Fawley et al v Moslenko, 2017 MBCA 47

Citation: Fawley et al v Moslenko, 2017 MBCA 47 Date: 20170511 Docket: AI16-30-08580 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Holly C. Beard Madam Justice Diana M. Cameron Mr. Justice Christopher J. Mainella BETWEEN: ROBERT FAWLEY and ) TRACY ANGER-ISINELLI ) R. M. Beamishas the Personal Representative ) for the Appellantof the ESTATE OF ) KAILA LATOYA TRAN ) B. J.

Harris ) for the Respondents (Applicants) Respondents ) ) Appeal heard:- and - ) November 29, 2016 ) DRAKE DAVID MOSLENKO ) Judgment delivered: ) May 11, 2017 (Respondent) Appellant ) On appeal from 2016 MBQB 59 MAINELLA JA Introduction [1] Determining legal responsibility for a murder is usually a matter for the criminal courts. The backdrop to this civilappeal is the drug-related murder of Kaila Tran (the deceased). Her family believes the murder was ordered by the deceased’s boyfriend(the respondent). While the police arrested and charged him, he was never ultimately tried for the murder.

The family wishes to bring acivil action against him. In order to begin the action, relief from a statutory limitation period was required. The deceased’s sister,Tiffany Tran (the applicant), successfully brought an application for leave to begin the action pursuant to section 14(1) of The Limitationof Actions Act, CCSM c L150 (the LAA).[1] The respondent appeals the order granting leave to begin a wrongful death action. [2] The first of two issues raised by the appeal involves the application of the discoverability rule under the LAA.

Therespondent submits that the judge erred in determining that the applicant did not discover all decisive material facts that could link him tothe murder until after the expiry of the limitation period. He says she knew the facts necessary to sue him before the limitation periodexpired, but did not act with the necessary diligence to commence the claim. [3] The other issue raised is that of when is contentious hearsay evidence admissible in an application for relief from alimitation period under the LAA.

The respondent argues that the application for an extension of time was based entirely on inadmissiblehearsay and double hearsay and, therefore, the judge erred when he concluded that there was admissible evidence of a prima facie caseon the causes of action alleged that would have a reasonable prospect of success at trial (see Johnson v Johnson, 2001 MBCA 203 at para13; and Justice v Cairnie Estate et al (1993), (MB CA), 88 ManR (2d) 43 at para 9 (CA), additional reasons at (MB CA), 88 ManR (2d) 179, leave to appeal to SCC refused 100 ManR (2d) 296). [4] For the following reasons I would dismiss the appeal.

Background [5] On June 20, 2012, the deceased was brutally stabbed to death in the parking lot of her Winnipeg apartment. Theattack was perpetrated by a drug dealer named Treyvonne Willis (Willis). Six days after the murder, Willis and the respondent werearrested and jointly charged with first degree murder. [6] At common law, a cause of action in tort dies with the person to whom, or by whom, the wrong was done (see Grant vWinnipeg Regional Health Authority et al, 2015 MBCA 44 at para 49). Survivor legislation has overridden this rule but there are

statutory limitation periods. Section 7(4) of The Fatal Accidents Act , CCSM c F50, and section 2(1) (

m) of the LAA create a two-year limitation period from a person’s death for the commencement of a claim by qualified survivors for wrongful death. Similarly, section 53(2) of The Trustee Act , CCSM c T160, creates a two-year limitation period from a person’s death for the commencement of a tort action relating to the death by the deceased’s personal representative for the benefit of the deceased’s estate. Accordingly, the two-year limitation period for a civil action in relation to the deceased’s death expired on June 20, 2014. [ 7 ] The murder case against the respondent fell apart at the preliminary inquiry.

The Crown lost an evidentiary ruling and, as a result, was prevented from adducing certain evidence it believed linked him to the murder. Because of that unfavourable ruling, on June 17, 2014 (three days before the expiry of the limitation period), the respondent’s murder charge was stayed. At the time, the applicant was told by a police detective and the prosecutor that the investigation of the respondent would continue. However, the murder charge was not recommenced within one year or subsequently re-laid thereafter. [ 8 ] The trial of Willis took place in April 2015.

During the trial, the jury heard evidence from two Crown witnesses and also viewed a video-recorded statement by Willis to police that are relevant to this appeal. [ 9 ] Tremaine Sam-Kelly (Sam-Kelly) was a friend of Willis who was present at the time of the murder and discussed it with Willis. He testified that Willis admitted to him prior to the murder that the deceased’s “boyfriend” had told him to kill her. He told the jury that Willis said that the boyfriend had revealed to him that the deceased was a “snitch” who had to be killed because she might “rat him out”.

He also testified that Willis told him that the boyfriend had said to him, “if we get rid of her, he can give me the money” to pay a drug debt Willis owed. Finally, Sam-Kelly also told the jury that the boyfriend had given Willis information about the habits of the deceased to assist him in killing her. [ 10 ] There is no suggestion or evidence that anyone other than the respondent was the boyfriend of the deceased at the time of her murder. The couple lived together and had been in relationship for several years. [ 11 ] Cristina Valencia (Valencia) was a friend of Willis.

She testified that Willis spoke to her two days before the murder about him owing $3,000 to a drug dealer. [ 12 ] In the video-recorded statement, the jury saw that Willis confessed to the murder and said he killed the deceased to avoid violent repercussions to him and his family members over an unpaid drug debt owed to a criminal organization. In this statement, Willis named the person who told him to kill the deceased; it was not the respondent. The police did not believe Willis.

The investigation led police to believe that the person named by Willis as the directing mind of the murder had no involvement in it whatsoever. The only people ever charged for the murder were Willis and the respondent. [ 13 ] On April 24, 2015, approximately ten months after the expiry of the limitation period, Willis was convicted, after trial by judge and jury, of first degree murder. [ 14 ] Soon after Willis was convicted, the applicant was told by a police detective and the prosecutor that there was a second video-recorded statement from Willis to police (“the second statement”).

The second statement was never shown to the jury during the murder trial. The applicant did not know of the existence of the second statement until the detective and prosecutor told her about it. The applicant was told by the detective and the prosecutor that, in that second statement, Willis told police that it was the respondent who had hired him to murder the deceased. [ 15 ] The second statement of Willis is in the possession of the authorities.

Although the applicant knows that the second statement exists, she knows nothing of its content other than what the detective and prosecutor briefly told her. [ 16 ] The applicant says that the second statement, when considered in light of the testimony of Sam-Kelly and Valencia, is new evidence of a decisive character that may prove the respondent hired Willis to commit the murder. [ 17 ] On June 16, 2015, the application under the LAA for leave to begin a civil action against the respondent was filed.

The proposed statement of claim alleges that he conspired together with Willis to cause the death of the deceased and that his actions amount to assault, battery and/or the intentional infliction of harm. [ 18 ] The affidavit material filed in support of the application under the LAA consisted of three affidavits: one from Mr. Fawley and two from the applicant. There was no cross-examination on the affidavits filed.

Statutory Provisions [ 19 ] The relevant provisions of the LAA are as follows: Extension of time in certain cases 14(1) Notwithstanding any provision of this Act or of any other Act of the Legislature limiting the time for beginning an action, the court, on application, may grant leave to the applicant to begin or continue an action if it is satisfied on evidence adduced by or on behalf of the applicant that not more than 12 months have elapsed between (

a) the date on which the applicant first knew, or, in all the circumstances of the case, ought to have known, of all material facts of a decisive character upon which the action is based; and

(

b) the date on which the application was made to the court for leave. Evidence required on application 15(2) Where an application is made under

section 14 to begin or to continue an action, the court shall not grant leave in respect of the action unless, on evidence adduced by or on behalf of the claimant, it appears to the court that, if the action were brought forthwith or were continued, that evidence would, in the absence of any evidence to the contrary, be sufficient to establish the cause of action on which the action is to be or was founded apart from any defence based on a provision of this Act or of any other Act of the Legislature limiting the time for beginning the action.

Definitions 20(1) In this Part “appropriate advice” in relation to any fact or circumstance means the advice of competent persons qualified, in their respective spheres, to advise on the professional or technical aspects of that fact or that circumstance, as the case may be; “court” in relation to an action, means the court in which the action has been or is intended to be brought. Reference to material facts 20(2) In this Part any reference to a material fact relating to a cause of action is a reference to any one or more of the following, that is to say: (

a) The fact that injuries or damages resulted from

an act or omission. (

b) The nature or extent of any injuries or damages resulting from

an act or omission. (

c) The fact that injuries or damages so resulting were attributable to

an act or omission or the extent to which the injuries or damages were attributable to the act or omission. (

d) The identity of a person performing

an act or omitting to perform any act, duty, function or obligation. (

e) The fact that a person performed

an act or omitted to perform

an act, duty, function or obligation as a result of which a person suffered injury or damage or a right accrued to a person.

Nature of material facts 20(3) For the purposes of this Part, any of the material facts relating to a cause of action shall be taken, at any particular time, to have been facts of a decisive character if they were facts which a person of his intelligence, education and experience, knowing those facts and having obtained appropriate advice in respect of them, would have regarded at that time as determining, in relation to that cause of action, that, apart from any defence based on a provision of this Act or any other Act of the Legislature limiting the time for bringing an action, an action would have a reasonable prospect of succeeding and resulting in an award of damages or remedy sufficient to justify the bringing of the actions.

Where facts deemed to be outside knowledge 20(4) Subject to subsection (5), for the purposes of this Part, a fact shall, at any time, be taken not to have been known by a person, actually or constructively if

(

a) he did not then know that fact; (

b) in so far as that fact was capable of being ascertained by him, he had taken all actions that a person of his intelligence, education andexperience would reasonably have taken before that time for the purpose of ascertaining the fact; and (

c) in so far as there existed, and were known to him, circumstances from which, with appropriate advice, the fact might have beenascertained or inferred, he had taken all actions that a person of his intelligence, education and experience would reasonably have takenbefore that time for the purpose of obtaining appropriate advice with respect to the circumstances. Standard for an Extension of Time under the LAA and the Standard of Review [20] Subject to certain exceptions set out in the LAA,

Part II of the LAA is a complete code as to relief from a limitationstatute in Manitoba (see Rarie v Maxwell (1998), (MB CA), 131 ManR (2d) 184 at para 58 (CA)).

In Johnson,Helper JA explained the two aspects of the onus under the LAA for an applicant to obtain leave to commence an action after the expiry ofa limitation period in this way (at para 34): Pursuant to s. 14(1), the court must be satisfied on the evidence adduced that not more than 12 months have passed between the date onwhich an applicant first knew of all the circumstances of the case upon which the action is based and the date upon which the applicationto court was made.

Pursuant to s. 15(2), no order is to be granted under s. 14(1) unless it appears to the court that an applicant’s evidencewould be sufficient to establish the cause of action on which the action is founded, absent evidence to the contrary. See also Penner v Martens et al, 2008 MBCA 35 at paras 1-3; and Sochasky v Winnipeg (City), 2013 MBQB 204 at para 22. [21] The first part of the test is a statutory discoverability rule.

The judge considers the evidence adduced by the applicant,in light of the legal principles set out in sections 14(1) and 20 of the LAA, and decides whether the applicant knew, or ought to haveknown, all material facts of a decisive character upon which the action is based not more than 12 months before the date on which theapplication was filed.

Twaddle JA summarized the applicant’s onus this way in Einarsson et al v Adi’s Video Shop et al (1992), (MB CA), 76 ManR (2d) 218 (CA) (at para 13): Thus, an applicant must prove, at the very least, that he first learned of a fact material to his cause of action within the twelve monthsnext before the application was filed. The fact, first learned within that period, must be "material" within the sense defined in s. 20(2); itmust be of “a decisive character” as that phrase is defined in s. 20(3); and it must not be one which the applicant ought to have knownabout earlier.

See also Manitoba Hydro Electric v Inglis (John) Co et al (1999), (MB CA), 142 ManR (2d) 1 at para 25 (CA). [22] The statutory discoverability rule has both a subjective and an objective component. The applicant must demonstrateboth that she was unaware of the decisive material facts earlier than 12 months before the application was filed and that, in thecircumstances, her lack of awareness was objectively reasonable (see Johnson at para 31).

Awareness of having a possible cause ofaction is not to be confused with a party having a complete understanding of the particulars of the cause of action; whether it would, asopposed to could, succeed; or the amount of damages likely (see Rebizant v Greenwood et al (1998), (MB KB), 127ManR (2d) 35 at para 71 (QB); Johnson at para 15; Budd v Cardoso (1996), (MB CA), 113 ManR (2d) 101 at paras29-31 (CA); Munroe v Holder, 2002 MBCA 39 at paras 32-33; Swan River Valley Hospital District No 1 v MMP Architects, 2002MBCA 99 at paras 20-31; Lacroix (Guardian of) v Dominique, 2001 MBCA 122 at para 14; and Winnipeg Condominium Corp No 30 vThe Conserver Group Inc et al, 2008 MBCA 20 at paras 18-22). [23] The LAA recognizes that the nature of the given material facts in a particular case may require a party to seekappropriate advice from a third party as to whether the facts are of a decisive character, for purposes of advancing a claim, before filinghis or her application for relief from the limitation period.

Hamilton JA explained the relevant principles in the following way inMcIntyre v Frohlich et al, 2013 MBCA 20 (at paras 57-58): Sections 20(3) and (4) of the Act impose an “objective/subjective” test based on an assessment of what is reasonable given theapplicant’s personal characteristics of intelligence, education and experience. This assessment contemplates a consideration of whetherthe applicant has obtained “appropriate advice” in respect of the material facts. Advice can be legal, medical or other expert advice.

Depending on the factual circumstances, the date of receipt of an expert report hasbeen found to constitute the date that a plaintiff knew of all the material facts of a decisive character. See, for example, WinnipegCondominium Corp. No. 30 v. Conserver Group Inc. et al., 2008 MBCA 20, 228 Man.R. (2d) 30, in which M.A.

Monnin J.A. wrote (atpara. 22): I do not, by any stretch, wish to state that in every case the requirements of s. 14(1) of the Act require that a putative plaintiff obtainexpert evidence to buttress its position, but in this case it was necessary to satisfy the “decisive character” requirement of the Act.

[24] Assuming there is no issue that the applicant did not actually know all of the material facts of a decisive characterearlier than 12 months before the application is filed, the discoverability determination the judge is tasked to make under the LAA is asfollows: on what date, given the nature and character of the facts and the proposed cause of action, would it have been evident to areasonable person, standing in the shoes of the applicant, that she could have a cause of action with a reasonable prospect of success?

Ifthere has been consequential delay because of the seeking of third-party advice, the appropriateness of that delay will turn on whether ornot the material facts are of such a nature that they put the applicant “on notice” of the potential cause of action before seeking the third-party advice (see Penner at para 18; Morry et al v Janzen et al, 2015 MBCA 86 at paras 7-8, 13-14). [25] The second part of the test is a limited assessment of the merits of the proposed action.

Section 15(2) of the LAArequires the judge to assess the applicant’s evidence and decide whether it is sufficient, subject to any possible defence(s), to establish aprima facie case that would have a reasonable prospect of success (see Laing v Sekundiak, 2015 MBCA 72 at para 66). [26] The threshold for establishing a reasonable prospect of success is not as onerous as providing evidence that would provethe case on balance and not as simple as showing that the facts on which the claim is based, if accepted, could successfully resist amotion to strike out the claim (see Chan v Chan, 2001 MBCA 191 at para 14; and Cairnie Estate at para 45).

No two cases for relieffrom a limitation period are alike. What is important is that the facts relied on by an applicant “must be of substance” (Chan at para 14). This means that the facts are not based on speculation or conjecture but, rather, are grounded in tangible and identifiable pieces ofevidence that satisfy the judge.

As Scott CJM explained in Cairnie Estate, “that there is something to the case so that if sent on to trialthere is some realistic prospect that the action will succeed” (at para 45). [27] Applications for relief from a limitation period are, as Scott CJM noted in Penner, “very fact-specific” (at para 17). Accordingly, the standard of review on appeal is largely deferential.

Both aspects of the test for leave to commence an action after theexpiry of a limitation period under the LAA are applications of a legal standard to a set of facts and, therefore, absent a purely legal error,raise questions of mixed fact and law reviewable on a standard of palpable and overriding error (see Housen v Nikolaisen, 2002 SCC 33at paras 26-30; McIntyre at para 49; and Laing at paras 57-58).

Issue One—The Judge’s Application of the Discoverability Rule under the LAA Judge’s Decision [28] The judge rejected the respondent’s argument that, based on him being arrested and charged with murder, he couldhave been sued civilly before the limitation period expired in 2014. The judge also concluded that the application under the LAA wasmade within 12 months of the date on which the applicant knew, or ought to have known, of the decisive facts that could link therespondent to the murder of the deceased as required by section 14(1) of the LAA.

He stated (at paras 47, 48): I agree with the applicant's position that when the criminal charges against the respondent were stayed three days prior to the expirationof the limitation period, the applicant had insufficient evidence to establish that the respondent caused the deceased's death. It was notuntil after the conclusion of the Willis trial, that she was advised by the Crown and the police that there was a video confession inexistence in which Willis states that the respondent hired him to kill the deceased. This information first came to her attention on April25, 2015 and then again on May 17, 2015.

I am of the opinion, that this information along with the evidence given by Sam-Kelly and Valencia at the trial of Willis in April of2015, was critical to the establishment of the necessary legal connection between the respondent's actions and the applicant's knowledge.

Could an Action be Commenced Based on the Murder Charge Alone? [29] The respondent says that the applicant knew all of the material facts necessary for the purposes of Manitoba, Court ofQueen’s Bench Rules, Man Reg 553/88 (the QB Rules), r 25.06(1) to draft a statement of claim and sue him before the expiry of thelimitation period because he was arrested and charged with murder soon after it occurred.

The rule states: Material facts 25.06(1) Every pleading shall contain a concise statement of the material facts on which the party relies for a claim or defence, but notthe evidence by which those facts are to be proved. [30] In my view, this argument reflects a misunderstanding of the rule. The rule requires parties to turn their minds to the“essential elements” or “ingredients” of their claims or defences and then set out in the pleading “sufficient facts about the specificevents” that, if proven, would establish or defeat the claim (Robertson v Manitoba Keewatinowi Okimakanak Inc et al, 2011 MBCA 4 atpara 25).

To meet the requirements of the rule, more must be done than simply making a conclusory statement. The materialityrequirement obligates inclusion of the facts necessary to support or defeat the claim and the requested relief, but no more. As Beard JAexplained in Robertson, “conclusory statements themselves cannot be taken as material facts that support the cause of action” (at para25). See also Vojic v Canada (MNR), (FCA), [1987] FCJ No 811 (CA), leave to appeal to SCC refused, [1988]

SCCA No 42. [31] The essential characteristics of a proper civil pleading are well known: clarity, brevity and utility. As Binnie Jexplained in Lax Kw'alaams Indian Band v Canada (Attorney General), 2011 SCC 56 (at para 43): Pleadings not only serve to define the issues but give the opposing parties fair notice of the case to meet, provide the boundaries andcontext for effective pre-trial case management, define the extent of disclosure required, and set the parameters of expert opinion.

Clearpleadings minimize wasted time and may enhance prospects for settlement. [32] The respondent’s argument that he could have been sued in tort as soon as he was arrested and charged in 2012, withoutany reference in a statement of claim to the material facts as to how he committed the assault, battery and/or the intentional infliction ofharm to the deceased, is unpersuasive.

One of the requirements of both the torts of assault and of battery is an underlying intentional actof a particular nature (assault—intentional creation of the apprehension of imminent harmful or offensive conduct—see Hurley v Moore(1993), (NL CA), 112 Nfld & PEIR 40 at para 22 (CA); and battery—contact plus something else—see Non-MarineUnderwriters, Lloyd’s of London v Scalera, 2000 SCC 24 at para 16). Merely being arrested and charged with murder provides noclarity as to what intentional act(

s) occurred that allegedly have civil consequences. Without more, a civil pleading based on someonesimply being arrested and charged for a crime would be inadequate. [33] In cases where an injury or wrong may have both civil and criminal consequences, it is important to keep in mind thatcriminal pleadings are less exacting than civil pleadings because of the wording in the Criminal Code.

Saying someone committed themurder of a named victim with some sense of time and place is likely sufficient to meet the Criminal Code’s requirements for a countbecause the modern approach to criminal pleadings rejects formalism and focuses simply on whether an accused is prejudiced (see R vSharpe, 2007 BCCA 191 at paras 24-25).

Section 583(

f) of the Criminal Code confirms that a count is not objectionable because it failsto describe how a crime was committed: Certain omissions not grounds for objection 583 No count in an indictment is insufficient by reason of the absence of details where, in the opinion of the court, the count otherwisefulfils the requirements of

section 581 and, without restricting the generality of the foregoing, no count in an indictment is insufficient byreason only that . . . (

f) it does not specify the means by which the alleged offence was committed; [34] Because of the nature of the law regarding parties to an offence in criminal law, not only does the Crown not have toallege in a count how a murder was committed or whether an accused was a principal or an accomplice, but the jury does not have to beunanimous as to the material facts of an accused’s participation in a murder so long as they all agree that the accused was a party to theoffence within one of the various ways set out in

section 21 of the Criminal Code (see R v Thatcher, (SCC), [1987] 1SCR 652 at 690-99). [35] Here, it was impossible for the applicant to meet the requirements of QB r 25.06(1) and provide anything more thanspeculative or conclusory statements about the respondent’s complicity in the wrongful death of the deceased in 2012 because, as shedeposed, she had no knowledge of what act(

s) the respondent did that may have made him civilly liable for the deceased’s death. Inthese circumstances, if such a claim had been filed before the limitation period expired, I have little doubt that it would have beensuccessfully struck out. [36] Leaving aside what the law requires for a proper pleading, the respondent’s submission is logically inconsistent.

Therespondent places great legal significance for civil purposes on the fact that he was arrested and charged with murder before thelimitation period expired but he ignores the fact that, before the limitation period expired, the Crown stayed his criminal charge. For thesake of argument, any currency that could arise from him being arrested and charged evaporated when the charge was stayed by theCrown.

Was the Applicant’s Lack of Awareness of the Second Statement Objectively Reasonable? [37] I have also not otherwise been persuaded that the judge made a palpable and overriding error in his application of thediscoverability rule under the LAA in light of the record. It is uncontested that the earliest date on which the applicant knew about thesecond statement was on April 25, 2015, after Willis was convicted of first degree murder. There is no evidence that anyone told theapplicant about the second statement before that date.

I also do not see on the facts here how knowledge of the second statement couldbe imputed to her on an earlier date on an objective basis. [38] The applicant had no reason to believe or even suspect that there was something in the Crown’s disclosure brief that

would be the difference between whether or not she could have a cause of action against the respondent. The applicant deposed to thefollowing facts, which were unchallenged: At all material times, I deferred to the Police investigation and the criminal proceedings advanced by the Crown. I relied on theinformation that the Crown and the Police told me regarding Moslenko’s involvement in Kaila’s murder.

I had no independentknowledge of Moslenko’s alleged involvement into Kaila’s murder. [39] As well, when the respondent’s charge was stayed, the applicant was told by authorities that more investigation of thecase was necessary. It was not unreasonable for her to rely on that advice.

From the perspective of the reasonable person standing in theshoes of the applicant, the record here reasonably allows for the inference that, at the time the murder charge was stayed in 2014, therewas no reason to believe that the Crown’s disclosure brief would assist in making a civil claim. [40] There have been cases where plaintiffs have used civil rules of discovery after an action has been filed to obtain thefruits of a criminal investigation by authorities to further their claims (see Imperial Oil v Jacques, 2014 SCC 66; P (

D) v Wagg (2004), (ON CA), 71 OR (3d) 229 (CA); and Wong v Antunes, 2009 BCCA 278). That does not mean, however, thatprospective plaintiffs must initiate litigation and engage in fishing expeditions to attempt to learn what investigators have on their filesfor fear that, by not doing so, they may be considered to not have acted reasonably for the purposes of the LAA.

Questions about accessto material gathered by a law-enforcement agency conducting a criminal investigation for a civil claim are better left to after the actionhas been commenced. [41] I see no reason to disturb the judge’s decision that the actions of the applicant in relying on the authorities wereanything but objectively reasonable.

The situation here can be contrasted with that in Wolinsky et al v Assiniboine Credit Union, 2016MBCA 15. [42] In Wolinsky, creditors of two bankrupt companies sought an extension of time to begin an action under the LAA to sue acredit union because officials at the credit union may have had knowledge of cheque kiting by the debtors and did nothing to stop it.

Theapplicants said, in the affidavits filed in support of the LAA application, that the first time they learned of a possible cause of actionagainst the credit union was many years after the fact when criminal fraud charges over the cheque kiting were dismissed and the judge’sfindings about the credit union’s knowledge of what had been going on was reported in a newspaper. [43] This Court reversed the decision granting leave to begin the action and concluded that the record could not support theapplicants’ assertion that they only first learned of the credit union’s involvement in the cheque-kiting scheme years after the factbecause the information about the credit union’s actions had long been in the public domain and widely reported.

As Monnin JA noted,cross-examination of the applicants on their affidavits demonstrated “that the applicants were aware of the possible involvement of therespondent in a cheque-kiting scheme” long before the 12 months prior to the filing of their application under the LAA (at para 24). Conclusion [44] The respondent has not demonstrated any reversible error in the judge’s application of the discoverability rule under theLAA and, therefore, I would not accede to this ground of appeal.

Issue Two—Contentious Hearsay Evidence on an Application to Extend a Limitation Period Judge’s Decision [45] The judge’s reasons regarding the merits of the proposed action for the purposes of section 15(2) of the LAA were asfollows (at paras 53-56): Secondly, I am satisfied on the evidence of the applicant that a prima facie case has been established that would have a reasonableprospect of success. I note the respondent's concern that the applicant relies on hearsay evidence in order to argue the existence of these material facts.

Thefact that the applicant has had to rely on hearsay evidence in her affidavit is not surprising, given that the ongoing criminal proceedingarising out of the death of the deceased has restricted her ability to access that information directly. It may be that the applicant will facean evidentiary burden at a civil trial of this matter which is significantly higher than the onus she must satisfy in this application, and thatshe may not be able to meet that evidentiary burden in that context, but that is not a relevant consideration in this application.

As Queen's Bench Rule 39.01(4) provides: Contents—motions 39.01(4) An affidavit for use on a motion may contain statements of the deponent's information and belief, if the source of theinformation and the fact of the belief are specified in the affidavit.

On the basis of the evidence before me, I am satisfied that the evidence relied on by the applicant in this application has met the test set out in Chan supra , including “... establish[ing] a continuity to support a cause of action and, if based on information and belief, must reveal the source of that information and belief to demonstrate the weight to be attached to any particular allegation.” (para. 14). Respondent’s Hearsay Argument [ 46 ] There was no affidavit from the detective or prosecutor, who had personal knowledge about the second statement, filed in support of the application.

The respondent argues that the evidence that the second statement existed was hearsay as that fact came from what the detective and prosecutor told the applicant. He further says that the evidence that the contents of the second statement linked him to the murder of the deceased was double hearsay. He points out that the second statement was not before the Court.

He submits that all that was before the Court was the applicant’s limited information about the second statement based on what third parties told her was the content of the second statement. [ 47 ] In terms of the admissibility on the LAA application of the second statement, the respondent says that the general rule is that an affidavit must be confined to facts within the personal knowledge of the deponent.

QB r 4.07(2) provides: Contents 4.07(2) An affidavit shall be confined to the statement of facts within the personal knowledge of the deponent or to other evidence that the deponent could give if testifying as a witness in court, except where these rules provide otherwise. [ 48 ] The respondent says that the judge made a legal error by relying on the wrong QB rule as to when hearsay evidence may be received by affidavit, despite QB r 4.07(2).

He submits that the judge based his decision on QB r 39.01(4), which governs affidavit evidence on a motion, instead of QB r 39.01(5), which governs affidavit evidence on an application. QB r 39.01(5) states: Contents—applications 39.01(5) An affidavit for use on an application may contain statements of the deponent's information and belief with respect to facts that are not contentious, if the source of the information and the fact of the belief are specified in the affidavit. [ 49 ] The respondent submits that hearsay evidence is only admissible on an application under QB r 39.01(5) if two conditions are met.

First, the source of the information must be stated in the affidavit. Second, the fact deposed to must not be contentious ( see Rebizant at paras 134-140 ). [ 50 ] The respondent argues that both the existence of and the contents of the second statement are contentious facts. He points out that, at the murder trial of Willis, the Crown relied only on the first statement of Willis to police which named, as the directing mind of the murder, someone other than the respondent.

In that first statement (a written transcript of which is attached to an affidavit of the applicant), Willis also provided police with information which exculpated the respondent from any role in the murder. The respondent says that the contradictory word of a convicted murderer is not admissible. He also says that, if it is admissible, it cannot be sufficient evidence to establish a prima facie case that would have a reasonable prospect of success (see section 15(2) of the LAA ).

Review of the Judge’s Decision [ 51 ] The key difference between QB rr 39.01(4) and (5) is that, on a motion, there is a more permissive approach to reliance on hearsay evidence. The logic of the distinction is that, generally speaking, motions address only procedural matters whereas applications lead to a final disposition of the rights of the parties (see Telecommunication Employees Association of Manitoba Inc et al v Manitoba Telecom Services Inc et al , 2005 MBQB 259 at paras 8-9 (TEAM) ). [ 52 ] I agree with part of the respondent’s submission.

The rules regarding the contents of an affidavit in an application for relief from a limitation period under the LAA are governed by QB r 39.01(5), not r 39.01(4). The judge used the terms “motion” and “application” interchangeably throughout his reasons. For example, in his conclusion, he stated that, “In the result, the applicant's motion for an order granting leave to commence an action against the respondent for the wrongful death of Kaila Latoya Tran is granted” (at para 57) (emphasis added).

Based on my review of the judge’s reasons, he did not turn his mind to whether or not the evidence of the second statement was “contentious” hearsay because he considered the wrong rule. [ 53 ] I have some sympathy for the path the judge followed, as there is an oddity in the law as to relief from limitation periods. Normally, leave to commence a proceeding is sought by way of a motion, not an application. QB r 14.01(3) provides: Where leave required 14.01(3) Where leave of the court is required to commence a proceeding, the leave shall be sought by preliminary motion.

[54] The interests involved when seeking relief from a limitation period also do not focus on resolving the substantivedispute between the parties, while substantive disputes are often at issue in applications. It is accepted that an application for relief froma limitation period should not become “a trial itself” (Inglis at para 21).

Rather, the concern for the proceeding is about ensuring a fairbalancing of the interests of a plaintiff for relief from a limitation period while, at the same time, ensuring a defendant is not prejudicedin defending the claim by the delay in bringing it (see Rarie at paras 15, 45-46). If one looks at the nature of the hearing under the LAAbased on the comments made in TEAM, a LAA proceeding is closer to being a procedural matter than it is to being a final disposition ofthe rights of the parties.

For example, such applications can be dismissed based on the statutory discoverability rule even where anapplicant has a very strong chance of success on the merits of the claim. [55] Notwithstanding these concerns, the relevant statute, the LAA, defines the proceeding for relief from a limitation periodas an “application” in section 14(1). The proceeding before the judge was correctly brought as an application (see QB r 14.05(2)(b)).

Therefore, the judge should have directed his mind to the difference between the distinction between QB rr 39.01(4) and (5) as to thereceipt of and reliance on contentious hearsay evidence in an affidavit. In my view, the judge misdirected himself by failing to considerwhether the hearsay evidence in the applicant’s affidavit relating to the second statement was contentious and, because of that fact,inadmissible on the application.

Failing to apply the correct legal test to determine the admissibility of evidence is an error of law to bejudged on a standard of correctness (see R v DAI, 2012 SCC 5, at paras 87-89). Because of the judge’s legal error, no deference is owedto his decision regarding section 15(2) of the LAA.

Interpretation of QB r 39.01(5) [56] Where I

part company with the respondent is regarding his position that hearsay evidence is only admissible onapplication if it meets the requirements of r 39.01(5). In contrast, the position of the applicant is that it does not matter whether theevidence surrounding the second statement is contentious. In her view, if the judge erred, his error does not affect the result. She arguesthat the wording of QB r 39.01(5) is the same as the wording of the equivalent rule in the Ontario, Rules of Civil Procedure, RRO 1990,Reg 194 (the Rules of Civil Procedure), (r 39.01(5)).

She says that the Ontario courts do not view r 39.01(5) as an exclusionary rule; it isa rule to permit hearsay evidence but it does not serve to exclude hearsay evidence on an application if it is otherwise admissible atcommon law or by statute.

There is merit to this submission. [57] While this Court has not had the opportunity to interpret QB r 39.01(5) previously, there are a number of decisions thatare of assistance from this jurisdiction and others with similarly worded provisions. [58] In Aker Biomarine AS et al v KGK Synergize Inc, 2013 ONSC 4897, a case involving an application for letters rogatory,the respondent contended that the application relied on contentious hearsay and, therefore, could not be granted.

In the course ofdiscussing the respondent’s objection, Leach J confirmed that the purposes of rr 39.01(4) and 39.01(5) of the Rules of Civil Procedureare to admit evidence that is otherwise inadmissible for motions and applications if certain criteria are met. The rules do not serve toexclude evidence that is otherwise admissible.

He stated (at paras 11-13): However, it must be remembered that the concern underlying these particular rules is and at all times remains the prevention ofinadmissible hearsay; a necessary context for the application of Rules 39.01(4) and (5) made clear by many of the authorities relied uponby KGK. See, for example: Evans v. Holroyd, [1988] O.J. No. 1705 (H.C.J.), at paragraphs 12, 17 and 18; Metzler Investment GmbH v.Gildan Activewear Inc., supra, at paragraphs 11, 15, 48-51, and 54-55; and Lockridge v. Ontario (Director, Ministry of the Environment),2012 ONSC 2316 , [2012] O.J.

No. 3016 (S.C.J.), at paragraphs 109 to 116. What these and other authorities in this area make clear is that Rules 39.01(4) and 39.01(5) operate as controlled exceptions to thehearsay rule, and that challenges to admissibility based on alleged failure to satisfy the demands of those exceptions are predicated on anexpress or implicit finding that the impugned affidavit evidence should indeed be characterized as hearsay.

Put another way, the literal wording of Rule 39.01(5) should not be interpreted or applied so as to create some form of “stand alone”method of challenging and excluding evidence that is not clearly hearsay; i.e., on the alleged basis that the affiant has not detailed thebasis of his or her evidence to an opponent’s satisfaction and/or in a manner to satisfy the demands of the applicable test or burden underconsideration. [59] The following comments by Linda S Abrams & Kevin P McGuinness in Canadian Civil Procedure Law, 2nd ed(Markham: LexisNexis Canada, 2010) on the Civil Rules of Procedure are also of assistance in identifying the purpose of QB r 39.01(5)(at para §11.100): The Rules expand the extent to which hearsay evidence may be used on motions and applications.

They are not intended to restrict theevidence on which a court may act. Accordingly, hearsay evidence that is admissible under a general exception to the hearsay rule underthe law of evidence is not subject to the requirements of the Rules pertaining to information and belief.

[60] In my view, QB r 39.01(5) is part of the conversation about what evidence is admissible on an application, but it is byno means determinative of the question. The rule must be read in conjunction with QB r 4.07(2). R 39.01(5) allows for some forms ofhearsay evidence to be admissible on application that would be excluded under r 4.07(2).

However, if the evidence in question could begiven at a trial, such as hearsay evidence that falls under a recognized statutory or common law exception or the principled exception tothe hearsay rule, it is admissible on an application on the basis of r 4.07(2) even if it does not meet the requirements of r 39.01(5). Insummary, r 39.01(5) is not an exclusionary rule but, rather, is only a statutory exception to the hearsay rule.

The case law recognizes thata party, on an application, can, in some circumstances, rely on a statement of a third party on a contentious fact for non-hearsay andhearsay uses. [61] In King Estate v King, 1999 CarswellOnt 1797 (Gen Div), the executors of an estate brought an application to determinetheir right to refuse payment of a bequest to one of the sons of the deceased. As part of that proceeding, the executors asked the court tostrike out affidavits of the respondent on the basis of r 39.01(5) of the Rules of Civil Procedure because the affidavits contained hearsayevidence about contested facts.

Whitten J concluded that the fact that the affidavit material was contentious did not mean that it wasinadmissible at the application. He gave the following

interpretation of r 4.06(2) (which is worded the same as QB r 4.07(2)) and r39.01(5) of the Rules of Civil Procedure (at paras 19-24): Rule 4.06(2) provides that affidavits should be confined to a statement of facts which are “within the personal knowledge of the deponentor to other evidence that the deponent would give [if] testifying as a witness” in court. This general rule appears to eliminate the use of hearsay in an affidavit, unless the deponent/witness could testify in accordance with thenumerous exceptions to the hearsay rule.

Rule 39.01(5) provides: An affidavit for use on an application may contain statement of the deponent’s information and belief with respect to facts that are notcontentious, if the source of the information and the fact of the belief are specified in the affidavit. Statements of the deponent’s information and belief are invariably hearsay. This is permissible under the rule as long as the statementsare with respect to non-contentious matters. The meaning of “contentious” was explored in Ontario (Attorney General) v. Paul Magder Furs Ltd. (1989), (ONSC), 71 O.R. (2d) 513 (Ont.

H.C.), where Farley J. stated at 521: “‘Contentious’ to me would appear to be something that is in dispute orto which there are differences between the contending parties.” Rule 1.04(1) provides “These rules shall be liberally construed to secure the just, most expeditious and least expensive determination ofevery civil proceeding on its merits.” Therefore, it would have not been intended that Rule 39.01(5) would disallow otherwiseadmissible evidence.

If a statement based on information and belief is not hearsay by operation of the exclusions to the hearsay rule orby the scope of what is hearsay, rule 39.01(5) would not apply even though the statement is with respect to a contentious matter. [62] Whitten J refused to strike the contentious affidavit material for several reasons. In his view, some of the statementswere not being relied on for the truth of the statements but for non-hearsay uses (see paras 35, 38). One aspect of the affidavit materialfell within a recognized common law exception to the hearsay rule (see para 34).

Finally, part of the affidavit material “could” (at para33) fall within the principled exception to the hearsay rule as stated in R v Khan, (SCC), [1990] 2 SCR 531. [63] In Newmarket (Town) v Halton Recycling Ltd, 2006 CarswellOnt 3371 (Sup Ct J), the Town brought an application fora declaration that the operators of an organic waste-processing plant were creating a public nuisance and an order that the plant be closedfor up to two years.

The respondent sought to have part of the Town’s application record struck out on the basis of it containingcontentious facts contrary to r 39.01(5) of the Rules of Civil Procedure. [64] Fuerst J accepted that the word “contentious” in r 39.01(5) refers to facts “likely to cause an argument; disputed,controversial” (at para 14).

She went on to note that, except where the information and belief is obviously contentious, it will normallyrequire the other party to put forward his or her own affidavit to demonstrate that the fact is, in fact, contentious (see paras 18-20; andalso see Kisilowsky v Her Majesty the Queen, 2016 MBQB 224 at paras 50-52; Garowey v Rural Municipality of Whitemouth, 2011MBQB 87 at paras 12-13; Metropolitan Toronto Condomium Corp No 781 v Reyhanian, 2000 CarswellOnt 2431 (Sup Ct

J) at para 16;Ontario (Securities Commission) v 1367682 Ontario Ltd, 2008 CarswellOnt 2920 (Sup Ct

J) at para 8; NTI v Canada (AG), 2007 NUCJ27 at paras 24-26; and Mahe v Nunavut Liquor Licensing Board, 2006 NUCJ 23 at paras 49-50).

[65] Fuerst J agreed with the approach taken in King Estate that r 39.01(5) is simply an exception to the hearsay rule and notan exclusionary rule on an application.

She stated (at para 15): [E]ven where the facts are contentious, a statement on information and belief is permissible if it is not hearsay because it is not tenderedin proof of the truth of its contents, or if it falls within an exception to the hearsay rule, including the principled approach: King Estate,supra. [66] On the facts of the case, she found some of the Town’s record was inadmissible hearsay but other aspects of the record“may” or were “capable” of non-hearsay uses or falling within recognized exceptions to the hearsay rule (paras 35, 43(2), 43(5)). [67] In Garowey, challenge by way of an application was brought to a municipality’s decision to construct a water and sewersystem.

The municipality unsuccessfully attempted to have the applicant’s affidavit struck as contentious hearsay (see r 39.01(5))because it contained statements attributed to the reeve and members of the municipal council. Duval J concluded that the mere fact thatcounsel for the municipality objected to the contents of the affidavit material did not make the contents contentious as no affidavitmaterial in reply had been filed to make the facts contentious.

She also went on to say that r 39.01(5) was not applicable because theevidence in question was not inadmissible hearsay; it was either original evidence as to the intention of the reeve/council members or itfell within a recognized exception to the hearsay rule as being statements against interest. [68] In McCorkill v Streed, Executor of the Estate of Harry Robert McCorkill (aka McCorkell), Deceased, 2013 NBQB 419,aff’d 2015 NBCA 50, leave to appeal to SCC refused, [2015] SCCA No 411, the applicants applied for a declaration that a bequest to analleged neo-Nazi hate group in a will was contrary to public policy.

In support of the application, reliance was placed on affidavitmaterial filed by an intervener containing annual audited reports prepared by B’nai Brith Canada as to annual incidents of anti-Semitismin Canada. One of the interveners argued that the affidavit material was not admissible under r 39.01(5) of the New Brunswick, Rules ofCourt, NB Reg 82-73, which has similar wording to QB r 39.01(5). [69] Grant J rejected the objections to the affidavit material based on it containing hearsay and opinion evidence.

He ruledthat, although the documents fell outside a “strict application of Rule 39.01(5)” (at para 69), they were admissible on the applicationbecause they were in the nature of “business records” and were “necessary” and “reliable” for the determination of the application (atpara 65). [70] In 6705058 Manitoba Ltd v Penguin Heating and Cooling Technologies Inc, 2016 MBQB 62, an application was madeto discharge a builder’s lien. The respondent’s affidavit material included an inspection report prepared by the respondent. Theapplicant objected to the admissibility of the document as being contentious hearsay.

Edmond J agreed that it was contentious hearsayand was therefore not admissible under QB r 39.01(5), but he was satisfied that the inspection report was a “business record” and,because the deponent would be able to testify about it as a witness in court, it was admissible on the application pursuant to QB r 4.07(2). [71] In 1718351 Ontario v Township of Guelph/Eramosa, 2011 ONSC 4036, a landowner brought an application for aprescriptive easement.

The applicant attempted to rely on statutory declarations on title from previous owners, as well as a letter fromthe solicitor of a previous owner, to establish the historical use of the right. Hourigan J (as he then was) determined that the statutorydeclarations and the solicitor’s letter were hearsay and could not be admitted pursuant to r 39.01(5) of the Rules of Civil Procedure. Hestated (at para 25): On a plain reading of Rule 39.01(5) there is an absolute prohibition on the inclusion of hearsay statements in affidavits filed in anapplication where the statements go beyond non-contentious issues.

However, in Ontario Judges’ Assn. v. Ontario (ManagementBoard), (2002) (ON SCDC), 58 O.R. (3d) 186 (Div. Ct.), affirmed (2003), (ON CA), 67O.R. (3d) 641 (C.A.), leave to appeal allowed (2004) 197 O.A.C. 398 (S.C.C.), the court admitted affidavits based on information andbelief and relating to contentious issues because they provided necessary evidence.

It would appear, therefore, that notwithstanding theplain wording of the Rule, hearsay statements in affidavits filed in applications may be admissible in certain circumstances. [72] Hourigan J then went on to consider whether the evidence sought to be tendered would be admissible under a traditionalhearsay exception or, failing that, the principled approach to the hearsay rule.

Ultimately, he determined that the documents in questionwere not admissible on the application. [73] There is an important aspect to the approach taken by Edmond and Hourigan JJ in 6705058 Manitoba and 1718351Ontario as compared to how Whitten and Fuerst JJ dealt with the hearsay issues in King Estate and Halton Recycling Ltd.

The languageused in both King Estate and Halton Recycling Ltd is more tentative as to the admissibility of the hearsay evidence on an application forgood reason. [74] Judges have an evidentiary gate-keeper role in any judicial proceeding to ensure the fairness and integrity of the fact-finding process (see R v Grant, 2015 SCC 9 at para 44). This role is particularly important when dealing with expert opinion evidence(see White Burgess Langille Inman v Abbott and Haliburton Co, 2015 SCC 23 at para 16) and hearsay evidence (see R v Youvarajah,2013 SCC 41 at paras 21-24).

This evidentiary gate-keeper obligation must, however, be understood in context. Not all judicialproceedings call for fact finding on the merits of the underlying dispute between the parties. The judge’s gate-keeper obligation isgreatest when dealing with a trial or another proceeding, such as certain types of applications, where a final disposition of the rights ofthe parties will be made.

However, when the judge is conducting a proceeding that will not result in a final disposition of the rights ofthe parties as to the dispute in question, the judge must adjust his or her evidentiary gate-keeper role to conform to the reality that theultimate fact-finding necessary to resolve a dispute is not occurring. Accordingly, the judge must decide whether the nature of thehearing he or she is conducting requires him or her to decide whether the challenged evidence is potentially admissible or actually

admissible. [75] Unlike the situation in 6705058 Manitoba and 1718351 Ontario, in King Estate and Halton Recycling Ltd, Whitten andFuerst JJ were not deciding the merits of the applications. Rather, each was dealing with a preliminary objection to part of theapplication record. In Halton Recycling Ltd, the respondent had not yet even filed its materials in response. Because of that feature ofthose cases, the evidentiary gate-keeper role of Whitten and Fuerst JJ was less onerous. In contrast, Edmond and Hourigan JJ weredealing with evidentiary issues in the course of deciding the merits of the applications.

Each of them had to make a decision as towhether the evidence in issue was actually admissible, not potentially admissible; that decision was directly related to the finaldisposition of the dispute between the parties. [76] The principles that I take from this jurisprudence lead me to summarize the purpose and scope of QB r 39.01(5) in thefollowing manner: 1. The purpose of r 39.01(5) is to admit evidence on an application that is otherwise inadmissible under r 4.07(2); it is not a free-standing exclusionary rule to challenge otherwise admissible evidence. 2.

The pre-conditions to admissibility on information and belief under r 39.01(5) are that the source of the information must bespecified in the affidavit and that the facts deposed to are not contentious. 3. A fact is contentious only if the evidence makes it likely to cause an argument, be disputed or raise a controversy. The mereobjection of counsel to a fact does not make it contentious.

Unless a fact is obviously contentious from the affidavit material filed by theparty wishing to rely on the fact, the other side will have to establish the fact is contentious through either cross-examination on theaffidavit or filing his or her own affidavit if the particular application permits such practice. 4. If the affidavit evidence in question does not meet the requirements of r 39.01(5), before disregarding it, the judge must also besatisfied that the evidence is not otherwise admissible, based on the law of evidence, if it was given by a witness in court. 5.

Where the judge is not weighing the evidence in order to decide the merits of the dispute between the parties, the question for thejudge to decide is the potential admissibility of the evidence, not its actual admissibility. In such cases, if the evidence is potentiallycapable of being admitted, it may be received and relied upon even if the facts are contentious. [77] I will now turn to the respondent’s argument that both the existence and the content of the second statement areinadmissible hearsay on the basis of r 39.01(5).

Hearsay Objection to Existence of the Second Statement [78] In my view, the existence of the second statement is not a fact that is contentious.

Those portions of the applicant’saffidavit which establish the existence of the second statement are admissible pursuant to r 39.01(5), as the source of the information isidentified (a detective and prosecutor who are named) and there is no basis to see how this fact is contentious. [79] It is important to note that, in an application under the LAA for relief from a limitation period, a respondent is notentitled to call evidence as to whether or not there is a prima facie case for the purposes of section 15(2) (see John Inglis at paras 20-21).

That, however, does not mean that a respondent will not be able to show that a fact is contentious for the purposes of r 39.01(5). Arespondent can cross-examine on an affidavit to demonstrate a fact is contentious. Facts can also be contentious simply on the basis ofthe record presented by the applicant. [80] I have no concerns here as to the hearsay nature of the applicant’s affidavit regarding the existence of the secondstatement. The respondent did not cross-examine the applicant as to when she learned of the existence of the second statement for thepurposes of section 14(1) of the LAA.

The mere fact that counsel for the respondent challenges the existence of the statement does notmake that fact contentious (see Garowey at para 13; Kisilowsky at para 51; and Attorney-General of Canada and Continental Trust Co,Re (1985), (ON SC), 52 OR (2d) 157 at 163 (H Ct J)). Hearsay Objection to Content of the Second Statement [81] The situation as to the content of the second statement is, however, quite a different matter. On the basis of theapplicant’s affidavit, it is obvious that the content of the second statement is a contentious fact.

As previously mentioned, in his firststatement to police, Willis names a person other than the respondent as the directing mind of the murder and also provides exculpatoryevidence about the respondent. In my view, because of the contentious nature of the content of the second statement, it would not beadmissible under QB r 39.01(5) for the purpose of the LAA application.

The question then becomes how could the content of the secondstatement be admissible when it is presumptively inadmissible hearsay evidence? [82] The applicant’s argument that the second statement is not hearsay evidence because it is a video recording is notpersuasive. A video recording of an event as it happens, such as a recording by a surveillance camera, is original evidence that isadmissible provided that it is proven that the recording has not been tampered with (see R v Nikolovski, (SCC), [1996] 3SCR 1197).

In contrast, the mere fact that an out-of-court statement is video recorded does not take away from the fact that thestatement is still hearsay if it is relied on for the purpose of its truth and, therefore, is presumptively inadmissible (see R v B (KG), (SCC), [1993] 1 SCR 740). [83] There is no statutory or recognized common law exception to the hearsay rule that would allow a declarant’s post-arreststatement to police that is mere narrative of a past event to be admissible against another party for the purpose of the truth of its content.

In my view, only the principled approach to the hearsay rule would allow the potential admission of the content of the second statementfor the purposes of its truth (and also Willis’ comments to Sam-Kelly about the respondent). That rule of evidence focuses on thequestions of necessity and reliability (see Khan at p 542 and R v Smith, (SCC), [1992] 2 SCR 915 at 933).

Willis’ Status as a Former Co-Accused of the Respondent [84] Before addressing the questions of necessity and reliability, a preliminary consideration is whether there is someevidentiary rule that would independently prevent the admissibility of the evidence sought to be admitted pursuant to the principledexception to the hearsay rule (see B (KG) at p 784).

If there is, then the principled exception to the hearsay rule is of no assistance to theapplicant. [85] There is a long-standing rule of evidence that, in a criminal case, an out-of-court statement of one co-accused cannot beused by the Crown as proof against another co-accused (see McFall v The Queen, (SCC), [1980] 1 SCR 321 at 338).

That rule, however, in my view, has no application here and would not prevent resort to the principled exception to the hearsay rule in acivil action against the respondent even though, at one time, he had the status of being a co-accused with Willis. [86] To begin, that evidentiary rule has no application to a civil case. The rule also may be limited in its application incriminal cases only to the Crown (see R v Waite, 2014 SCC 17 at para 4). Also important to consider is the fact that Willis and therespondent are no longer co-accused facing a joint criminal trial. The prosecution of Willis is over.

The respondent faces no criminalcharges over the deceased’s murder; the only question is his potential civil liability for complicity in the murder of the deceased. [87] The decision of R v Naicker, 2007 BCCA 608, leave to appeal to SCC refused, [2008] SCCA No 45, is instructive. Thebackground there was that three individuals were tried for kidnapping offences in two separate trials. On the second trial, the Crownattempted to call the accused from the first trial as a witness to testify against the two accused on the second trial. The witness refused totestify based on a claim of personal safety.

The Crown then moved to admit his video-recorded statement to police for its truth as, in it,he implicated the two accused on trial. After conducting a Khelawon hearing (see R v Khelawon, 2006 SCC 57), the trial judge admittedthe evidence based on the principled exception to the hearsay rule. [88] The British Columbia Court of Appeal ruled that the trial judge did not err in doing so despite the fact that the witnesswas accused of the same crimes as the accused at the trial.

Lowry JA stated (at paras 44-46): There simply is no rule of evidence that precludes the admission of the statement of an accomplice who is tried separately. Nor does itappear to me there is any sound basis upon which a preclusive exception to the principled approach to hearsay should be created. Theprincipled approach has been developed as a flexible approach not to be impaired by rigid, preconceived notions of reliability. It is entirely open to the Crown to decide whether the participants in a crime are tried jointly or separately.

If the evidence of oneparticipant is required to convict another, the Crown may obtain the evidence by conducting separate trials where the evidence could notbe obtained in a joint trial. The Crown is entitled to achieve in one way what it could not achieve in another. There is no principle thatprecludes the Crown from proceeding as it sees fit in this regard and no rule that restricts its access to the evidence: R. v. Crooks (1982), (ON SC), 2 C.C.C. (3d) 57 (Ont. H.C.), aff'd (1982), 2 C.C.C. (3d) 57 at 64 (Ont. C.A.).

An accomplice who isseparately tried is a witness in the trial of another participant in the crime like any other witness. I see no reason why, under theprincipled approach, a statement given to the police by an accomplice should be any less admissible for the truth of its content than astatement given by any other witness where the requirements of necessity and reliability are established. What is, of course, ofparamount importance is that the requisite threshold of reliability be clearly met. Roman Narwal was in law a competent witness.

Once he refused to testify, it was necessary to adduce his statement to the police officerif the value of his evidence was not to be lost. The indicia of reliability in the circumstances under which the statement was made were,in my view, particularly compelling. What the appellants advance as the principal reason the statement of an accomplice is inherentlyunreliable has no application here. Narwal did not attempt to deflect responsibility from himself to the other participants in the crime.

He did minimize the incident in terms of the conduct to which Singh had been subjected, but not in a way that suggested an involvementon the part of the other participants that was any greater than his own. His purpose was to put the police right about Singh and thereason he had been “grabbed”. In so doing, Narwal implicated himself.

The appellants’ other reasons why the statement was unreliable(the fact that Narwal was an experienced criminal and was a target of police investigation at the time of the statement) are outweighed byother indicia of reliability. [89] In my view, this is not a case where there is a potential concern of making evidence admissible through the “back door”which would not be otherwise admissible if Willis gave it as a witness (B (KG) at p 784).

Assessing Admissibility of Evidence for Purposes of LAA [90] As previously explained, an application for relief from a limitation period under the LAA is essentially a proceduralmatter; the proceeding does not determine the substantive rights of the parties to a dispute. Accordingly, the evidentiary gate-keeper rolefor a judge hearing such an application is to consider the potential admissibility of evidence falling outside of QB r 39.01(5), not itsactual admissibility.

The relevant question here, therefore, is whether the contentious hearsay evidence relied on by the applicant ispotentially capable of being admitted at a civil trial. Willis is a Compellable Witness for the Applicant [91] In this case, Willis is a competent and compellable witness for a civil action against the respondent (see sections 3 and 4of The Manitoba Evidence Act, CCSM c E150). Based on the evidence of Sam-Kelly at the murder trial of Willis and the anticipated

content of the second statement, Willis may be able to provide direct evidence to prove that the respondent was complicit in the murderof the deceased. The evidence which the applicant seeks to rely on suggests that the respondent apparently hired Willis to murder thedeceased to assist Willis with his drug debts.

In the unlikely event that Willis testifies in a manner consistent with the evidence of Sam-Kelly and the anticipated content of the second statement, then there is no question that the applicant has established that she has a primafacie case on her proposed causes of action that would have a reasonable prospect of success at trial (see section 15(2) of the LAA). [92] While compellable, in the more likely event that Willis testifies about the respondent in accordance with his firststatement to police, or refuses to testify at all, the applicant would be able to make application to cross-examine him on his oralstatements to Sam-Kelly and his second statement to police that has been reduced to writing pursuant to sections 19-21 of The ManitobaEvidence Act.

If that procedure is unsuccessful in moving Willis to adopting the facts alleged by Sam-Kelly or the content of his secondstatement, then the applicant would be able to seek a Khelawon hearing to admit the second statement of Willis and his comments toSam-Kelly for the truth of their contents under the principled exception to the hearsay rule. [93] The term “Khelawon hearing” is the moniker currently used to describe the voir dire held at a trial to determine whetherpresumptively inadmissible hearsay evidence meets the criteria of necessity and reliability.

At the hearing, the onus is on the partyseeking to admit the evidence to establish these criteria on the balance of probabilities (see Khelawon at paras 42 and 47; and R vWoodard, 2009 MBCA 42 at para 46). Potential Admissibility of Out-of-Court Statements by Willis under the Principled Exception to Hearsay Rule [94] There is no merit to the respondent’s submission that the principled exception to the hearsay rule and a Khelawonhearing to determine admissibility questions relating to the principled exception to the hearsay rule have no application to civil cases.

Absent some statutory modification to the rules of evidence, the hearsay rule and the common law exceptions to it apply equally to civiland criminal cases (see Khan v College of Physicians and Surgeons of Ontario (1992), (ON CA), 9 OR (3d) 641 at653 (CA); Jung et al v HSBC Trust Company (Canada) et al, 2006 BCCA 549, additional reasons at 2007 BCCA 67; Pfizer Canada Incv Teva Canada Limited, 2016 FCA 161 at paras 87, 102-3, 118; and Maria G.

Henheffer & Margaux Savoie, “The Principled ApproachException to Hearsay Evidence in Civil Litigation,” in Justice Todd Archibald & Justice Randall Echlin, Annual Review of CivilLitigation 2008). [95] However, the context of a given case in terms of the issues and the impact that the hearsay evidence may have toresolving them is always a consideration in the application of the principled approach to the hearsay rule (see R v Couture, 2007 SCC 28at para 76).

While that does not mean that hearsay evidence is necessarily more readily admissible in civil cases than in criminal cases,civil courts must be mindful that there are dynamics in a civil case that are different than in a criminal case, such as a lesser burden ofproof, the importance of access to civil justice and the principle of proportionality.

As Adams J noted in Clark v Horizon Holidays Ltd,1993 CarswellOnt 929 (Gen Div), the principled exception to the hearsay rule signals “a willingness in the judiciary to design proceduresand evidentiary rules to enhance the accessibility and, therefore, the relevance of our courts” (at para 37). See also Dodge v KaneffHomes Inc, 2001 CarswellOnt 1099 at paras 23-24 (Sup Ct J). [96] One of the difficulties here is that, although the testimony of Sam-Kelly in the murder trial of Willis is before this court,the second statement of Willis is not.

It is of course through no fault of the applicant that the police are withholding access to the secondstatement and that, until an action is filed, she lacks access to the remedies in the QB Rules to obtain the second statement through thediscovery process.

I do not, however, see the fact that the actual second statement is not before this court as a bar to considering thequestion of its potential admissibility for the purposes of whether she has a prima facie case with a reasonable prospect of success (seesection 15(2) of the LAA). [97] The fact that the second statement exists is, as I said previously, not contentious. As a co-accused with Willis foralmost two years, the respondent likely had possession of the second statement, having received it as part of the Crown’s disclosurebrief.

It is also safe to presume, for the purpose of the narrow questions before this Court at this time, that its content does actuallypotentially link the respondent to the deceased’s murder. While hearsay, that fact comes from a police officer and a member of the barwho have no interest in these civil proceedings. It is important to bear in mind that the principled exception to the hearsay rule must beinterpreted with flexibility, mindful of the circumstances of the case (see R v U (FJ), (SCC), [1995] 3 SCR 764 at para35).

Because the actual admissibility of the evidence is not the question to be decided, I am satisfied that the record is sufficient for mypurposes. I will now turn to the questions of necessity and reliability. [98] In this case, I am dealing with two pieces of hearsay evidence: the declarant, Willis’, statements to Sam-Kelly and hissecond statement to police. Each piece of hearsay evidence requires an individual admissibility ruling (see R v Laporte (PLR), 2016MBCA 36 at paras 97-98).

In coming to the decision I have reached, I have considered the admissibility of each piece of hearsayevidence individually in light of the overall context here, including the fact that the declarant made several statements about the murderof the deceased. [99] The questions of necessity and reliability are not separate thresholds; rather, they “work in tandem” (R v Baldree, 2013SCC 35 at para 72).

The circumstances of the given case will determine where a particular strength or weakness in one of thecharacteristics is accommodated by the opposite quality of the other characteristic. [100] Necessity means the hearsay evidence is reasonably necessary, not absolutely necessary (see Khan at p 546). Therationale behind the requirement of necessity is ensuring that the trial process can arrive at the true facts of the dispute (see Khelawon atpara 49). Necessity is established when there is no other way to present evidence of similar value at trial (see R v Hawkins, (SCC), [1996] 3 SCR 1043 at para 71).

In this case, the concern as to the necessity of admitting the hearsay evidence does not

depend on whether Willis is unavailable to testify at the proposed civil action; rather, the question is whether his courtroom testimony isunavailable (see R v Devine, 2008 SCC 36 at para 16). As Côté JA explained in R v Dionne, 2004 ABCA 400 (at para 8): Even when the witness is physically present, hearsay evidence may be necessary if the trial judge is satisfied that there is no reasonableprospect of obtaining meaningful testimony by direct evidence: R. v. W.J.F., [R v F(WJ), (SCC), [1999] 3 SCR 569 atpara 31].

The relevant question is whether the interests of justice are better served by admitting the testimony, or by leaving thewitness’s knowledge unutilized: R. v. W.J.F., [R v F(WJ)] supra. [101] Like in Naicker, the record here demonstrates that Willis is unlikely to cooperate and voluntarily give evidence insupport of the applicant’s action in the courtroom. In his first statement to police, Willis described the respondent as a “good friend” and“a buddy of mine”.

According to the first statement Willis gave to the police, prior to the murder, Willis was a drug dealer heavilyinvolved in the activities of a criminal organization. Despite being threatened, beaten and shot over a drug debt, he refused to turn toauthorities to extricate himself from his predicament. He told police that contacting them would have made things worse. Instead, hedecided to kill a person, the deceased, whom he barely knew.

Willis has stood alone facing the murder charge for several years and,although he apparently implicated the accused in his oral statements to Sam-Kelly and in the second statement to the police, there is noreason to have any confidence that he would be prepared to testify against the respondent at a criminal trial, let alone a civil one.

Therecord here is persuasive that the testimony of Willis may be unavailable for the applicant despite reasonable efforts by her to obtain itby compelling him to testify and cross-examining him on his oral statements to Sam-Kelly and the second statement as may be permittedunder The Manitoba Evidence Act. [102] While a civil finding of complicity in a murder has significant reputational and monetary damage consequences, it palesin comparison to the severity of the criminal consequences if one is found guilty of first degree murder.

The hearsay evidence of thedeclarant, Willis, via Sam-Kelly testifying and the second statement, is important to establishing the truth as to who ordered the murderof the deceased. Admission of the contentious hearsay evidence is likely the only way in which a trier of fact will be able to determinewho, on balance, directed Willis to commit a brutal murder in broad daylight.

Given that there appears to be no realistic alternative toensure that the trier of fact has the benefit of all of the potential facts of this case, contextual factors, such as a lesser burden of proof,access to civil justice on a serious matter and the principle of proportionality, would all favour admissibility of the hearsay evidence. [103] Also noteworthy is the fact that any concerns about the unfairness of allowing hearsay evidence in this case is dampenedby the fact that Willis is available to be cross-examined at a civil trial by the respondent on his prior statements to police and Sam-Kelly(see U (FJ) at paras 34-35 and Dodge at para 25). [104] I will now turn to the question of the other requirement of the principled exception to the hearsay rule, reliability. [105] Reliability means “the hearsay statement was made in circumstances which provide sufficient guarantees of itstrustworthiness” (Hawkins at para 74).

The judicial assessment of reliability at the admissibility stage focuses on “threshold reliability,not ultimate reliability” (Hawkins at para 75; and Khelawon at para 2). The rationale behind the requirement of reliability is ensuring theintegrity of the trial process (see Khelawon at para 49). The approach to be taken in determining threshold reliability is a functional one. As Charron J explained in Khelawon (at para 93): Relevant factors should not be categorized in terms of threshold and ultimate reliability.

Rather, the court should adopt a morefunctional approach as discussed above and focus on the particular dangers raised by the hearsay evidence sought to be introduced andon those attributes or circumstances relied upon by the proponent to overcome those dangers.

In addition, the trial judge must remainmindful of the limited role that he or she plays in determining admissibility—it is crucial to the integrity of the fact-finding process thatthe question of ultimate reliability not be pre-determined on the admissibility voir dire. [106] In B (KG), Lamer CJC discussed when a prior inconsistent statement will be substantially reliable (at pp 795-96): Therefore, the requirement of reliability will be satisfied when the circumstances in which the prior statement was made

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