as users of the intended report. The two expert reports prepared by Mr. Lansink and delivered by Wellington name Mr. Sasso and the Pauls as clients without mention of TCB. TCB was not a party to the trial at which Mr. Lansink provided expert evidence in person. There is simply no factual basis from which I could find that a contractual link exists between TCB and Wellington. They are strangers and TCB ought not to have been joined. The fact that TCB’s name was added to the invoices rendered by Wellington does not create a contract where none existed.
[27] Mr. Lansink’s stated reason for having included TCB as a defendant to the counterclaim was that that it was TCB who wrote the previous cheques. The original $5,000 deposit was paid by MasterCard and, from the email exchange that constituted the retainer agreement, appears to have been paid by the Pauls’ daughter. The fact that TCB may have paid one or more of the invoices that followed is not sufficient in my view to render TCB liable on a contract of retainer it was not party to for the cheques it did not write on the invoices it did not pay. It is hardly uncommon for individuals to use bank accounts of holding companies they control to pay expenses – the accounting for those directions and payments for tax and other purposes is obviously an entirely different matter and is of no concern to Wellington.
[28] TCB is entitled to judgment dismissing the counterclaim as against it. The plaintiff by counterclaim has put its best foot forward and failed to prove that it has any claim to pursue as against TCB.
Disputes regarding the amounts outstanding
[29] The evidence of Mr. Lansink on behalf of Wellington in respect of the counterclaim includes copies of Wellington’s outstanding invoices. These contain significant time charges for days spent in court by Mr. Lansink where he was not testifying. Mr. Lansink’s affidavit claimed that he was directed to observe the entire trial by the Pauls and their counsel Mr. Sasso but provides no particulars of how and when those instructions were alleged to have been given.
[30] Mr. Paul’s responding affidavit on this motion specifically denied having instructed Mr. Lansink to stay in court for the duration of the trial or having authorized Mr. Sasso to so instruct him.
[31] I am left with an irreconcilable conflict on the evidence as to whether all aspects of the work invoiced by Wellington were in fact authorized. The amount at issue would appear to be at least $6,000 of the $24,086.81 claimed on the counterclaim. The exact amount would require a more careful analysis than either side entered into in argument.
Breach of contract and negligence
[32] The Pauls have defended the counterclaim alleging that Mr. Lansink was in breach of his contract and his professional and ethical duties by reason of having failed to act independently. Mr. Paul’s affidavit has provided extensive evidence of the reasons why he asserts that Mr. Lansink has breached those obligations.
[33] Mr. Lansink obviously took strong exception to this evidence. His evidence takes strong issue with the allegation that he breached any ethical duties and strongly defends the professional standards he applied in preparing his two reports (and in testifying at trial).
[34] It is clear that the breaches of duty alleged by the plaintiffs (defendants by counterclaim) go to the root of the retainer of Wellington. I am of the view that witness immunity can properly be used as a shield by Mr. Lansink to avert liability on the plaintiff’s claim but cannot be used as a sword by Wellington to preclude the Pauls from defending Wellington’s counterclaim on the basis of the alleged breaches of contract and negligence. The policy grounds that prevent the plaintiffs from suing their own expert witness for consequential damages are of no application to defending a claim for professional fees brought by an expert witness. I am drawing for this purpose no relevant distinction between Mr. Lansink (who was the actual witness) and Wellington (the company through which he billed his services). If properly demonstrated, these breaches may well provide a defence to some or all of the damages claimed by Wellington.
[35] I must however comment upon the plaintiff’s allegation that Mr. Lansink lied to Nolan J. on the witness stand and (hopefully) put that question at least to rest. There was no such finding by Nolan J. in her judgment. I can see no means by which an alleged lie neither detected nor relied upon by Nolan J. in her decision can have any bearing on any live issue today. The expert evidence of Mr. Lansink was clearly rejected by Nolan J., but she did not do so in consequence of any conclusion that he had lied to her. This allegation is exceptionally serious and grave but of absolutely no relevance to the matters at hand. It is a textbook example of a collateral issue – and is a rabbit hole down which this proceeding ought not to be permitted to go.
Conclusion re counterclaim
[36] In my view, the evidence before me raises significant triable issues regarding (i) the authority of Wellington to have charged for a material portion of Mr. Lansink’s billed time at trial; and (i) the claimed breaches of duty and negligence.
[37] In respect of both triable issues I have extensive and contradictory evidence of the parties.
[38] It is clearly not possible for me to resolve the factual disputes necessary to dispose of these triable issues without resorting to the toolbox of Rule 20.04(2.1) of the Rules of Civil Procedure. There are numerous irreconcilable conflicts in the very voluminous evidence that would require findings of credibility to be made, inferences to be drawn and evidence to be weighed.
[39] I am only authorized by Rule 20.04(2.1) to use the “toolbox” of powers listed therein in cases where the interests of justice do not require such powers to be exercised only at a trial. In my view, this is a case where the interests of justice require that the powers enumerated in Rule 20.04(2.1) ought only to be exercised at trial. There are simply too many issues of irreconcilable conflict in the evidence. The defences raised are too complex and the evidentiary contradictions too deep to be resolved without viva voce testimony. The issues raised have substantial parallels with the issues that remain to be resolved in the action that is continuing with Mr. Sasso and his firm as defendants. It makes no sense to have separate hearings on the counterclaim and the main action with so many common issues.
[40] In my view, the proper outcome in this case is to dismiss the motion for judgment under the counterclaim and to require the counterclaim to be proved in the usual way at trial. Subject to further order, the trial of the counterclaim ought to be concurrent with the trial of the main action (despite the success of the motion for judgment in that regard as regards these defendants) in light of the common issues remaining. However, I am granting judgment in favour of TCB alone dismissing the counterclaim as against TCB only.
Disposition
[41] In the result, I dismiss the counterclaim as against TCB and I otherwise dismiss Wellington’s motion for judgment as against Mr. and Mrs. Paul.
[42] In light of the fact that I have dismissed the plaintiffs’ claim against Mr. Lansink and Wellington, the plaintiff by counterclaim (Wellington) will have no further role in the main proceeding apart from its counterclaim for fees. Subject to further order, the counterclaim shall be tried concurrently with the remainder of the claim in the main action.
[43] The moving parties should not fairly have to bear the burden of paying costs of the counterclaim should they elect to discontinue the counterclaim. It was originally appended to a much larger claim that has now been dismissed as against them. Accordingly, any discontinuance of the counterclaim shall be without costs if done within thirty days of the release of these reasons (or following the final disposition of any appeal of my order as regards the counterclaim as the case may be).
[44] Success has been divided on the motion and I have had no substantive submissions from the parties on costs nor outline of costs. If either party seeks costs, I shall receive written submissions on or before December 31, 2016. Responding submissions shall be due seven days after costs submissions are received. Written submissions shall be limited to five pages excluding attached settlement offers or Outline of Costs. Cases need not be attached if available on line.
[45] Order accordingly.
S. F. Dunphy, J.
Date: December 1, 2016