Court File and Parties

Court File No.: 09-44583 Date: 2017/04/10 Ontario Superior Court of Justice

Between: 1168760 ONTARIO INC.; o/a R & R REALTY, PETER CLARK and J.G. RIVARD LIMITED Plaintiffs – and – 6706037 CANADA INC. and DENIS BERTRAND Defendants

Counsel: Eric R. Williams, for the Plaintiffs David Debenham, for the Defendant, Denis Bertrand Edward H. Masters for the Defendant, 6706037 Canada Inc.

Heard: December 5, 2016

Reasons for Decision

R. Smith J.

[1] The defendants brought a motion for an order prohibiting the plaintiffs from calling Donald Raymond to give expert opinion evidence for the Quigley Hill property, in accordance with his 2005 appraisal report.

[2] The defendants object to Mr. Raymond giving expert opinion evidence on the value of the subject property for the following reasons:

(a) He failed to submit a report in accordance with Rule 53.03(2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The plaintiffs do not seek to have Mr. Raymond testify as a Rule 53 expert witness, even though Mr. Raymond’s appraisal report was delivered to the defendants in 2010 with their affidavit of documents. The plaintiffs seek to have Mr. Raymond give evidence as a “participating or other expert” pursuant to the Ontario Court of Appeal decision in Westerhof v. Gee Estate, 2015 ONCA 206, 124 O.R. (3d) 721.

(b) The second and main reason for objecting is that the Defendants submit that Mr. Raymond does not qualify as a “participating or other witness” because:

(i) The contents of his file were destroyed and as a result he is unable to produce the documents, notes or records that he considered or discarded as not being relevant in reaching his opinion;

(ii) He carried out additional investigations at the request of plaintiffs’ counsel, after he discovered that his file had been destroyed by his former employer after seven years;

(iii) He did not actually participate in the sale by Bertrand to Joncas, but prepared an appraisal 16 months before the sale to Joncas for the purpose of valuing the subject property, for Royal Bank’s sale of their 18.91% interest in the property; and

(iv) His opinion is not based only on his knowledge of underlying facts but also partly on documents and statements obtained from the plaintiff.

(c) Thirdly the defendants submit that Mr. Raymond`s opinion is not relevant to the issues because:

(i) The appraisal was prepared for asset management purposes, and

(ii) His appraisal opinion is not relevant to the value of the subject property when it was sold 16 months later.

(d) Fourthly, the Defendants submit that the plaintiffs have not met the required standard for fulfilling their “best efforts” undertaking to obtain a copy of the appraiser’s file, and as a result the appraiser should not be allowed to testify. The defendants allege that the plaintiffs should have listed Mr. Raymond’s file in their affidavit of documents, and they failed to use their “best efforts” to obtain the contents of Mr. Raymond’s file.

(e) Finally, that the Court should exercise a gate keeper function and should not allow Mr. Raymond to testify because the probative value of his evidence is low and the prejudice to the defendants of not having access to his file is great.

[3] The plaintiffs disagree with the defendants’ submissions and argue that:

(i) Mr. Raymond’s appraisal is relevant to the issue of whether the subject property was sold at or below fair market value, as it was prepared 16 months before the disputed property was sold in 2007;

(ii) There is no prejudice to the defendants because his appraisal report sets out the basis for his expert opinion; the balance of the file which was destroyed, contained mostly information on sales that he discarded, as not being relevant. The information provided by the plaintiff is referenced in his report, and the defendants were granted an adjournment of the trial to obtain their own appraisal, which they have done and this removes any prejudice;

(iii) Mr. Raymond qualifies as a “participant or other expert” because his report was prepared before litigation commenced in the ordinary course of R & R’s business;

(iv) The destruction of the appraiser’s file by his former employer after seven years was indirect and not intentional. The cases relied on by the defendants are disclosure cases and did not prevent a witness from testifying;

(v) The plaintiffs do not contest that there may have been some inadvertence in complying with their “best efforts” undertaking, but the defendants were advised promptly of the situation and they also took no further steps; in any event they submit that in the circumstances, the remedy should not be to prevent Mr. Raymond from testifying.

Analysis

[4] The Mohan decision sets out the following four criteria to admit expert evidence:

(a) It must be relevant – I agree with the submission of the plaintiffs that his appraisal is relevant to the value of the subject property in 2005, as it was prepared only 16 months before the sale was made by Bertrand;

(b) It must be necessary, being outside the experience and knowledge of the court – This criteria is not disputed;

(c) There must be an absence of any exclusionary rule – no exclusionary rule has been identified, except for the destruction of his file which I will be discuss later;

(d) There must be a properly qualified expert – The defendants do not challenge Mr. Raymond’s qualifications as an appraiser. He is a qualified appraiser and they do not challenge his impartiality.

Best Efforts Undertaking

[5] I agree with the defendants’ submission and the case of Zarate (Litigation Guardian of) v. Toronto Community Housing Corporation, that simply writing one letter asking the appraiser to produce his file and being told that he was not comfortable with producing it, is not sufficient to comply with a “best efforts” undertaking. A further letter should have been sent to ascertain his problem and to propose solutions, such as advising Mr. Raymond that his client would sign a release. Further, he should have been advised that if he did not produce his file, a motion would likely be brought and there was a risk he would be ordered to pay costs.

[6] In this case, plaintiffs’ counsel understood that the appraiser had refused to produce his file and he advised the defendants promptly of this fact. The defendants also bear some of the blame as they failed to request that further steps be taken and also failed to bring a motion to obtain a copy of his file. The defendants had a lengthy period of time to respond and did not advise the plaintiffs that the appraiser’s response was unacceptable.

[7] The plaintiffs did not take sufficient steps to comply with their best efforts undertaking but the defendants also failed to take reasonable steps for a lengthy period of time to insist on further steps being taken by the plaintiffs, or by bringing a motion. In the circumstances, I find that the remedy of preventing a witness from testifying is not justified as both parties share the blame for failing to take further steps to obtain a copy of Mr. Raymond’s file, which was inadvertently destroyed.

Is Mr. Raymond a Participant or Non-Party Expert under Westerhof?

[8] It is agreed that Mr. Raymond’s file was destroyed in 2012 by his former employer, in accordance with its standard practice, after 7 years had passed. I agree with the defendants’ submission that Mr. Raymond should have been advised to preserve his file once it became apparent that there was a likelihood that he would become a witness in this trial. Unfortunately, this was not done.

[9] In paragraph 85 of the Westerhof decision, the Court of Appeal outlines the fifth requirement to be a participant or other expert. The Court of Appeal assumed that the summary could be obtained through the discovery process:

Fifth, I am not persuaded that disclosure problems exist in relation to the opinions of participant experts and non-party experts requiring that they comply with rule 53.03. In many instances, these experts will have prepared documents summarizing their opinions about the matter contemporaneously with their involvement. These summaries can be obtained as part of the discovery process. Further, even if these experts have not prepared such summaries, it is open to a party, as part of the discovery process, to seek disclosure of any opinions, notes or records of participant experts and non-party experts the opposing party intends to rely on at trial. If the notes produced are illegible, the party producing them must provide a readable version.

[10] Mr. Raymond has prepared a document summarizing his opinion contemporaneously with his involvement by preparing a lengthy appraisal report, which has been provided to the defendants. If the expert had not prepared a summary, “then” it would be open to a party, as part of the discovery process, to seek disclosure of any opinions, notes or records of the participant and non-party expert. In this case, Mr. Raymond prepared a summary, which was included in his lengthy appraisal report, which was provided to the Defendants.

[11] As a result, I find that Mr. Raymond is a participant or non-party expert as defined under Westerhof because he prepared a detailed report summarizing his opinion, which was contained in his appraisal report.

Is Mr. Raymond no longer a Participant Expert or a Non-Party Expert because his File Was Destroyed?

[12] I find that Mr. Raymond is not disqualified as a participant or non-party expert because his file was destroyed for the following reasons:

(a) His file was destroyed by his former employer in accordance with their standard practice after seven years, and not with any intention to conceal any information;

(b) The relevant information in his file was summarized in his lengthy appraisal report that sets out the data and the basis for forming his opinion. A copy of his report was provided to the defendants early in the litigation;

(c) The Defendants will suffer minimal prejudice because they have received the data forming the basis for Mr. Raymond’s opinion in his report. His file, that was destroyed, contained some details of sales that he determined were not relevant. Any prejudice caused to the defendants as a result of not being aware of irrelevant sales has been cured by allowing them to obtain their own appraiser, who also has access to all of the sales in the registry system;

(d) The fact that the appraisal was prepared 16 months before the sale by Mr. Bertrand and the fact that he stated that it was for asset management purposes, does not make it irrelevant but rather as a matter of weight to be given to his evidence;

(e) The defendants will be able to cross-examine Mr. Raymond and point out any weaknesses in his report;

(f) The defendants were not concerned enough to take any steps to obtain a copy of Mr. Raymond’s file for about two years, before it was inadvertently destroyed; and

(g) The probative value of his evidence exceeds any prejudice to the defendants, which I find is minimal for the above reasons.

[13] The defendants have not challenged Mr. Raymond on the grounds that he lacks impartiality. He remains a qualified participant expert or non-party expert. I am not aware of the exact steps that he took, subsequent to finding that his file had been destroyed, but my understanding is that he tried to get copies of some of the documents that he believed had been in his file. This does not disqualify him to give evidence as a participant or non-party expert.

Does the Lack of Mr. Raymond’s Participation in the Sale to Joncas Disqualify him as a Participant Expert?

[14] The plaintiffs do not allege that Mr. Raymond participated in what they allege is the unauthorized sale by Mr. Bertrand to Joncas. The situation is more analogous to a family doctor or other specialist, who has provided opinion evidence related to a pre-existing medical condition, where the patient is subsequently injured and claims for damages. The expert evidence of the doctor who treated the patient and prepared reports with opinions shortly before the patient was injured, could be relevant and if so, they would be permitted to testify as participant or non-party expert. In this case, Mr. Raymond participated by appraising the land, which is the subject of this dispute. The land would be analogous to the patient and I find that Mr. Raymond participated with the Quigley Hill land by examining it and comparing it with other comparable sales in the area and preparing a report containing a summary of his findings, which forms the basis for his opinion.

Report Contains Opinion as Opposed to Factual Observations

[15] Mr. Raymond’s opinion of value as set out in his appraisal report, was prepared in accordance with the appropriate standards. Mr. Raymond would have physically observed the land in question; he discovered facts about the property including its zoning and potential for development, and was aware of other expert reports affecting its future development, including soils and water studies that were filed with the planning department. An expert working within his or her area of expertise is permitted to consider hearsay evidence, in forming his opinion. An appraiser may consider information that he or she deems reliable to form his or her opinion in accordance with acceptable standards.

[16] I anticipate that an important part of Mr. Raymond’s expert appraisal evidence will be that he considered sales of what he determined were comparable to the property in question which he also examined. These are both be important factual observations.

[17] In this case, Mr. Raymond’s expert appraisal report is based on factual findings, including his observations of the land, his observations of comparable sales from the registry system, and based on information furnished by the plaintiffs about the lands from various parties. He then applied his expertise to the facts and information he discovered in conducting his investigation of the property, and provided his opinion of value.

Disposition of the Motion

[18] I find that Mr. Raymond should not be disqualified from testifying as a participant or non-party expert witness because his opinion is partly based on information supplied by the plaintiffs in addition to his factual observations.

Final Disposition

[19] The Defendants’ motion to prevent Mr. Raymond from testifying as a participant expert or non-party expert, as recognized under Westerhof, in this trial is dismissed.

Costs

[20] Submissions may be made at the end of the trial.

R. Smith J. Released: April 10, 2017