W. Bryant Shears Ltd. v. Sharmat Services Inc., 2012 NLCA 17

Date: 20120313 Docket: 12/14 &12/15 Citation: W. Bryant Shears Ltd. v. Sharmat Services Inc. 2012 NLCA 17 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN : W. BYRANT SHEARS LTD. AND BOYD SHEARS APPELLANTS/RESPONDENTS ON CROSS-APPEAL AND : SHARMAT SERVICES INC. AND SHARON SHEARS RESPONDENTS/APPELLANTS ON CROSS-APPEAL Coram: Green C.J.N.L., White and Hoegg JJ.A. Court Appealed From: Supreme Court of Newfoundland and Labrador, Trial Division, 2010 02F 0499 Appeal Heard: March 8 and 9, 2012 Judgment Rendered: March 13, 2012 Reasons for Oral decision delivered by Green C.J.N.L.

Concurred in by: White and Hoegg JJ.A. Counsel for the Appellant: Nicholas Avis, Q.C. Counsel for the Respondent: Jean Dawe, Q.C. Green C.J.N.L. (Orally) for the Court:

[1] In view of the fact that this appeal and cross-appeal involve challenges to rulings made during a trial which is ongoing, wehave decided to announce our decision orally now so that the parties will have direction as to how the matter should proceed from here. [2] Although the nature of the orders being appealed would arguably require leave to appeal to be granted pursuant to rule 57.02,of the Rules of the Supreme Court, 1986, in this case both parties signified that they wanted this Court to hear most of the issues engagedon the appeal to resolve matters which they considered of importance with respect to the future direction of the trial.

It is sufficient tonote at this time that, in the circumstances of this case, we would have granted leave in any event pursuant to the grounds itemized inrules 57.02(4)(

d) and 57.02(4)(e). [3] This litigation, which has been ongoing in fits and starts for nearly fourteen years, arose out of a matrimonial disputeregarding claims to matrimonial and business assets.

Those claims became intertwined with ancillary litigation concerning variouscorporate entities and trusts created, owned or controlled by the ex-spouses. [4] The fundamental issue in the application, the decision in which is under appeal, was whether a witness, an accountant andfinancial advisor of the appellants, who had unique, or at least significant, knowledge of various financial transactions under question inthe litigation, could be excused completely from testifying on grounds of ill-health (a serious, potentially life-threatening, heartcondition) or, if not, what conditions, if any, could be imposed with respect to the manner and scope of his testifying, so as to amelioratepotential consequences to his health. [5] Before dealing with the merits, we would observe that the process adopted in this case to raise the issue of whether thewitness should be excused from testifying – i.e. the making, by one of the parties, of a pre-emptive application for a declaration that asubpoena should not be issued to require him to testify, rather than waiting for the witness himself to apply to quash the subpoena after itis issued, as was done in Re Carroll; Kent v.

Kent 2010 NLCA 53 – is problematic because it prevented a clear demarcation between theissues at play relating to the witness’s position, as opposed to the issues that one of the parties (in this case, the appellants), consideredrelevant. The positions of a party and a witness, and their motivations for acting, are not necessarily the same. In this case, the choice ofprocedure caused confusion and resulted in issues related to abuse of process, viewed from the point of view of the appellants instead ofthe witness, being advanced. While we recognize that, considering the relationship between Mr.

Shears and the witness and his consentto having Mr. Shears make the pre-emptive application, Mr.

Shears could in some respects be said to be acting as the witness’s agent forthe purpose of the application, we nevertheless are of the view that except in the most exceptional of cases (such as, perhaps, where thereis a significant risk to the potential witness’s health from the fact of service of the subpoena on him), the better approach is for thewitness to respond to the subpoena itself as issued. [6] A potential witness may be excused from testifying in court where the trial judge finds that a witness’s health may beseriously jeopardized by attending and giving evidence: see, for example, Toronto Dominion Bank v.

Goldberger Holdings Ltd. (1999),49 C.P.C. (4th) 306 (Ont. S.C.J.); Re Jacobs (1835), 1 Har. & W. 123 (Bail Ct.). The onus of demonstrating the risk to the health or lifeof the witness is on the party raising it, and the burden is a high one. We would adopt the following statement from Alan W. Mewett,Q.C. and Peter J. Sankoff, Witnesses, looseleaf (Toronto: Carswell, 1991) at 7-27, where the authors, citing Rumble v. CanadaPermanent Trust Co. (1999) (MB KB), 140 Man. R. (2d) 154 (QB) and Lamothe (Litigation Guardian of) v.Parkland School Division No. 63 (2007), 49 C.P.C. (6th) 324 (Sask.

Q.B.), suggest that, “… where the evidence of the witness isrequired for the action the courts will usually side in favour of granting the examination with conditions imposed to make the processeasier upon the witness unless it is clear that the risk of serious harm from testifying simply cannot be avoided.” [7] In this case, we are all of the view that the trial judge did not err in concluding that the witness, Claude Blagdon, could berequired, by subpoena, to testify at the trial.

The trial judge did not commit any palpable or overriding error in her assessment of themedical evidence leading to her conclusion that he should not be excluded completely from testifying on grounds of ill-health. Furthermore, we are not persuaded, as the appellants urged on us, that the trial judge mischaracterized the issue she had to decide. It isclear from the record of submissions as well as her analysis and conclusion, that the trial judge was alive to the importance ofdetermining, as a first step, whether Mr. Blagdon’s medical condition was such that it would provide a legitimate excuse for nottestifying.

When her reasons are considered as a whole against the submissions that were made, we are satisfied that she did not, as wassuggested, assume that Mr. Blagdon could testify and simply proceed to determine the logistics of how to facilitate such testimony. [8] We further see no basis for interfering with the manner in which the trial judge dealt with the appellant’s arguments regardingabuse of process and the impact of the respondent’s alleged failure to act more promptly in seeking discovery pre-trial as well as otheralleged failures. The issue of abuse of process and the issue of whether Mr.

Blagdon can be compelled to testify notwithstanding hishealth condition are distinct and, in this case, must be analyzed separately. [9] As to the appellant’s submission of error on the part of the trial judge in making certain final factual findings before the trialhad concluded, we are of the opinion that, viewed in context, the statements made by the trial judge at paragraphs 18 and 21 of herjudgment were only made, as findings, for the purpose of disposing of the application in front of her and not as final determinations forultimate trial purposes, which obviously, would be affected by any additional evidence received as well as argument thereon. [10] As to the respondent’s cross-appeal, relating to whether the trial judge, having decided that Mr.

Blagdon should testify, shouldhave imposed certain conditions on the manner in which the evidence should be given, as well as making certain ancillary ordersrespecting the scope of examination, the admissibility of documentary evidence, the inability to subpoena further documents, and the useof the 1998 examination for discovery of Mr.

Blagdon as evidence in the trial, we would observe, as a preliminary point, that a trialjudge ought to be cautious on an application regarding compellability of a witness, about fettering, at too early a stage, her ability tomanage the trial as it unfolds. [11] Many of the ancillary matters dealt with by the trial judge were not directly engaged in the application dealing with Mr.Blagdon’s ability to testify and were not necessary to be determined according to a rigid formula before the issues actually presentedthemselves in the trial.

The inherent jurisdiction of the trial judge as well as the rules of court providing for control of the trial processprovide the latitude needed to impose conditions and restrictions such as those which the judge set out in her Procedural Order, orperhaps other conditions and restrictions, whenever it is actually necessary for trial management.

[ 12 ] While we are of the view that the trial judge was correct in attempting to outline some broad parameters for control of the manner of examination of Mr. Blagdon in the interests of preserving his health, we believe that despite her laudable attempt to manage the trial with a view to moving it forward on a reasonable, expeditious basis, she erred with respect to the imposition of some of the conditions and in the making of ancillary orders before it was necessary to do so. [ 13 ] Specifically, it is appropriate to outline parameters with respect to the manner of Mr.

Blagdon’s testifying where those conditions are designed to ameliorate the concerns raised in the medical evidence. On the other hand, it is not appropriate to make rulings on other issues that are still speculative and which require examination through a different analytic structure or which amount to nothing more than a reiteration of general principles. [ 14 ] With respect to the Procedural Order, we comment as follows: (

a) Paragraphs 1-3 : These stipulations merely reiterate that certain financial records may not be entered into evidence without proof from their author unless the parties consent. This tracks the general rule with respect to admissibility of documentary evidence that would apply in any event. There is no need for these statements to be included in an order dealing with Mr. Blagdon’s ability to testify. In fact, their presence may prematurely preclude one of the parties from seeking to have such documents admitted without proof from their author on the basis of an exception to the hearsay rule or in some other manner. (

b) Paragraph 4 : The condition that counsel for Mr. Shears should advise, at the conclusion of his re-examination of his client, whether he intends to call any other witness from the accounting firm, Blagdon, Tilley and Co., with counsel for Ms. Chaulk having the right to do so if he did not, is supportable as an attempt by the trial judge to minimize the amount of evidence Mr. Blagdon would have to give and thereby minimize the risk to his health. The limitation that any subpoena issued by counsel for Ms.

Chaulk to any such person should be limited to a summons to testify and not to produce further documents may be questionable, but counsel for Ms. Chaulk withdrew her appeal against this condition. Accordingly, it must stand. (

c) Paragraph 5 : The ruling that the 1998 examination for discovery of Mr. Blagdon “be accepted into evidence” was made without proper analysis of the principles relating to admissibility that would have to be considered before such evidence could be received. The ruling was also premature because the trial judge was not privy to the nature and scope of the evidence given by Mr. Blagdon on that occasion. The ruling that counsel for Ms. Chaulk not be entitled to cross examine Mr.

Blagdon “on topics already addressed during his discovery except to update such topics…” should also not have been made in advance of the trial judge’s knowing the details of the nature and extent of the evidence that Mr. Blagdon had given on that occasion. Furthermore, such a restriction operates as an arbitrary curtailment on the right of counsel for Ms. Chaulk to examine or, if allowed, cross-examine, Mr. Blagdon. The scope and nature of her examination or cross-examination can better be regulated and controlled by the trial judge as it actually occurs in court, taking into account, amongst other things, Mr.

Blagdon’s ongoing reaction as he testifies and any rulings properly made with respect to the admissibility of his examination for discovery in the event he cannot continue to testify. (

d) Paragraph 6 : The ruling that counsel for Ms. Chaulk is “entitled to serve a subpoena on Mr. Blagdon” is the fundamental ruling in this case and is affirmed on this appeal. Although the trial judge’s requirement that such a subpoena not be duces tecum was originally challenged on the cross-appeal, counsel withdrew this ground of appeal. Hence, this requirement stands. (

e) Paragraph 7 : The condition that “cross-examination of Mr. Blagdon shall be confined to relevant and material areas for which no other member from Blagdon, Tilley and Co. was available to testify” is, on its face, an arbitrary limit on the scope of examination of Mr. Blagdon by counsel. Under normal circumstances, examination and, in particular, cross-examination of a particular witness on specific topics, if relevant, cannot be limited just because another witness has spoken to the same subject- matter. Because of his intimate knowledge of the financial transactions in question, Mr.

Blagdon might well bring more detailed knowledge, or a different perspective, to the areas upon which another member of his accounting firm may have already testified. That said, one can perhaps understand the trial judge’s motivation as an effort to limit the length of Mr. Blagdon’s testimony because of his health. However, in so doing it may have the effect of depriving the court and the parties of valuable information and unnecessarily prejudice counsel’s scope and manner of examination if it ultimately turns out that Mr. Blagdon’s health does not in fact preclude extra time for such questioning.

We would therefore set aside this condition. We would observe, however, that the trial judge retains authority, in the special circumstances of this case, to direct in general terms the order in which the subject-matter of the examination or cross-examination should be dealt with. It would obviously be advisable in any event for counsel for Ms. Chaulk to cover, as best she can, matters not dealt with by other witnesses and upon which obtaining information is important, in case the examination of Mr. Blagdon has to be cut short because of deterioration in his health. (

f) Paragraph 8 : We agree that it was reasonable for the trial judge, as a means of addressing Mr. Blagdon’s health issues by attempting to reduce his stress associated with surprise, to require that a list of topics to be covered in Mr. Blagdon’s examination be provided in writing in advance to Mr. Blagdon and that such topics “be broken down into manageable components to be addressed in a concise and organized fashion on a day to day basis”. We were informed, however, that the requirement that the list be submitted no later than 72 hours following the completion of the testimony of Mr.

Shears is no longer capable of being complied with because Mr. Shears’ testimony is now completed. We agree, however, that there should be advance notice given. We stipulate that a list of topics to be covered on the first scheduled date for Mr. Blagdon’s testimony be provided to him at least 48 hours in advance and that additional lists be provided at the end of his testimony on each succeeding day setting out the topics to be covered in cross-examination on the next sitting time set for him to resume his testimony.

We also agree that there is no basis for interfering with the trial judge’s discretion in limiting the extent of examination per day and per week and in stipulating that the evidence be taken in a less adversarial and more physically comfortable environment. It is, however, arbitrary and inappropriate for the trial judge to limit, in advance, the length of the examination to a total of four consecutive days. The overall length of the examination, including cross-examination, should be determined as it progresses, based on the trial judge’s continuing assessment of the impact of the process on Mr.

Blagdon’s health and ability to continue. We also say that the list of topics should not be used to prevent the asking of legitimate questions arising from the natural flow of the evidence, even though they may not fall within the strict confines of the topics listed. As well, whatever regime is set in advance, it need not be rigidly adhered to if circumstances of Mr. Blagdon’s health dictate otherwise as matters progress; the trial judge retains the discretion to manage the progress of Mr. Blagdon’s giving evidence as circumstances dictate.

We also do not agree with the stipulation that challenges “on the basis of relevancy, materiality and/or limits to cross-examination based on assertions of

‘disguised discovery’ [should be made] in advance of Mr. Blagdon’s attendance.” This is unworkable and will be productive of further argument on the basis of speculation as to what the actual questioning may be. Challenges should be made at the time the questions are put and the evidence tendered. (

g) Paragraph 9 : This stipulation is unusual in that it purports to be an order of the Court ordering itself to do whatever it can to reduce Mr. Blagdon’s physical and emotional stress. It is not appropriate in a formal order. In any event, it is clear from the trial judge’s judgment that she is completely alert to the dangers to Mr. Blagdon’s health. See para. 71, item 9 of her decision where she states: “… his health is of great concern to me and … within reason the court will do whatever it can do to reduce the physical and emotional stress associated with his testimony.” (

h) Paragraph 10 : The condition that the questions posed “must be relevant and material” and that counsel for Ms. Chaulk not be permitted to engage in a “fishing expedition” or engage in a “disguised form of discovery” is unnecessary insofar as it stipulates a requirement for relevancy and materiality and is inappropriately restrictive insofar as it deals with “fishing” and “disguised discovery”. There is no additional requirement of admissibility that examination not include a search for documents. Questions can be asked of a witness provided they are relevant or material.

If the answers result in references to additional relevant documents, such documents may well be the subject of additional questioning and, if necessary, production. The determination of how far counsel may go in such questioning is within the discretion of the trial judge, to be exercised at the time of questioning, according to her perceptions of how best to manage the progress of the trial, her application of evidentiary principles and her ongoing assessment of Mr. Blagdon’s ability to continue with questioning. (

i) Paragraph 11 : This stipulation, requiring the parties and their counsel to abide by the terms of document disclosure dealt with in previous case management meetings, merely formalizes what was formerly stipulated or agreed to. Counsel agreed to having that provision in the order, though it does not relate directly to the issue of Mr. Blagdon’s testifying. (

j) Paragraph 12 ; The requirement that any records which Mr. Shears’ expert relied on in preparation of his expert’s report be supplied to counsel for Ms. Chaulk was not the subject of this appeal and must therefore stand. [ 15 ] The Procedural Order should be amended accordingly. [ 16 ] As to costs, the respondents were successful in resisting the submissions of the appellant on the appeal and also achieved substantial success on the cross-appeal. Accordingly, the respondents shall have their costs on this appeal on a party and party basis. [ 17 ] We would make the following additional observations.

The trial judge, though ultimately satisfied that Mr. Blagdon should testify, recognized that a special regime for the manner and extent of Mr. Blagdon’s evidence was required to take account of his health condition and that, in imposing such a regime, there would be incidental impacts, in terms of trial fairness, on the ability of the parties to present their cases. In that, she was acting wisely. We have no doubt that the trial judge will proceed cautiously and sensitively with the regulation of Mr.

Blagdon’s examination and cross-examination and will monitor the situation closely throughout the process, taking whatever steps may be necessary or advisable to protect Mr. Blagdon’s health from unnecessary risk, while at the same time trying to minimize any consequences to the parties and any effect on the trial. [ 18 ] We are also sure that counsel are aware of what is at stake in this matter. It would be inappropriate for counsel, like the proverbial ostrich, to put their heads in the sand and proceed as if this aspect of the trial was normal. The consequences to each party, if Mr.

Blagdon were not to be able to complete his testimony may be significant. It is incumbent on each counsel, therefore, to proceed realistically with respect to how the examination of Mr. Blagdon is conducted. Every effort should be made, in a spirit of cooperation, to attempt to resolve issues respecting admissibility, scope and timing of examination in a practical manner and without the necessity of standing on technical legal principle. White J.A. (Orally): I concur. Hoegg J.A. (Orally): I concur. J. D. Green C.J.N.L.

C. W. White J.A. L. R. Hoegg J.A.