NEWMARKET COURT FILE NO.: CV-15-124489-A1 and CV-14-502952-A1
DATE: 20220124
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE 6th LINE MOFOS LIMITED
Plaintiff
– and –
STEWART, YOUNG, HILLESHEIM & ATLIN LIMITED, THE MARSIGLIO GROUP LTD., 2234370 ONTARIO LIMITED, 2234439 ONTARIO LIMITED and 2186199 ONTARIO INC. carrying on business as a general partnership under the firm name and style of INTEGRIS REAL ESTATE COUNSELLORS, DAVID ATLIN and ALISTAIRWISHART
Defendants
Kevin Sherkin, for the Plaintiff, The 6th Line Mofos Limited
Doug Smith and Andrew Baker, for the Defendants
– and –
JAMES FREDERICK DIAMOND, LEVINE SHERKIN BOUSSIDAN PROFESSIONAL
CORPORATION, ROBERT J. POTTS, and BLANEY McMURTRY LLP
Third Parties
John Pirie and Ahmed Shafey, for the Third Parties, James Frederick Diamond and Levine Sherkin Boussidan Professional Corporation
Sandra L. Secord, for the Third Parties, Robert J. Potts and Blaney McMurtry LLP
HEARD: November 29, 2021
NEWMARKET COURT FILE NO.: CV-15-124490-00
TORONTO COURT FILE NO.: CV-14-501660
ONTARIO
SUPERIOR COURT OF JUSTICE
BAYVIEW-WELLINGTON (BRADFORD) INC.
Plaintiff
– and –
DAVID ATLIN, ALASTAIR WISHART, INTEGRIS REAL ESTATE COUNSELLORS, STEWART, YOUNG HILLESHEIN & ATLIN LTD. and THE MARSIGLIO GROUP LTD.
Defendants
Ronald Moldaver, for the Plaintiff Bayview-Wellington (Bradford) Inc.
Doug Smith and Andrew Baker, for the Defendants
REASONS FOR DECISION
HEALEY J.
OVERVIEW
[1] The plaintiffs in each of these actions were formerly co-owners of a parcel of undeveloped land in Bradford, Ontario (the “Property”), consisting of approximately 85 acres. The relationship between these co-owners, The 6th Line Mofos Limited (“6th Line”) and Bayview-Wellington (Bradford) Limited (“Bayview”), was governed by a co-tenancy agreement (the “CTA”) created in 2003. Their joint intention was to develop the Property into a residential subdivision.
[2] The CTA included a mechanism by which one owner could purchase the other’s interest. 6th Line and Bayview’s relationship broke down and became litigious. After several years they agreed that Bayview would purchase 6th Line’s interest as provided for in the CTA. The CTA allowed Bayview to exercise its option to purchase 6th Line’s interest at a price equal to 85% of its appraised value.
[3] 6th Line and Bayview could not agree on the value of the Property. The CTA provided that in such an event, each would obtain an appraisal of the Property. If the two appraisers did not agree on the Property’s fair market value, its value would be determined by averaging the two appraisals.
[4] Bayview retained Bosley Farr Associates Ltd. and its appraiser, Fred Roth. 6th Line retained David Atlin and Alistair Wishart of Integris Real Estate Counsellors (the defendants in both actions are collectively “Integris”).
[5] On January 31, 2012, 6th Line and Bayview executed a further agreement (the “Side Agreement”), which provided that if Roth and Integris could not agree on the Property’s fair market value, the appraisers would meet, consult, investigate and make documents available to determine the Property’s value, with the methodology provided for in the CTA.
[6] The two appraisals were widely divergent. Roth delivered a report assessing the Property’s value at $199,000 per acre. Integris’ report assessed it at $325,000 per acre.
[7] Bayview did not accept the methodology used by Integris and took the position that the Integris appraisal was not a bona fide appraisal as defined by the CTA and the Side Agreement. Bayview refused to close the transaction. This triggered the dispute resolution mechanism under the Side Agreement, which was binding arbitration.
[8] In the arbitration, Bayview sought a declaration that 6th Line continued to be a defaulting co-tenant pursuant to the CTA, and that Bayview was therefore entitled to institute any remedy permitted by the CTA and by the earlier Consent Award made by the retired Honourable Justice Patrick Galligan (“Arbitrator Galligan”). 6th Line counterclaimed for specific performance mandating the purchase by Bayview of its interest in the Property, using the formula of 85% of the average of the Roth and Integris appraisals.
[9] The arbitration was conducted over 18 days between November 2012 and April 2013 by the former Associate Chief Justice of Ontario, the Honourable Justice John Morden (“Arbitrator Morden”). Arbitrator Morden rejected the Integris report and found that it did not qualify as an appraisal under the CTA. The disqualification of the Integris appraisal meant that only the Roth appraisal could be used to calculate the buyout price of the Property.
[10] The results of the arbitration permitted Bayview to acquire 6th Line’s beneficial interest in the Property for $2,533,487.64, which included additional interest due under the CTA and legal costs and disbursements. Had the Integris appraisal been utilized, Bayview would have been required to purchase 6th Line’s interest for $4,237,942.67 (not including any potential adjustment for interest and costs).
[11] 6th Line and Bayview then both sued Integris. In 6th Line’s action, it seeks, inter alia, damages from all of the Integris defendants on a joint and several basis for breach of contract, negligence and breach of fiduciary duty. Integris then added the lawyers and law firms who acted for 6th Line before and during the arbitration, seeking contribution and indemnity from those third parties.
[12] In Bayview’s action against Integris, Bayview seeks damages for its losses caused by having to undergo the arbitration conducted by Arbitrator Morden, including unrecovered legal fees and disbursements in the amount of $122,146.94. Arbitrator Morden awarded costs payable by 6th Line to Bayview on a partial indemnity basis.
[13] There are four motions for summary judgment now before the court. All parties agreed pursuant to r. 20.04(2)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), to have the claims determined by the process of summary judgment.
[14] Integris seeks summary dismissal of the plaintiffs’ claims in both actions, advancing the doctrine of witness immunity as the primary grounds for dismissal.
[15] 6th Line seeks summary judgment against Integris in the amount of $2,971,117.31 plus interest and costs.
[16] Bayview limits its request to summary judgment for the costs and disbursements not awarded by Arbitrator Morden in the amount of $122,146.94, being the difference between its full indemnity costs and those awarded.
[17] No relief is sought on these motions against the third parties.
ISSUES
[18] The issues to be decided are:
Whether these cases are appropriate for summary judgment;
Whether 6th Line and Bayview’s claims are barred by the doctrine of expert witness immunity, including the preliminary question of whether Atlin was an expert witness;
If the claims are not barred by expert witness immunity, whether:
(i) issue estoppel or the doctrine of abuse of process should apply to prevent Integris from relitigating the issues decided by Arbitrator Morden;
(ii) whether the findings of Arbitrator Morden allow this court to grant summary judgment on the claims;
(iii) whether Integris owed a duty of care to Bayview. If there is sufficient proximity between Bayview and Integris to give rise to a duty of care, whether there are policy reasons for not enforcing such a duty; and
(iv) whether Integris was in a contractual or quasi-contractual relationship with Bayview, and whether Integris breached that contract.
SUMMARY JUDGMENT
[19] This case is an appropriate one for summary judgment.
[20] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49, Karakatsanis J. stated:
There will be no genuine issue requiring trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process 1) allows the judge to make the necessary findings of fact, 2) allows the judge to apply the law to the facts, and 3) is a proportionate, more expeditious and less expensive means to achieve a just result.
[21] At para. 50, the Court defined the overarching issue to be “whether summary judgment will provide a fair and just adjudication.” Karakatsanis J. went on to say that “the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.”
[22] Such is the case here. All four motions arise from a common set of facts and their issues overlap. The actions can be dealt with simultaneously. All parties are represented by experienced counsel who have placed a comprehensive record before the court that includes cross-examination transcripts. From this extensive record I have been able to conclude that I can weigh the evidence, find the necessary facts and apply the relevant legal principles to resolve the issues in dispute.
[23] Primarily, the disputed issues are questions of law. Most of the facts are not in dispute. The only liability issue that is in dispute is whether Mr. David Atlin was testifying as an expert witness at the arbitration. Specifically, both plaintiffs maintain that there was no legal proceeding pending between them at the time of the Integris defendants’ retainer, which is disputed by Integris. While there are minor conflicts in the evidence of the parties, this is the primary liability issue in dispute that appears to require a trial. Accordingly, this is a case in which determining whether there is a genuine issue requiring a trial requires resort to the court’s powers under r. 20.04(2.1) of the Rules. Having done so, I have determined that this issue may be determined on the record before the court. All parties have met their burden of showing that there is no genuine issue requiring a trial on the issue of liability.
[24] With respect to damages, the Integris defendants do not challenge Bayview’s calculation of loss although they do challenge 6th Line’s. If it is necessary to make a determination of damages, the evidence allows this court to do so.
[25] Accordingly, it is not in the interests of justice for any question of fact or law to wait for disposition at a trial. Summary judgment is the most proportionate, cost-effective, and efficient method of proceeding.
FACTS
The Provisions of the CTA
[26] The CTA dated November 27, 2003, as amended, governed the relationship between the co-owners. Among other things, it set out the financial obligations of 6th Line and Bayview and addressed their rights and remedies in the event either of them defaulted.
[27] One of the remedies available to a non-defaulting co-owner is found at Article 9.02(c). That provision allows a non-defaulting co-owner to give an initiating notice to the defaulting co-owner to commence proceedings to determine the appraised value of the Property, thereafter electing to buy out the defaulting co-owner’s interest at 85% of the Property’s fair market value. The closing of such transaction would occur 30 days after the determination of the appraised value.
[28] The process for determining the appraised value of a co-owner’s interest is set out in Article 9.03. First, Bayview and 6th Line were to attempt to agree upon the fair market value of the Property within 15 days after the defaulting co-tenant receives or is deemed to receive the initiating notice referred to in 9.02(c).
[29] If 6th Line and Bayview were unable to agree on the fair market value of the Property, two appraisers were to determine its value. Each of the co-owners had the right to appoint an appraiser who “shall generally be recognized as a person experienced in appraising real estate and qualified and accredited with the designation “AACI” to appraise properties such as the Property.”
[30] Article 9.03(d) provided that each appraiser was to have access to all records and documents of each of the co-owners that may relate to the Property, and that each of the co-owners was to cooperate with each appraiser for such purpose and provide all information and documents requested. In the determination of the fair market value of the Property, each appraiser was required to “have regard to all relevant considerations including historic and potential performance and shall make all proper and necessary allowances for contingent or other liabilities, but shall make no allowance for goodwill.”
[31] If the appraisers were unable to agree on the fair market value of the Property, the fair market value of the Property was to be the average of the two appraisals.
[32] Article 9.03(f) requires each appraiser to report in writing to the co-owners, but no report was to be made until the appraiser has given each of the co-owners reasonable opportunity to present arguments and evidence in respect of his report.
[33] Article 9.03(g) provides that each appraiser shall be deemed to be acting as an expert and not as an arbitrator, and that if there are two appraisers, each of the co-owners shall pay the fees and expenses of the appraiser nominated by it.
[34] The CTA also provides at Article 11 that any disputes that could not be resolved would be settled by arbitration, and such arbitration would be final and binding.
The Prior Disputes that Engaged the CTA
[35] The parties had historically resorted to the arbitration provisions of the CTA long before Integris ever became involved. In 2007, a dispute arose between them about payment of development charges for the Property, which was resolved by arbitration before retired Honourable Justice Saunders (“Arbitrator Saunders”) in 2008. Bayview’s Arbitration Statement of Claim also references an award of Arbitrator Saunders dated May 5, 2011, but no evidence has been provided on these motions about that later award.
[36] According to the evidence of Galliano Tiberini, who is the President of Bayview, there was another dispute that arose between the co-owners regarding 6th Line’s compliance with its obligations under the CTA. This fact is not in dispute.
[37] There is some ambiguity in the evidence about when Bayview began to allege that 6th Line was in default under the CTA in that “second” round of disagreement. In his affidavit sworn January 6, 2019, Frank Dipede, who is the President of 6th Line, stated that it was “on or about September 16, 2011” that Bayview took the position that 6th Line was in default of its obligations. That was the date on which Bayview delivered an initiating notice under Article 9.02(c). The evidence leads to the ready conclusion, however, that the dispute existed prior to Bayview taking the formal step of delivering an initiating notice.
[38] Because 6th Line denied any default, by that date the parties had already agreed to engage in arbitration before Arbitrator Galligan for the purpose of determining whether 6th Line was in default of its obligation. This fact is outlined in correspondence dated September 20, 2011 from Mr. Potts, who was 6th Line’s lawyer at the time. This letter was referenced in Arbitrator Morden’s arbitration award at page 4, wherein Mr. Potts wrote:
This letter responds to your clients’ Initiating Notice dated September 16, 2011, which our client received on September 19, 2011.
As you know, 6th Line has disputed your client’s allegation of default, the determination of which has been referred to arbitration before Mr. Justice Galligan on consent of the Co-Tenants. That arbitration is pending and no finding of default has been made.
[39] That disagreement came to an end on November 28, 2011, when 6th Line gave notice that it was withdrawing its challenge in respect of whether it was in default. 6th Line agreed to have its proportionate interest in the Property acquired by Bayview under the default provisions of the CTA.
The Side Agreement
[40] Thereafter, the parties negotiated the terms of an award, made on consent and signed by Arbitrator Galligan on January 31, 2012, to have 6th Line’s share purchased by Bayview under the terms of the CTA (the “Consent Award”). They also negotiated and entered into the Side Agreement on that same date. These steps formally ended the need to proceed with the pending arbitration. It can be inferred from the content of the Side Agreement that at some point the appointed arbitrator had changed to Arbitrator Morden even though it was Arbitrator Galligan who signed the Consent Award of January 31, 2012.
[41] Bayview and 6th Line agree that the purpose of the Side Agreement was to establish the necessary additional terms to complete the purchase of 6th Line’s interest in the Property and bring closure to all other outstanding matters between the co-owners under the CTA, without the need for litigation.
[42] The Side Agreement notes that Bayview and 6th Line had not been able to agree on the fair market value of the Property as defined by Article 9 of the CTA, and so shall “proceed to have their respective appraisers complete their work and will meet, consult, investigate and make documents available as requested in accordance with Subsection 9.03(c) and (d) of the CTA.” Paragraph 3 of the Side Agreement states:
- Both Bayview and Mofos have each appointed their respective appraisers pursuant to Subsection 9.03(c) of the CTA, namely David Atlin for Mofos and Fred Roth for Bayview.
[43] As of the signing of these documents on January 31, 2012, the dispute that had given rise to the most recent need for arbitration had ended. All that was required at that point was for the appraisals to be completed, and to follow the methodology set out in the CTA and the Side Agreement to determine the value of the Property and thereafter engage in the mathematical calculations required to arrive at the amount needed for Bayview to purchase 6th Line’s interest.
The Atlin Retainer
[44] Backing up in the chronology, Integris—and specifically its principal David Atlin and employee Alistair Wishart—first met with 6th Line’s principals on August 11, 2011, to discuss a potential retainer. Following that meeting, Mr. Atlin delivered an engagement letter dated August 17, 2011, to 6th Line’s counsel, Mr. Potts, in which he noted that he had been asked to submit a proposal to provide appraisal and consulting services, required “as part of an on-going dispute between the parties to the co-tenancy agreement.” Integris’ retainer letter dated August 26, 2011, repeats the same information.
[45] On August 29, 2011, Mr. Potts sent a six-page letter to Integris enclosing information “in order to assist with the exercise at hand.” That information included a history of the Property’s ownership, information about the draft plan of subdivision, development budgets, and pro-formas, among other information. The letter stated that it was regarding “materials in connection with the valuation of 84 acres of development land…municipally known as 2695 the 6th Line.”
[46] To state the obvious, this meeting and the letters pre-date 6th Line’s withdrawal of its challenge, as discussed above. Accordingly, I accept Mr. Atlin’s evidence that Integris was initially consulted and retained for the purpose of the pending arbitration before Arbitrator Galligan.
[47] I do not accept Mr. Dipede’s evidence and 6th Line’s submissions that “there was no legal proceeding pending at our meeting with Atlin in August.” Mr. Dipede’s evidence is that all that was in issue at the time of the meeting on August 11, 2011, was to “obtain an appraisal so that the formula in accordance with the CTA could be engaged.” That cannot be true. In August 2011, no agreement had been reached for Bayview to purchase 6th Line’s interest, the arbitration was still pending, and the Consent Award and Side Agreement did not yet exist. In August 2011, 6th Line did not consider itself to be a “defaulting co-tenant” under Article 9.02, and disputed Bayview’s right to trigger the buyout and appraisal provisions of the CTA. 6th Line’s argument that Integris was retained solely to complete an appraisal in the context of a non-litigious dispute is not supported by the evidence.
[48] This conclusion is supported by 6th Line’s arbitration statement of defence and counterclaim, at paras. 8 through 16. 6th Line pled the fact of four previous arbitrations under the CTA, and then stated “on September 16, 2011, while both the Management Fee Arbitration and the Financing Arbitration were pending, Bayview Wellington unilaterally delivered an Initiating Notice electing its remedy for the alleged default by 6th Line.”
[49] All of which places into context the contents of the retainer letter of August 26, 2011, and Mr. Atlin’s evidence that Integris was retained by 6th Line pursuant to the following written mandate:
(i) to complete an independent appraisal of the Property, as at an effective date to be mutually agreed upon in the future;
(ii) possibly completing a critique/review of any appraisal report conducted by Bayview; and
(iii) possibly providing expert witness testimony, in the event that an agreement between the co-tenants could not be reached and the resolution included some form of judicial hearing.
[50] The retainer letter also stated that the appraisal report and any necessary critique/review report would conform to the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP).
[51] 6th Line has not provided evidence about why they decided to proceed with an appraisal in August 2011 and I will not speculate. However, I find that it was a decision made by 6th Line’s principals within the context of the ongoing disagreement about 6th Line’s alleged default.
[52] Mr. Potts provided Mr. Atlin with the Side Agreement on the day that it was executed by 6th Line and Bayview, although a draft had been given to him a few days earlier. He had also been informed by Mr. Potts that 6th Line and Bayview intended to complete a buyout in accordance with the CTA.
[53] It is undisputed that Mr. Atlin was not involved in any of the negotiations regarding the terms of the Side Agreement or the Consent Award of Arbitrator Galligan.
[54] On cross-examination, Mr. Dipede admitted that Integris’ mandate under the retainer agreement had never been amended or altered. He testified that Mr. Atlin was retained because of his expertise in valuation disputes and on the recommendation of another litigation lawyer. Mr. Dipede also testified that he understood that Mr. Atlin had an obligation to provide an opinion based on his independent judgment and not act as an advocate for either party.
[55] Bayview argues on these motions that it is clear that both 6th Line and Bayview had a reasonable expectation that the term “appraisal” means an appraisal done by a qualified appraiser within the meaning of the CTA and the Side Agreement, and according to the standards of the Accredited Appraiser Canadian Institute (AACI). There is little doubt that this was the case, and Mr. Atlin maintains to this day that his appraisal conformed both to the requirements of the CTA and the standards required by his industry.
[56] Mr. Atlin’s uncontested evidence is that he is an AACI accredited real estate appraiser practicing in the City of Toronto, who has worked as a real estate appraiser for 38 years. Since around 1992, his appraisal practice has focused almost exclusively on providing expert appraisal services for litigation and dispute resolution purposes. He has provided expert witness testimony before the Ontario Superior Court of Justice, the Superior Court of Quebec, the former Ontario Municipal Board and Manitoba Municipal Board, and various arbitration tribunals. He is also regularly appointed as an arbitrator and mediator. He was formerly a partner in the corporate entities named as defendants in these proceedings, and continues in that capacity at Altus Group, which purchased the assets of the defendant Integris in 2015.
The Appraisals
[57] Mr. Atlin’s evidence is that shortly after finalizing Integris’ retainer, he was advised that Bayview had retained Mr. Fred Roth to provide an independent opinion of value of the Property, and that Integris may be called upon to critique or respond to his work in addition to providing their own opinion of value.
[58] Mr. Atlin made it clear to 6th Line that despite whatever input they may have wished to have into his report or valuation, the valuation was to be his own independent opinion. Mr. Atlin received information from 6th Line and Mr. Potts about the development status of the Property, including a pro forma that 6th Line’s principals had prepared to estimate the development costs of the Property.
[59] Integris delivered a draft report to Mr. Potts on November 25, 2011, and advised that further information was required before the report could be finalized. Once the Side Agreement was executed, he continued to move forward with finalizing his report.
[60] Mr. Atlin met with Mr. Roth several times before finalizing his report. At their first meeting on February 7, 2012, Mr. Atlin learned that Mr. Roth had already finalized his appraisal report, and that the approach taken by Mr. Roth left little possibility that the appraisers would agree on the Property’s value. Mr. Atlin documented his response to the meeting in an email to Mr. Potts on February 8, 2012. The beginning of that email reads, “PRIVILEGED AND CONFIDENTIAL – PREPARED FOR COUNSEL IN ANTICIPATION OF LITIGATION.”
[61] Mr. Roth’s report was completed on November 17, 2011. Mr. Roth’s report assessed the Property’s value at $199,000 per acre using the direct comparison approach.
[62] Mr. Atlin provided an updated draft report to Mr. Potts on February 29, 2012, which opined an estimated value of the Property at $28,600,000. It is his evidence that Mr. Dipede and Mr. Skara, another officer and director of 6th Line, believed that value was too low.
[63] Mr. Atlin attended further meetings with Mr. Roth to discuss their various appraisal methods. However, by email dated March 9, 2012, Mr. Atlin was specifically instructed by Mr. Skara to not discuss the development pro forma with Mr. Roth.
[64] Mr. Atlin was provided with a copy of the CTA and the Side Agreement prior to the preparation of his appraisal. The Integris appraisal report references both documents.
[65] Integris delivered its appraisal to both 6th Line and Bayview on May 22, 2012, assessing the Property’s fair market value at $325,000 per acre using the subdivision development approach. The covering letter to 6th Line confirmed that the appraisal was completed with regard to the CTA and Side Agreement, and in conformity with the CUSPAP.
[66] Referencing the CTA and the Side Agreement several times throughout the appraisal report, Mr. Atlin also noted that the definition of market value in the CTA was similar to that provided by the AIC.
[67] 6th Line offered to close the transaction using the average between the two appraisals. Bayview rejected 6th Line’s tender on the basis that the “the delay by and the methods and considerations of Mr. Atlin fatally taint the appraisal process and in the end his appraisal was not in law bona fide…”
[68] By June 2012, 6th Line and Bayview decided to submit this latest dispute to arbitration, which ultimately went ahead before Arbitrator Morden.
The Arbitration Pleadings
[69] In its arbitration statement of claim, Bayview sought declarations that 6th Line continued to be a defaulting co-tenant pursuant to the CTA, and that Bayview was therefore entitled to institute any remedy permitted by the CTA and by Arbitrator Galligan in his Consent Award.
[70] In its arbitration statement of defence and counterclaim, 6th Line disputed that Bayview was entitled to elect any remedy under the CTA other than the buyout that it had previously elected. It sought declarations that it was not in default of the Consent Award of Arbitrator Galligan and that Bayview was in default of its obligations under the Side Agreement and the CTA. It also sought specific performance of the terms of the CTA, as amended by the Side Agreement, requiring Bayview to complete the appraised buyout and purchase 6th Line’s interest in the Property in the amount of $4,237,942.80.
[71] By reply and defence to the counterclaim, Bayview pled the following with respect to the Integris appraisal:
- Further, …it was at least implicit in the Initiating Notice and at all material times, that any Appraiser purportedly appointed by Mofos, for the benefit of Mofos and Bayview, would produce and execute and deliver a bona fide Appraisal prepared in accord with the professional standards for the professional Institutes and Associations of which the Appraiser was a member and in any event, from which the Appraiser received his or her professional designations. In addition, the CTA sets out the parameters for and the assumptions pursuant to which such appraisal ought to be prepared.
7.… Moreover, at all material times, Mofos knew or ought to have known that the Appraisal it was endeavouring to secure and which it ultimately secured from appraiser Atlin, employed by Integris Real Estate Counsellors, did not meet the criteria above set forth and that the valuation contemplated and ultimately delivered was so manifestly higher than fair market, whatever the criteria so as to amount to know fair appraisal at all. Accordingly, there was no capital appraisal commissioned by Mofos in accord with the CTA. Any Appraisal produced as a result of the terms of the CTA was to be produced for the benefit of both Bayview and Mofos.
15…..Mofos is tainted by the unreasonable and unreliable Atlin/Integris appraisal by reason of the facts set out above and cannot rely upon the Atlin/Integris appraisal to affect (sic) a purchase price of its lands.
[72] Because Robert Potts was anticipated to give evidence at the arbitration, 6th Line retained James Diamond (now the Honourable Justice Diamond) to represent it at the arbitration.
[73] Mr. Atlin has provided evidence with respect to his attempts to provide input into the litigation strategy of 6th Line and its counsel. These were generally not accepted for the reasons explained by Mr. Diamond in his affidavit sworn for this motion, as the suggestions ran contrary to the positions taken and decisions made by 6th Line prior to Mr. Diamond’s involvement.
[74] 6th Line did not rely on any expert reports other than the Integris appraisal in its claim for specific performance. By comparison, Bayview’s strategy at the arbitration was to call three additional appraisers to buttress the Roth report.
The Arbitral Award and Decision
[75] Arbitrator Morden issued his award on December 2, 2013, concluding that the Integris report was not prepared in compliance with the CUSPAP and therefore constituted an invalid appraisal for the purposes of the CTA. The relief sought by Bayview was awarded, as the Roth appraisal was found to be the only CTA-compliant appraisal.
[76] Because 6th Line sought to rely on the value in the Roth appraisal in its quest for specific performance, the primary issue to be decided at the arbitration was whether the Integris report conformed to the CTA by being an appraisal of fair market value, which could be averaged with the Roth appraisal to determine the sale price. This is noted by Arbitrator Morden at para. 20 of his Award: “The question of whether Mofos is entitled to specific performance is the major issue in this proceeding and is considered at substantial length in these reasons.” He noted at para. 24 that Bayview’s major defence to the claim for specific performance was that the estimate of market value in the Integris appraisal was not made in accordance with the CTA.
[77] Arbitrator Morden had no authority to determine the Property’s value due to the terms of the CTA and the Side Agreement.
[78] Both 6th Line and Bayview rely on the findings of Arbitrator Morden that the Integris appraisal was not prepared in compliance with the CUSPAP and therefore constituted an invalid appraisal for the purposes of the CTA and the Side Agreement.
[79] Both plaintiffs submit that because Arbitrator Morden clearly and unequivocally found that the Integris report fell below the appropriate standards mandated by AIC and did not qualify as an appraisal under the CTA, Integris is liable to them in both contract and tort.
[80] 6th Line argues that by continuing to take the position that the Integris appraisal was prepared in accordance with the CTA and applicable standards, the defendants are making an impermissible attack on the decision of Arbitrator Morden and are attempting to re-litigate the very issue that was before him at the arbitration.
[81] For these motions, the important findings made by Arbitrator Morden are:
• Article 9.03(c) was intended to make the AIC Standards and the principles in the text published by the AIC, The Appraisal of Real Estate, applicable to the appraisals of the two appraisers.
• The subdivision development approach used by Integris could not have any application to the case.
• Mr. Atlin’s reasons on the residual land value discount issue were not in compliance with the AIC Standards, or substantively, with the requirements of the AIC text.
• In the course of their meetings, Mr. Atlin did not tell Mr. Roth that his valuation was based on a subdivision development analysis. This was a very serious breach of the CTA, and his non-disclosure made an agreement between the appraisers impossible.
• As of August 29, 2011, Mr. Atlin had not yet been retained by 6th Line.
• The Atlin appraisal does not qualify as an appraisal under Article 9.03(c) of the CTA, because there was no factual basis for estimating the value of the land by the subdivision development approach, and further, assuming this approach was appropriate, there were serious errors in input or calculation methods which, no doubt, had a heavy impact on the ultimate amount determined.
[82] In short, because the Integris appraisal did not meet the AIC standards, it did not qualify as an appraisal of fair market value under the CTA.
[83] Equally important for these motions is what Arbitrator Morden did not decide. He did not decide whether Mr. Atlin had been negligent in the preparation of his report. That issue was not before him. He also did not decide whether Mr. Atlin had breached his fiduciary duty. That issue was not before him. The issues before him, as his reasons state, were whether Integris delivered an appraisal that complied with the requirements of the CTA, whether there was a factual basis to use the subdivision development approach in establishing value, and whether there were errors in the input or calculation methods used by Mr. Atlin.
[84] The plaintiff’s argument is that the Morden Award establishes that Mr. Atlin and Integris are liable in negligence and for breach of fiduciary duty as a result of delivering a report that did not qualify as an appraisal under Article 9.03 of the CTA and did not meet the CUSPAP, as required by his governing body. Neither plaintiff has delivered an expert liability report in these proceedings to support those allegations.
[85] Only Integris’ counsel has provided guidance on the standard of care owed by a real estate appraiser, as opposed to addressing to whom a duty is owed. The latter is the focus of the plaintiffs’ factums. According to the one case provided, the test for determining whether an appraiser has breached a standard of care owed to a client is whether the appraiser acted contrary to any professional standards, and whether they failed to meet the standard of care of a reasonable appraiser in presenting an opinion of value: Royal Bank of Canada v. Westech Appraisal Services Ltd., 2018 BCSC 473, at paras. 163-171.
[86] At para. 165, the court in Westech Appraisal stated that the test for appraiser negligence is not necessarily conformity with the CUSPAP given that the standards are often of general application:
CUSPAP “provides a set of rules that appraisers should follow when they are developing and communicating a formal opinion of value.” However, it also recognized that the rules were general and did not “necessarily reflect how a typical and competent appraiser had to undertake his or her work… Rather, they reflect the aspirations of the Appraisal Institute of Canada for the conduct of its members.
[87] Arbitrator Morden’s reasons cannot be used as a basis for a finding of negligence or breach of fiduciary duty. There was no finding that Mr. Atlin failed to meet the standard of care of a reasonable appraiser. The rejection of his report by Arbitrator Morden cannot unequivocally establish that there has been a decision on this issue. As noted in C.R. v. Her Majesty the Queen in Right of Ontario, 2019 ONSC 2734, at para 136: “the fact that one judge rejects an expert’s opinion or finds their methodology unreliable does not render the expert unable to testify in another proceeding and it certainly cannot form the basis for a claim in negligence against the expert.”
[88] Even if the Morden Award was used by this court to conclude that Mr. Atlin acted contrary to professional standards, the plaintiffs have not established that they have satisfied the second part of the test established in Westech Appraisal. I agree with the decision in Westech that an appraiser cannot conclusively be found negligent by virtue of the fact that his opinion of fair market value did not wholly conform to AIC’s standards.
[89] The plaintiffs cannot rely on issue estoppel to establish these aspects of liability. For issue estoppel to apply, the first pre-condition is that that the same question has to have been previously decided: Angle v M.N.R., 1974 CanLII 168 (SCC), [1975] 2 S.C.R. 248. Neither plaintiff is able to meet this first requirement as it concerns negligence and breach of fiduciary duty.
[90] In examining this first requirement of issue estoppel, Abella J.A. stated in Rasanen v. Rosemount Instruments Ltd., 1994 CanLII 608 (ON CA), [1994] O.J. No. 200 (Ont. C.A.), at para. 29:
The proper inquiry in deciding whether the requirements have been met is whether the question to be decided in these proceedings is the same as was contested in the earlier proceedings and was, moreover, so fundamental to the decision that it could not stand without the determination of that question. (Angle v. Minister of National Revenue, 1974 CanLII 168 (SCC), [1975] 2 S.C.R. 248 at pp. 254-255 per Dickson J.; Spens v. Inland Revenue Commissioners, [1970] 3 All E.R. 295 at p. 301, per Megarry J., quoting Bower and Turner, supra, at pp. 181-182.)
[91] Arbitrator Morden was able to decide the issue before him without ever using the word “negligence” or averting to the standard of care required of Mr. Atlin. He focused only Mr. Atlin’s departure from the ICA standards and his failure to deliver that which Integris had contracted to provide. He did not decide that there was a breach of the standard of care or a breach of fiduciary duty.
[92] The question of whether Arbitrator Morden’s findings can be used to establish breach of contract will be dealt with later in these reasons.
EXPERT WITNESS IMMUNITY
The Position of the Parties
[93] The positions of 6th Line and Bayview are, first, that Atlin was not testifying at the arbitration as an expert witness, and second, even if he was, the doctrine of expert witness immunity upon which the Integris defendants rely should not apply.
[94] Both 6th Line and Bayview argue that the findings of Arbitrator Morden support a finding that he acted negligently in the preparation of the Integris report, and in breach of his contractual obligations, and that Atlin should not be permitted to escape liability on the basis of what they characterize as an outdated principle.
[95] They argue that their actions against Integris are not collateral attacks on Arbitrator Morden’s award, or tort actions based on negligent preparation or presentation as an expert, nor based upon dissatisfaction as to the value arrived at by Mr. Atlin. These are the evils the doctrine of witness immunity purports to cure. As those evils are inapplicable, the doctrine should not be permitted to prevail in this case. They assert that an expert witness who receives compensation for his or her services and who is negligent should not be permitted to use witness immunity as a shield.
[96] As previously concluded, Arbitrator Morden did not decide the issue of negligence.
[97] The position of the Integris defendants was that their mandate throughout was to act as an impartial, expert witness. They were retained in the context of a judicial process, their report was prepared for that process, and their obligation at the time that they rendered the Integris report was to provide an opinion of value. Mr. Atlin’s evidence was given in the context of a litigious dispute, rendered necessary by Bayview not accepting the appraisal and the parties deciding to resort to arbitration. These are exactly the circumstances which give rise to immunity from civil suit as an expert witness.
[98] The Integris defendants submit that the law in Canada is that expert witnesses to litigious proceedings are entitled to immunity from subsequent liability for their opinions and testimony.
Was Atlin an Expert Witness?
[99] I conclude that Mr. Atlin testified at the arbitration as an expert witness.
[100] He was retained for his expertise, and his retainer letter outlines the scope of Integris’ retainer, which includes Mr. Atlin providing expert witness testimony in the event of a hearing. As I have found, he was retained when the parties were still contemplating a litigious process in August 2011. On this point, I respectfully disagree with the finding of Arbitrator Morden that Integris was not yet retained as of August 29, 2011. His reasons do not explain why he came to that conclusion. On the basis of the retainer letter dated August 26, 2011 that is before me in evidence, I find that this was the date on which Integris was retained. Mr. Potts delivery of information to Mr. Atlin on August 29, 2011, for the purpose of his appraisal confirms that retainer.
[101] Mr. Atlin’s communications with Mr. Potts reveal that he intended privilege to attach to those communications. The CTA, at Article 9.03(g), expressly states Mr. Atlin (and Mr. Roth) were acting as expert appraisers, not as arbitrators of the dispute. Further, Mr. Atlin was excluded from decision-making around the litigation strategy of 6th Line, which decisions were made only between 6th Line and its counsel.
[102] At the arbitration, several expert witnesses were called by Bayview to give testimony in respect to reports they delivered for the purpose of the arbitration, attacking the methodology and results reached by Integris. Mr. Atlin likewise gave evidence for the purpose of supporting his appraisal, evidence that he could provide only in his capacity as an expert.
[103] Arbitrator Morden’s reasons make clear that the Integris appraisal was the subject matter of Mr. Atlin’s testimony.
[104] There is nothing in the evidence that persuades me that he was present and testifying other than as an expert.
The Law of Expert Witness Immunity
[105] The doctrine of witness immunity precludes the bringing of a civil action based upon harm alleged to be caused by a witness’ testimony. It is a principle well-entrenched in our law.
[106] There are various rationales for this doctrine: 1) to encourage witnesses to testify freely and without fear of consequences to themselves; 2) to protect witnesses from being harassed by unjustified claims from dissatisfied litigants; 3) to prevent a collateral attack on issues already tried, fostering finality in judicial proceedings; and 4) to encourage expert witnesses to testify in judicial proceedings, so as to protect against a shortage of experts willing to testify and a resulting rise in cost to retain experts for that purpose.
[107] In Law of Witnesses and Evidence in Canada (Toronto: Thomson Reuters, 2021) at §21:14, author Peter J. Sankoff summarizes the current state of the doctrine as follows:
Suffice it to say at this stage that the immunity remains vibrant and healthy in Canada, even though a few cracks are beginning to appear in the framework. This long-standing protection, which has operated virtually without scrutiny for over a century, has recently come under attack in a number of foreign jurisdictions – at least in respect of expert witnesses – and it seems likely that similar challenges will arise here in due course. Whether a complete immunity for all witness testimony will be maintained in Canada over the long term remains a very open question at this moment.
[108] There is some uncertainty in this area of the law. This is highlighted in Nordheimer J.’s review of the state of witness immunity in Canada in Halpern v. Morris, 2016 ONSC 7855 (Div. Ct.). In Halpern the appellant and his wife retained the respondent, a psychologist, during their divorce proceedings to carry out an assessment of their daughter in the context of a custody and access dispute. The respondent was never called as a witness and the custody and access issues were settled. The appellant was displeased with the report and sued the respondent in Small Claims Court for the $21,900 he paid for the report. The deputy judge granted the respondent’s motion to dismiss the claim on the basis that his report was protected from legal action pursuant to expert witness immunity.
[109] The issue before the Divisional Court was whether it was appropriate for the deputy judge to strike the appellant’s claim for breach of contract and/or negligence on the basis of expert witness immunity. After reviewing the law, Nordheimer J. allowed the appeal and reinstated the appellant’s claim.
[110] Nordheimer J. first referenced Jones v. Kaney, [2011] UKSC 13, in which the United Kingdom Supreme Court abolished expert witness immunity for a party suing their own expert in negligence. He focused on the concurring reasons of Lord Brown, who stated, at para. 67 of Jones:
In stark contrast, not only do expert witnesses clearly owe the party retaining them a contractual duty to exercise reasonable skill and care but, I am persuaded, the gains to be derived from denying them immunity from suit for breach of that duty substantially exceed whatever loss might be thought likely to result from this.
[111] However, Nordheimer J. noted at para. 15 of Halpern that Jones does not dictate the result in Canada and that for expert witness immunity to be abolished in Canada, it would have to be done by a higher court.
[112] There are no Canadian cases that make the broad exception decided in Jones.
[113] At para. 16 of Halpern, Nordheimer J. outlines the areas of uncertainty that have emerged from the cases in Canada. One is whether the immunity accorded to experts extends to a party’s own expert, or only to experts retained by the opposite party. And, if the immunity does apply to a party’s own expert, whether that immunity extends to all aspects of the expert's work or is limited to what the expert says in court and any reports prepared for that purpose.
[114] One of the cases referenced in Halpern was Robinson v. Ottawa (City), [2009] O.J. No. 262 (Ont. S.C.J.). The issue before the court in that case was the same as arises here in the motions brought by and against 6th Line: whether the City of Ottawa could sue its own expert witness for alleged negligence in the preparation of an expert witness report. The expert brought a motion to dismiss the claim on the basis that his report was protected by expert witness immunity. The court dismissed the motion on the ground that the issue was novel and ought to be decided at a trial. In so concluding, at para. 53 Smith J. said:
There are no decisions of the Court of Appeal for Ontario, or any other Canadian court which has decided the issue of whether witness immunity should be extended to prevent a party from suing his or her own expert witness in negligence or for breach of contract, based on the opinion evidence given in a Court proceeding. Given the absence of any Canadian authority directly on point, I conclude that the law is unsettled on this issue.
[115] Another case referenced by Nordheimer, J. is one relied on by the Integris defendants, Paul v. Sasso, 2016 ONSC 7488, [2016] O.J. No. 273. In that case the plaintiffs were shareholders in a corporation who brought a claim against the corporation invoking their dissent and appraisal rights. The main issue was the value of their shares. They retained Mr. Lansink, an expert, to perform a valuation of the shares and critique the corporation’s expert’s report. At trial, the judge did not accept Lansink’s valuation, and accepted the number put forward by the corporation. The plaintiffs then sued Lansink for negligence and breach of contract, and argued that Lansink breached his professional ethical obligations by giving a biased report. Lansink brought a counterclaim for payment of outstanding fees.
[116] On a motion for summary judgment, Lansink sought a dismissal of the action and judgment on the counterclaim for unpaid fees. The motions judge, Dunphy J., granted Lansink’s motion to dismiss the claim against him on the basis of expert witness immunity for Lansink’s report and testimony. Thus, claims for damages directly or indirectly flowing from the result of the trial could not proceed: para. 19.
[117] At para. 16, Dunphy J. summarized the existing state of the law, which he concluded applied to both an adverse and one’s own expert witness:
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 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).
[118] However, Dunphy J. dismissed the motion with respect to Lansink’s counterclaim, holding that there was a triable issue as to whether the plaintiff’s allegations of breach of contract and negligence could, if proven, provide a valid defence against Lansink’s counterclaim for payment of fees. As Dunphy J. stated at para. 34, “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.”
[119] Paul therefore carves out an exception to expert witness immunity for an expert’s breach of contract or negligence, allowing such a breach, if proven, to be used as a defence by a former client in an expert’s subsequent action for collection of fees.
[120] At para. 31 of Halpern, Nordheimer J. inversely extended Dunphy J.’s ruling, stating that an expert’s breach of contract or negligence could sustain an independent cause of action for repayment of fees.
[121] Nordheimer, J. ultimately concluded, at para. 32, that:
Based on the current state of the authorities in this country, I am prepared to accept that the weight of authority favours the conclusion that an expert witness enjoys immunity arising from his role as an expert witness, whether it is at the suit of the opposing party, or at the suit of his own client. That said, the extent of that immunity is far from clear. As Dunphy J. points out in Paul, it is one thing to hold that an expert witness cannot be sued for damages arising from her/his evidence and/or report. It is a different matter to conclude that an expert witness cannot be held to account for the basic performance of her/his contractual duties.
[122] In reaching that decision, Nordheimer J. also referenced Sheehan v. Snell, Balka, Saad Barristers and Solicitors, [2016] O.J. No. 5301 (Ont. S.C.J.). In Sheehan the expert was sued by an adverse party and moved for summary judgment dismissing the claim. Matheson J. granted the motion and dismissed the action because of expert witness immunity. In her reasons, at para. 45, she referred to the protection as being “absolute.”
[123] Nordheimer J. disagreed with that statement where it concerns a party’s own expert witness, although accepted that it may be an accurate statement of the law as it concerns a suit brought by an adverse party.
[124] Subsequently, in Graff v. Network North Reporting and Mediation, 2017 ONSC 7451, [2017] O.J. No. 6513, Favreau J. (as she then was) granted motions for summary judgment on claims brought against the plaintiff’s own experts. The plaintiff had initially commenced a tort claim arising from a motor vehicle accident. While representing her on that claim, her lawyers retained several health care experts, each of whom conducted medical assessments and prepared reports at her lawyer’s request. The plaintiff then sued those experts; her claims were based in part upon the contents of their opinion reports.
[125] Favreau J. dismissed the plaintiff’s claims against each of the health experts on the basis of expert witness immunity. She began by noting, at para. 72, that expert witness immunity for independent experts providing opinions for the purpose of litigation is well established, citing Halpern and Fabian v. Margulies (1985), 1985 CanLII 2063 (ON CA), 53 O.R. (2d) 380 (Ont. C.A.). She went on to state, at para. 73:
Expert witness immunity is absolute. It extends to all activities related to the preparation of a report and testimony in court. It also extends to allegations of bad faith. The rationale and extent of expert immunity were recently addressed by this Court in Sheehan v. Snell, Balka, Saad Barristers and Solicitors, 2016 ONSC 6340(Ont. S.C.J.), at paras. 43 to 46, as follows:
The protection of the integrity of the judicial process requires that an expert witness be immune from civil suit by any person with whom his or her only relationship derives from the judicial proceeding: Varghese v. Landau (2004), 2004 CanLII 5084 (ON SC), 3 R.F.L. (6th) 204 (Ont. S.C.), at para. 48; Carnahan v. Coates (1990), 1990 CanLII 2299 (BC SC), 71 D.L.R. (4th) 464 (B.C.S.C.), at p. 474; Howatt v. Klassen (2005), 31 C.C.L.T. (3d) 54 (Ont. S.C.), at paras. 11 and 15, citing Fabian v. Margulies (1985), 1985 CanLII 2063 (ON CA), 53 O.R. (2d) 380 (Ont. C.A.).
Immunity from suit extends not only to reports filed in court and oral evidence given in court, but also to activities outside of court related to a report or its preparation: Varghese v. Landau, at para. 49; Smith (next friend of). v. Kneier, 2001 ABQB 291, 288 A.R. 144, at para. 11, citing Evans v. London Hospital Medical College, [1981] 1 All E.R. 715 (Q.B.).
The protection is absolute. Even allegations of bad faith are insufficient to remove the application of the immunity doctrine: Howatt v. Klassen, at paras. 11-13, citing Samuel Manu-Tech Inc. v. Redipac Recycling Corp. (1999), 1999 CanLII 3776 (ON CA), 124 O.A.C. 125 (C.A.).
One of the justifications for immunity is the protection of the court process, which seeks to discourage relitigation of issues: Smith (next friend of). v. Kneier, at para. 14. This is especially important in the family law context, which is already fraught with conflict. In the family law context, attempts to sue expert witnesses have been dismissed or struck out at early stages because of immunity: e.g. Van de Vrande v. Butkowsky, 2010 ONCA 230, 99 O.R. (3d) 648; Carnahan v. Coates; Howatt v. Klassen; Varghese v. Landau; Smith (next friend of) v. Kneier.
[126] Accordingly, Graff decides that the immunity continues to extend to one’s own expert. Favreau J. was alive to the plaintiff’s argument that the defendants had been negligent but noted that the plaintiff had failed to produce any evidence showing that the medical experts had not met the standard of care.
[127] Fabian, one of the cases cited by Favreau, J. also involved a situation in which a plaintiff sued his own expert for a medical-legal report and the contents of his trial testimony. Labrosse J. characterized the plaintiff’s claim as one based on libel and slander, and held that both the report and the expert’s testimony at trial were subject to the absolute immunity.
[128] These cases lead me to conclude that expert witness immunity remains intact in Canadian law. It bars a suit against an adverse expert witness for consequential damages arising from that expert’s report and/or testimony, absolutely. With respect to a litigant’s own expert, the only “crack” in that immunity may be for claims for an expert’s fees.
[129] The plaintiffs in these actions advance arguments as to why the immunity should not apply here. Neither seeks to change or challenge the Morden Award. This is not a collateral attack on his findings nor do these actions raise the risk of inconsistent verdicts. They also allege that theirs are not tort claims—this is difficult to understand given that they seek damages arising from the outcome of the arbitration, based on what they allege are findings of negligence.
[130] Further, where Bayview is concerned, the absence of a duty of care owed to an adverse litigant is one ground for barring suit against the other side’s expert. However, in this case I agree with Bayview’s position that a duty of care was owed by Integris to Bayview. Certainly the principles enunciated in Hedley Byrne and Co. Ltd. v. Heller and Partners Ltd., [1964] A.C. 465 (H.L.) and 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35 are sufficiently broad to impose a duty of care on an appraiser of real estate toward anyone to whom an appraisal may be shown and who might be expected to rely on it in their dealing with the real estate. The facts of this case easily establish that such a duty of care was owed to Bayview, notwithstanding the boiler-plate exclusion of liability clause contained in the Integris report. Bayview relied on Integris to produce a fair market value appraisal as defined by the CTA so that the simple averaging exercise could occur without resort to further litigation.
[131] Notwithstanding the plaintiffs’ valid points, there remains value in preserving expert witness immunity: to encourage the candour and cooperation of expert witnesses; to foster the truth seeking function of the adversarial process by giving the court access to expert’s testimony; and to avoid wide-spread reluctance of experts to participate.
[132] As observed by Nordheimer J. in Halpern, a change in the law of expert witness immunity will have to be undertaken by a higher court than this one before arguments such as the ones advanced by the plaintiffs can succeed.
ANALYSIS
Can Integris Rely on Expert Immunity as Against Bayview?
[133] I conclude that the current state of the law bars Bayview, as an adverse party, from suing Integris for its legal fees not covered by Arbitrator Morden’s award.
[134] Even if this were not so, Bayview has not proven its case. It has no liability report on the issue of negligence, and as previously stated, the findings of Arbitrator Morden cannot be relied on to establish a breach of the duty of care that was owed to Bayview.
[135] Further, I conclude that Bayview cannot prove a contract between itself and Integris, even though it argues in its factum that Integris was in a contractual or quasi-contractual relationship with Bayview. Apart from the fact that this has not been pled by Bayview, it cannot be established on the evidence. There was no joint retainer agreement between Bayview, 6th Line and Integris, and the Side Agreement clearly states that Mr. Atlin is 6th Line’s expert. The delivery of the Integris report to Bayview’s counsel, regardless of its content, does not create a contract-like relationship.
[136] Similarly, the fact that Integris’ retainer was made and accepted pursuant to the CTA, and that fact that his appraisal purported to comply with the CTA, does not give rise to a contractual or quasi-contractual relationship. Bayview has not provided any authority for that proposition. It likely does not exist because, in my view, that would be an unfortunate development in the law. Experts are routinely retained to opine on matters arising from commercial agreements—holding them liable in contract to an adverse party just because such agreement forms the basis or subject matter of their retainer is a dangerous precedent.
[137] Integris’ motion to dismiss the claim of Bayview is granted.
Can Integris Rely on Expert Immunity as Against 6th Line?
[138] The answer to this question depends on whether there is a basis to find Integris liable for breach of contract, as claimed by 6th Line. If the answer to that question is yes, then there may be a basis to permit 6th Line to recover the fees paid to Integris on the basis of Paul and Halpern.
[139] According to 6th Line, on the basis of issue estoppel, Arbitrator Morden’s finding that Integris delivered an appraisal report that was not in compliance with the CTA is enough to establish liability.
[140] The doctrine of issue estoppel provides that no court may try an issue which has been tried in a former proceeding between the same parties or their privies. The doctrine applies to decisions rendered in commercial arbitration proceedings: The Manufacturers Life Insurance Company v. Parc-IX Limited, 2018 ONSC 3625, at para 43.
[141] The parties agree that the three requirements for issue estoppel are those set out in Angle:
(i) the same question has been decided;
(ii) the judicial decision which is said to create the estoppel was final; and
(iii) the parties to the judicial decision or their privies participated in the earlier litigation.
[142] All three criteria must be satisfied. I will focus only on the last requirement, as in my view 6th Line not able to demonstrate that this criterion has been established.
[143] In Rasanen, the Court of Appeal held that a non-party witness may be considered a privy where they had sufficient participation rights and “a meaningful voice… in a proceeding which decided the very issue sought to be raised in the subsequent action.”
[144] In Rasanen, at para. 47, the appellant was found to be privy in a prior claim under the Employment Standards Act because he,
clearly called the witnesses he wanted, introduced the relevant evidence he needed, and had the chance to respond to the evidence and arguments against him. He had the assistance of counsel provided by the Ministry of Labour, and there was no evidence that he sought his own counsel or that his choice would have been denied if sought. He enjoyed, in short, the full benefits that an official "party" designation would have provided, regardless of whether he was referred to specifically as a party in s. 50(4) (now s. 68(4)) of the Employment Standards Act.
[145] The facts in Rasanen are completely different from the facts in this case. As I have found, Mr. Atlin testified in the arbitration as an expert witness for 6th Line. Mr. Atlin did not call the witnesses that he wanted—he was excluded from all litigation decisions. He had no say in the litigation strategy. He was confined to giving evidence strictly in response to the questions asked by the plaintiffs’ lawyers. He was not represented. He had no reason at the time to believe that he needed his own lawyer. 6th Line’s former lawyers both confirm that they were never acting as counsel to Mr. Atlin. He had no input into the clause in the CTA that made the arbitration decision final and binding.
[146] On these facts it would be manifestly unfair to conclude that simply because the Integris appraisal was the focus of the arbitration, and that Mr. Atlin testified for four of the eighteen days, that he had a “meaningful voice” in the arbitration.
[147] I conclude that Mr. Atlin was not a privy (nor any of the Integris defendants). Arbitrator Morden’s findings can therefore not suffice to establish a breach of contract between Integris and 6th Line.
[148] Incidentally, in addition to the reasons already provided in the discussion of negligence and breach of fiduciary duty, this finding also prevents issue estoppel from applying to those claims.
[149] Even if issue estoppel had been found to apply, I would still use my discretion not to apply it in this case: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at para. 33. The agreements struck by the plaintiffs rendered the Morden Award final and binding. Integris was not a party to those agreements and had no input into them. Yet Integris is barred from seeking review of Arbitrator Morden’s findings and conclusions in that proceeding. These proceedings are the only way for Integris to present the evidence that it believes necessary to demonstrate why it should not be liable for the claims made by the plaintiffs in these proceedings. And Integris has presented evidence on this motion, which has not been challenged by the plaintiffs other than through their reliance on the Morden reasons, which suggests that the findings of Arbitrator Morden are open to challenge. For example, Mr. Atlin has provided evidence, some of which has been confirmed on cross-examination of Mr. Tiberini, that Bayview developed the subdivision and sold the final lot on a timeline that was consistent with Mr. Atlin’s opinion—earlier than the projections in the Roth appraisal. For the same reason, I cannot accede to the plaintiffs’ alternative argument that allowing Integris to continue to assert its position is an abuse of process.
[150] Other than relying on the Morden Award, 6th Line has provided no analysis on this motion showing how it has proven its allegation that Integris breached its contractual obligations by failing to deliver a report that complied with the CTA. It has not shown a triable issue on the issue of breach of contract. That being the case, there is no basis upon which 6th Line can fit itself into the limited exception to expert witness immunity.
DECISION
[151] For the foregoing reasons, this court orders that the motions of the Integris defendants are granted, and those of Bayview and 6th Line are dismissed.
[152] If the parties are unable to agree upon the costs of these motions, they may make submissions in writing limited to 5 pages each, not including a cost outline or bill of costs or offers to settle. Integris’ are due by February 4, 2022, each of the 6th Line and Bayview’s are due by February 11, 2022, and any reply, if necessary, by February 18, 2022.
HEALEY J.
Released: January 24, 2022