Brace v. Snow, 2012 NLCA 24

Date: 20120 507 Docket: 09/22 Citation: Brace v. Snow, 2012 NLCA 24 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN : DAVID BRACE and GAIL CURL APPELLANTS AND : BOYD SNOW RESPONDENT Coram: Welsh, Harrington and Hoegg JJ.A. Court Appealed From: Supreme Court of Newfoundland and Labrador Trial Division (General) 200601T4866 Appeal Heard: April 12, 2012 Judgment Rendered: May 7, 2012 Reasons for Judgment by Welsh J.A. Concurred in by Harrington and Hoegg JJ.A. Counsel for the Appellant: Donald Powell Counsel for the Respondent: Owen Myers

Welsh J.A.: [1] David Brace and his spouse, Gail Curl, (the “Braces”) filed a statement of claim alleging that Boyd Snow breached a rent-to-purchase agreement the parties had executed in relation to a house the Braces were renting from Mr. Snow. The trial judge dismissedtheir claim, having concluded that Mr. Brace had fraudulently altered a document which had previously been signed by Mr. Snowproviding for a rent reduction in exchange for certain repairs and improvements being made by the Braces.

The trial judge ordered theBraces to vacate the premises. [2] Nonetheless, the trial judge recognized that the Braces had undertaken significant improvements to the house, beyond thoseconsidered in the agreement, at their own expense, and that Mr. Snow had acquiesced in that work. As a result, Mr. Snow was orderedto pay $18,000 in compensation to the Braces. This amount was to be set off against unpaid rent. [3] Finally, based on his conclusion that Mr. Brace had fraudulently altered the agreement, the trial judge ordered the Braces topay Mr.

Snow’s costs on a solicitor and client basis. [4] The Braces have appealed the trial judge’s decision dismissing their claim and the determination that the document on whichthey relied was fraudulently altered. They have also appealed the trial judge’s order imposing costs on a solicitor and client basis. Dismissal of the Braces’ Claim [5] In his comprehensive oral reasons, the trial judge explained the rationale for his determinations (2009 NLTD 15). TheBraces submitted that the trial judge erred in several respects. First, they contended, he erred by allowing Mr.

Snow’s expert onhandwriting analysis to remain in the courtroom while the Braces’ expert gave her testimony via videoconference even though the judgeknew that the Braces’ expert would not be available to view the evidence subsequently given by Mr. Snow’s expert. This submission isnot persuasive. [6] It is common practice for experts to view the testimony of other experts. Their role is to aid the trier of fact by providinginformation, often of a technical nature, that is necessary for purposes of assessing the issues but which is “likely to be outside theexperience and knowledge of a judge or jury” (R. v.

Mohan, (SCC), [1994] 2 S.C.R. 9, at page 23). Unlike witnesses tothe event, experts are not testifying as to what they saw or heard in a particular situation. Witnesses to the event may be excluded fromhearing the evidence of others so as to avoid the possibility that their evidence may become tainted by what they hear from others. Inthis case, the fact that the expert provided by the Braces was simply unavailable to view the evidence of the other expert would notconstitute a valid basis on which to exclude Mr. Snow’s expert from the courtroom.

The trial judge did not err in this respect. [7] In addition, the Braces alleged that the trial judge erred in rejecting the evidence of the expert they provided, and, instead,accepting the credentials and testimony of Mr. Snow’s expert. The trial judge gave clear and comprehensive reasons for rejecting theevidence of the one expert and accepting that of the other. With respect to the expert provided by the Braces, the trial judge commented: [32] … I found her explanations of her opinion difficult to follow.

At times she gave her evidence in an argumentative and defensivemanner; at times she appeared somewhat exasperated. She is not a member of any recognized forensic society … . Further, the trial judge questioned the witness’ testimony that she had been accepted by the courts as an expert in other cases since shecould not name any such case and her responses to questions in cross-examination did not provide reasonable explanations. [8] On the other hand, the expert tendered by Mr. Snow provided credentials which included significant experience as a formerR.C.M.P. forensic analyst.

The trial judge explained: [37] Fillmore gave his evidence in a fair and objective manner. He acknowledged that, with respect to two of the documents inExhibit DB 11, he could “not preclude the possibility” that the signature had in fact been written by Boyd Snow. Thisacknowledgement, in my view, demonstrated Fillmore’s independence and objectivity. The balance of Fillmore’s opinion was notseriously challenged in cross-examination. [9] In the circumstances, there is no basis on which to conclude that the trial judge erred in accepting the opinion of Mr.

Snow’sexpert. [10] Further, in reaching his conclusion that portions of the writing in the document had been fraudulently added by Mr. Brace, thetrial judge did not rely solely on the expert evidence related to handwriting analysis. After reviewing the document, he explained: [10] The two subject matters [rent-to-purchase and repairs in exchange for rent reduction] are not dealt with in separate sections. Rather, provisions relating to rent to own are interspersed with those relating to repairs.

That is, the document does not read as alogically sequenced agreement. [11] The trial judge concluded: [22] … (iii) Read as a whole, the document put forward by Brace does not make sense. But if one isolates only the portions acknowledged bySnow [relating to repairs in exchange for rent] those portions read quite comfortably as a stand-alone agreement dealing with the makingand funding of certain repairs. The document reads quite logically from “The following is an arrangement …” It first says that there is“an arrangement,” then sets out the particular work to be done, and finally deals with financial matters.

These provisions, read in thesequence they appear in the document, make sense. They stand in stark contrast to the almost illogical document that results when theimpugned portions are inserted as they are. [12] Regarding the visual presentation of the document, the trial judge commented:

[11] With the exception of the signatures, the document is entirely in David Brace’s handwriting. The provisions relating to rent to own are visually different from the other provisions. In particular, the printing is clearly more cramped – smaller and with less spacing between the words. The judge noted that the rent-to-own writing “appears to have been written to fit into available space” (paragraph 22(i)). The difference in size of the writing was acknowledged by Mr.

Brace during cross-examination. [ 13 ] Noting that the agreement refers to a purchase price of $100,000, the trial judge commented: [22] … (ii)(a) … At the March 2003 rental rate of $500 per month, it would take over 16 years to pay the purchase price. But there is no provision for interest, nor any provisions dealing with default of any monthly payment.

Such provisions – in particular dealing with interest – would be reasonably expected. [ 14 ] The trial judge also noted that the order in which the references to different types of repairs occurs “supports an inference that the rent-to-own provisions were added later” because the ordering in the document would not otherwise make sense (paragraph 22(ii) (b)). [ 15 ] In addition, taking into account that Mr.

Snow owns a number of rental properties and “is not inexperienced in business and financial matters” (paragraph 22(ii)), the trial judge concluded: [22](ii)(b) … Further, the reduction of the purchase price by the full cost of the listed repairs and improvements is not logical or reasonable. To repay the Braces’ expenditures through rent reduction is one thing; to go on to again credit the Braces with the expenditures through a reduction in the purchase price leads to a potential for double counting.

But more fundamentally, there is no logical reason why Snow would reduce the purchase price on account of expenditures which are solely for the Braces’ benefit. If the Braces’ contention is correct, not one cent of the enhanced value brought about by the improvements would fall to Snow. It would accrue totally to the Braces. Yet Snow is obliged to completely pay for all of the improvements by reducing the purchase price. This is absurd. To illustrate through an admittedly extreme example, if the Braces were to spend a total of say, $50,000, on the improvements, the purchase price would fall to $50,000.

There is no reason in the evidence, or in logic and common sense, for Snow to do this. [ 16 ] In addition to reviewing the impugned document, the trial judge gave detailed consideration to other evidence relevant to the credibility of the parties. Based on detailed financial records kept by Mr. Snow and receipts tendered by Mr. Brace, the trial judge concluded that Mr. Brace had forged Mr. Snow’s signature on some receipts and had altered the amounts for which some receipts were issued.

The judge explained, as one consideration: [48] In any event, there remains the question why the documents [receipts] in DB 11 were necessary, and in particular, why Snow would sign them given that there are admittedly genuine receipts (Consent 2) signed by Snow on the same dates.

That is, given that Snow had signed, for example, a receipt for $1600 on September 10, 2004, identified on the receipt as representing rent for June ($500), July ($500), August ($500) and September ($100), why would he then sign a document on the same date acknowledging receipt of $4600 “to be applied to balance owing on the house as per agreement signed March 2003?” To refer to another example, Consent 2 contains one receipt not written on a receipt book. It is in Snow’s handwriting and signed by him.

It is for $2000 and reads, “rent paid for November and December /03 and January and February /04.” It is dated February 1/04. In DB 11, a document bearing date February 1, 2004 indicates the receipt of $2800 for “house payments.” I was given no evidence that would provide a logical basis upon which these two documents could stand together. (Underlining in original.) [ 17 ] The trial judge concluded: [50] I will not discuss these documents further.

I am satisfied that – applying the civil standard of proof – that the documents in DB 11 were not signed by Snow and that the amounts shown on those documents were not paid to Snow.

I am satisfied that these documents – with the exception of the one scratched out line in Snow’s handwriting (September 23, 2005) – were fabricated by Brace as to amounts (except December 18, 2004), as to the purpose for payment (rent to own), and as to Snow’s signature. [ 18 ] Finally, on the question of assessing the testimony of the witnesses, the trial judge noted that three prior convictions for fraud in October 2002 adversely affected Mr. Brace’s credibility. [ 19 ] As to the Braces’ submission that Mr.

Snow had destroyed evidence by throwing away the original document, the trial judge noted: [16] The original of the March 11, 2003 document was not produced. The evidence is that the original was given to Snow after it was signed. Sometime after the repairs were concluded and the last rent abatement given, Snow threw it out. When Brace later asked Snow if he had the original, he did not have it. [ 20 ] It is clear from the trial judge’s decision that he carefully considered the whole of the evidence and that the conclusions he reached are amply supported.

There is no basis on which to conclude that he erred in dismissing the Braces’ claim, or that he erred in determining that Mr. Brace fraudulently added the rent-to-own provisions to the repairs-in-exchange-for-rent-reduction agreement after the document was executed and without the knowledge or consent of Mr. Snow.

Costs in the Trial Division [21] Although the trial judge concluded that the agreement to reduce the rent in exchange for repairs had been fraudulently altered,he accepted that Mr. Snow had acquiesced in additions and renovations made to the house by the Braces beyond those covered in theagreement. Accordingly, he concluded that the Braces were entitled to “some limited compensation” in this regard (paragraph 62). Since the Braces did not have receipts to validate their $40,000 claim, he concluded: [62] … I am not prepared to order that Brace be paid the full remaining present value of the enhancements.

That value was notaddressed in evidence. Further, as already noted, Brace’s assertion of expenditure in excess of $40,000 is suspect because of credibilityconcerns. Further again, some rental credits have already been provided for certain expenditures. And, fundamentally, Brace’s conductis not such as to merit any equitable relief at all. [63] My assessment is that, in all of the circumstances of this case, that Brace should be awarded $18,000 towards the present valueof enhancements he and his wife made to the property.

Against this amount, Snow may offset rent owing by the Braces to the date oftheir vacating the property. [22] Given the lack of proper financial evidence and Mr. Brace’s fraudulent actions in relation to other claims for compensation forrepairs and renovations, there is no basis on which to conclude that the trial judge erred in this determination which was, in fact, notchallenged by either party in this appeal.

However, the Braces rely on this award to submit that they were partially successful at trial,and that, therefore, an award of solicitor and client costs as ordered by the trial judge could not be sustained. This submission is notpersuasive. [23] The principle that solicitor and client costs are available at the trial judge’s discretion to sanction misconduct by a party isreferenced in Perry v. Heywood et al. (1998), (NL SC), 175 Nfld. & P.E.I.R. 253 (NLCA).

As noted by CameronJ.A., for the Court, the imposition of solicitor and client costs in circumstances where a party’s conduct has been reprehensible represents“an expression of censure or chastisement and will engender a certain element of opprobrium” (paragraph 62). (See also, Young v.Young, (SCC), [1993] 4 S.C.R. 3, at page 134.) [24] Reprehensible conduct in this context may occur either in the circumstances giving rise to the action or in the conduct of thelitigation. In Earle v.

Christian Brothers of Ireland in Canada et al. (1995), (NL SC), 136 Nfld. & P.E.I.R. 52(NLTD), Mercer J. summarized: [12] There are therefore two factual questions to be answered. Has there been reprehensible, scandalous or outrageous conduct either (1)in the circumstances giving rise to the cause of action, or (2) in the proceedings?

The conduct in question must be that of the partiesagainst whom an order for solicitor and client costs is sought. [25] In this case, the fact that the trial judge awarded a sum in compensation for work done by the Braces, an amount that issignificantly less than was sought by the Braces, does not preclude the exercise of the trial judge’s discretion to award costs based on Mr.Brace’s reprehensible fraudulent conduct. The trial judge recognized that the Braces did not come to court with clean hands. Theirclaim was based on a fraudulently altered document. They provided false and fraudulently altered receipts.

Given their reprehensibleconduct both in grounding their claim and in presenting that claim in court, the trial judge granted the above compensation “withconsiderable reluctance”, based only on Mr. Snow’s acquiescence in the Braces making the improvements and renovations to the house.

In the result, there is no basis on which to interfere with the trial judge’s exercise of his discretion to award costs on a solicitor and clientbasis. [26] Accordingly, the appeals against the trial judge’s determination rejecting the Braces’ claim based on the fraudulently altereddocument and against the order for costs in the Trial Division on a solicitor and client basis are dismissed. Costs of the Appeal [27] As to costs of the appeal and those for the related application for security for costs, Mr. Snow submitted that he is entitled tohis costs on a solicitor and client basis.

He submitted that, where a party has acted in a reprehensible manner, in this case, by fraudulentconduct which is affirmed on appeal, that party properly bears the full burden of costs, including those of the appeal. [28] This submission is grounded in the concept that a party coming to court and using the judicial process to accomplish andperpetrate a fraud constitutes a dishonourable and dishonest use of the courts.

Not only does the party against whom the fraud is directedsuffer a detriment, but the attempt to use the system for an improper purpose is contrary to the principles and foundation underpinningthe administration of justice. This consideration applies not only to a decision at the trial level, but also to an appeal where the appeal isunsuccessful and the determination that the party committed a fraud is affirmed. This result was applied in Mining & Allied Supplies(Canada) Ltd. v. 2390869 Manitoba Ltd. (1997), (MB CA), 118 Man.

R. (2d) 136 (MNCA), where costs at the triallevel and on appeal were ordered on a solicitor and own client basis “[g]iven the finding of fraud permeating as it did the entiretransaction” (paragraphs 14 and 19). (See also, for example, Brideau v.

Mowry (2000), (NB CA), 229 N.B.R. (2d)244 (NBCA), at paragraph 10.) [29] In addition to the concern that a claim based on a fraud involves an attempt to use the judicial system for an improper purpose,an award of solicitor and client costs at the appellate level is a recognition that, in such circumstances, the party who has been the objectof the fraudulent conduct should receive complete indemnification for his costs related to both the trial and the unsuccessful appeal.

Anything short of that would have the effect of imposing an unjustified burden on that party and releasing the party who engaged infraud from bearing the costs associated with his reprehensible conduct. [30] Having identified these considerations, which would apply on the facts of this case, it should be noted that an award of solicitorand client costs is discretionary and will, in each instance, depend on the particular circumstances.

There may be some situations wherefraudulent conduct is at the root of an unsuccessful appeal, but where the court exercises its discretion to refuse a request for costs on asolicitor and client basis.

[ 31 ] However, as discussed above, the circumstances of this appeal are such that this is a proper case for the exercise of the Court’s discretion to order the Braces to pay Mr. Snow’s solicitor and client costs of the appeal and those of the related security for costs application. Payment out of Funds Paid into Court as Security for Costs [ 32 ] Mr. Snow requested an order that any funds remaining from the amount paid into this Court as security for costs of the appeal be applied to unpaid costs of the trial.

It should be noted that, in granting the order for security for costs in this case, Green C.J.N.L. referred to the principle that “an order for security for costs on appeal must only relate to the costs of the appeal and not to recovery of outstanding costs of the original trial” ( 2010 NLCA 16 , at paragraph 30 ). Mr. Snow provided no authority and failed to establish a basis on which the requested order could be granted. The request is, therefore, denied. Disposition [ 33 ] The appeal is dismissed. Mr.

Snow will have his costs of the appeal and those for the related application for security for costs on a solicitor and client basis. _________________________________ B. G. Welsh J.A. I concur: M. F. Harrington J.A. I concur: L. R. Hoegg J.A.