Saturley v. CIBC World Markets Inc., 2012 NSSC 389

SUPREME COURT OF NOVA SCOTIA Citation: Saturley v. CIBC World Markets Inc., 2012 NSSC 389 Date: 20121108 Docket: Hfx No. 305635 Registry: Halifax Between: Fredrick Thomas Saturley Plaintiff v. CIBC World Markets Inc. Defendant LIBRARY HEADING Judge : The Honourable Justice Michael J. Wood Heard: November 1, 2012, in Halifax, Nova Scotia Written Decision: November 8, 2012 (Re Motion on Telephone Records) Subject: Evidence - Admissibility of Documents Civil Procedure - CPR 51.03

Summary: The defendant sought to introduce records during trial which had only been disclosed to the plaintiff in redacted form.

Issue: Should the complete unredacted report have been disclosed and, if so, would it be unjust to exclude it at trial? Result: The Court determined that the defendant should have disclosed the unredacted report prior to trial. It weighed the applicable factors under CPR 51.03(1) and determined that it would be unjust to exclude the full report in the circumstances. The issue of costs was deferred until the conclusion of trial. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET . SUPREME COURT OF NOVA SCOTIA Citation: Saturley v.

CIBC World Markets Inc., 2012 NSSC 389 Date: 20121108 Docket: Hfx No. 305635 Registry: Halifax Between: Fredrick Thomas Saturley Plaintiff v. CIBC World Markets Inc. Defendant

Judge: The Honourable Justice Michael J. Wood Heard: November 1, 2012, in Halifax, Nova Scotia Written Decision: November 8, 2012 (Re Motion on Telephone Records) Counsel: George W. MacDonald, Q.C., Jack Graham, Q.C. and Kiersten Amos, for the plaintiff Michael S. Ryan, Q.C., John A. Keith, Christy L. Sandles and Jack K. Townsend, for the defendant By the Court : [ 1 ] On December 3, 2008, Fredrick Saturley was fired by CIBC World Markets Inc. for allegedly engaging in discretionary trading for which he was not properly licensed.

Three weeks later he commenced these proceedings, claiming damages for wrongful dismissal and intentional interference in economic relations. CIBC has vigorously defended Mr. Saturley ’ s claims and says that he was engaged in unlicensed discretionary trading and that this amounts to just cause for the termination of his employment. [ 2 ] The trial began in April 2012 and has continued for forty-two sitting days. The defence has essentially completed its case and the plaintiff has indicated that he intends to call rebuttal evidence.

Time has been set aside for this evidence later in November, 2012. [ 3 ] As the record indicates, this proceeding has generated eight reported decisions to date. These decisions involve a range of procedural and evidentiary issues. Several of the decisions deal with disputes over relevance and the extent of required evidentiary disclosure. [ 4 ] The most recent disclosure decision was issued on April 19, 2012 ( 2012 NSSC 155 ) as a result of Mr. Saturley providing CIBC with relevant information that had not previously been disclosed.

Pursuant to Civil Procedure Rule 51.03(1), I exercised my discretion and permitted the evidence to be used because I was satisfied that it would be unjust to exclude it. I also granted CIBC ’ s request for a short adjournment of the trial which was then underway. [ 5 ] In the spring of 2011, counsel for CIBC had obtained telephone records showing calls made from and to all extensions at the Halifax office of CIBC for the period January, 2007 through October, 2008. Counsel concluded that only the records for the extensions of Mr. Saturley and his two assistants were relevant. On April 5, 2011, CIBC provided Mr.

Saturley with a redacted report which excluded the records for the other extensions. [ 6 ] In the middle of trial, and after the plaintiff had closed his case, counsel for CIBC concluded that the unredacted telephone records for the entire Halifax branch might be relevant and requested that they be introduced as evidence. The plaintiff opposes this request and relies on Civil Procedure Rule 51.03(1) in support of his position. [ 7 ] I will provide a brief overview of the background of this litigation in order to put this decision in context. OVERVIEW

[ 8 ] Mr. Saturley was employed by CIBC as an investment advisor for a number of years prior to being fired in December, 2008. The justification for the termination of his employment advanced by CIBC is that he engaged in discretionary trading for certain specified clients without being licensed to do so. In this context, discretion relates to one of the four essential elements of a trade, which are: the identify of the security, the quantity to be bought or sold, the price and the timing of the transaction. [ 9 ] CIBC submits that Mr.

Saturley was required to have specific client instructions on all of these elements prior to placing a trade in a client account. In particular, it says that Mr. Saturley would have to enter client trades immediately after he receives instructions for the transactions. If he delays doing so, that is the improper exercise of discretion with respect to the timing of the transaction. [ 10 ] As discussed in my decision of April 19, 2012 ( 2012 NSSC 155 ), evidence with respect to contact between Mr. Saturley and his clients is clearly relevant.

In fact, proving lack of contact is crucial to CIBC ’ s defence theory. [ 11 ] In its attempts to prove that client contact did not occur as required, CIBC relies on a variety of telephone records. These include: reports for clients ’ home and cellular telephones, Mr.

Saturley ’ s home and cellular telephones and the CIBC Halifax branch office. [ 12 ] Presumably, one of the arguments which will be made by CIBC at the conclusion of the trial is that the absence of a record for a client call in advance of a particular transaction, will allow the Court to draw an inference that the required client contact did not take place. [ 13 ] The telephone system for the CIBC Halifax office was maintained by Avotus Corporation ( “ Avotus ” ).

They, in turn, subcontracted data storage and retrieval services to Anthelio Healthcare Solutions Inc. ( “ Anthelio ” ) at its office in Mumbai, India. [ 14 ] The report obtained by counsel for CIBC in April, 2011 was provided by Avotus which had obtained the data from its subcontractor, Anthelio. It was provided in electronic format. The redacted version provided to counsel for Mr. Saturley was also in electronic format. [ 15 ] The trial in this proceeding began on April 4, 2012. The first witness called by Mr.

Saturley was Wilhelmina Ditchfield, who is a senior officer of CIBC as well as the defendant ’ s designated manager for discovery in this litigation. The plaintiff also called Mr. Saturley, his wife and Michelle Harris, who was one of his two assistants during his employment at CIBC. [ 16 ] On April 19, 2012, counsel for CIBC identified what appeared to be gaps in the data contained in the records for the three telephone extensions which had been produced. The affected months were July, 2007 and August, 2008.

On April 20, 2012, counsel sent an email to Avotus requesting an explanation for these apparent gaps. [ 17 ] On April 26, 2012, during the cross-examination of Mr. Saturley, the Avotus records for the three extensions were introduced as trial exhibit number 16, subject to being proven by an Avotus witness. [ 18 ] In response to the request from counsel for CIBC, Avotus determined that there was, in fact, data which had been omitted from the initial reports relating to July, 2007 and August, 2008, and they provided revised reports for those two months.

As with the initial Avotus report, these included all of the extensions in the CIBC Halifax branch. [ 19 ] On April 29 and 30, 2012, counsel for CIBC provided counsel for Mr. Saturley with the revised Avotus reports for July, 2007 and August, 2008. Unlike the disclosure in April, 2011, these were not redacted and so records for the entire branch were provided. [ 20 ] On May 3, 2012, the plaintiff, Mr. Saturley, closed his case.

[ 21 ] On May 4, 2012, the revised Avotus reports for July, 2007 and August, 2008 were entered as exhibits 54 and 55 during the cross-examination of the Avotus witness by counsel for Mr. Saturley. These exhibits included records for all of the branch extensions. [ 22 ] On May 7, 2012, counsel for CIBC confirmed his intention to make a motion for leave to call an additional witness from Anthelio to testify about the gaps in the initial Avotus records, and to prove the revised reports prepared in April and May, 2012. [ 23 ] On May 11, 2012, CIBC provided Mr.

Saturley with an electronic copy of a report prepared by Avotus on May 8, 2012, containing the telephone records for the entire CIBC Halifax branch for the period June, 2007 to October, 2008. [ 24 ] On May 16, 2012, the initial allotment of hearing dates had been exhausted and the trial was adjourned. [ 25 ] The CIBC motion for leave to call a further witness to testify about the revised Avotus records was dealt with by correspondence and on September 17, 2012, I issued a decision granting leave to call Mr. Prasad Salien of Mumbai ( 2012 NSSC 325 ).

That decision did not consider the admissibility of those records. [ 26 ] The trial resumed on October 1, 2012 and Mr. Salien testified by video conference on October 18, 2012. He was examined with respect to the revised Avotus records for the entire branch. I am satisfied that his testimony authenticates the records and that they are otherwise admissible, subject to Mr. Saturley ’ s arguments with respect to the applicability of Civil Procedure Rule 51.03(1).

ANALYSIS [ 27 ] The Avotus records provided to counsel for CIBC in April, 2011 are not identical to the revised records produced in May, 2012 and authenticated by Mr. Salien. The technical reasons for these differences are not material to this decision. This means that the admissibility question will be determined based upon a consideration of the implications of the failure to disclose the unredacted Avotus records in 2011.

It is not a fair characterization of the situation to suggest that the revised Avotus records generated in May, 2012 represented a different document for purposes of disclosure. [ 28 ] Civil Procedure Rule 51.03 provides as follows: Exclusion of evidence for non-compliance 51.03

(1) A judge who presides at a trial must exclude evidence of the following kinds, unless the party offering the evidence satisfies the judge it would be unjust to exclude it: (

a) evidence for which notice is required, but for which notice is not given; (

b) evidence required to be disclosed under, but not disclosed in accordance with,

Part 5 - Disclosure and Discovery; (

c) evidence offered by a party who fails to give the evidence, or to give information leading to the evidence, in response to a direct question asked at discovery or by interrogatory, such as by answering that the party does not know the answer and failing to make disclosure when the answer becomes known or by objecting to the question on the ground of relevancy;

(

d) expert opinion not disclosed under Rule 55 - Expert Opinion.

(2) A judge who admits evidence despite non-compliance with the Rules for notice, disclosure, or discovery must consider ordering the party proposing the evidence to indemnify each other party for expenses caused by the introduction of the evidence, including expenses resulting from an adjournment. [ 29 ] Counsel for CIBC argues that he made a good faith decision in the spring of 2011 that only telephone records for the extensions of Mr. Saturley and his two assistants were relevant.

He says that counsel is required to give consideration to issues of relevance, particularly with respect to voluminous records such as these. He submits that counsel should be discouraged from producing large volumes of material without properly considering the issue of potential redactions. If counsel disclose everything, they might be accused of “ trial by avalanche ” . In other words, hiding relevant documents in an overwhelming amount of irrelevant material. [ 30 ] Counsel for CIBC notes that the existence of records for other extensions was known to Mr. Saturley and copies were never requested.

During the course of the trial evidence in April and May, 2012, counsel for CIBC says that he came to the realization that there might be evidence or argument from Mr. Saturley that some client calls could have been made or received at other office extensions, such as a meeting room.

He says that rather than having an evidentiary gap at trial with respect to whether there are records of such calls, the entire branch records should be entered as evidence. [ 31 ] CIBC argues that there has been compliance with their on-going disclosure obligations by producing the revised records as soon as they were received from Avotus in May, 2012. Alternatively, they submit that it would be unjust to exclude these records and the Court should exercise its discretion to admit under Rule 51.03(1) . [ 32 ] Counsel for Mr. Saturley takes a different view with respect to the issue of disclosure.

He says that the obligation to disclose the entire records arose when they were received in April, 2011. Having made a strategic decision to redact the report at that time, CIBC should not be entitled to reverse that position in the middle of trial. [ 33 ] Mr. Saturley maintains that it is extremely prejudicial to admit documents which he did not receive until after his case was closed.

He says that the information in the unredacted records may well have affected the examination of the witnesses which he called and could have resulted in a decision to call additional witnesses. [ 34 ] The threshold issue to be considered is whether the unredacted Avotus records should have been disclosed in 2011, or a least prior to commencement of trial. If it did not have to be disclosed, then Rule 51.03(1)(

b) has no application, and it is unnecessary to consider the issue of injustice. [ 35 ] The Court should be reluctant to second-guess bona fide decisions of counsel with respect to issues of relevance and resulting disclosure. “ Trial by avalanche ” is to be discouraged. Counsel must be diligent and thorough in assessing relevance, otherwise they are not properly performing their function as an officer of the court.

Undisciplined disclosure runs contrary to the principles of a just, speedy and inexpensive determination which underlie our Civil Procedure Rules , [ 36 ] It is also important that parties not under disclose, in the sense that relevant information is not provided to the other parties. As this litigation illustrates, it is not unusual for counsel to disagree on what falls within the scope of relevance in any particular proceeding. In my view, counsel should err on the side of over, rather than under disclosure. If in doubt with respect to the relevance of a document, it should probably be disclosed.

Determinations of relevance are very contextual and, in litigation, the context usually evolves as the case progresses. What seemed irrelevant at the beginning of a proceeding may become extremely relevant by the time trial arrives. Counsel must be conscious of this. This may require revisiting the extent of disclosure from time to time. [ 37 ] In this case, the absence of client contact is critical to CIBC ’ s defence. They will likely be asking the Court to draw inferences from the absence of information in certain records, rather than its existence.

They will presumably want to argue that they have left no stone unturned in their search for potential client contact. In such circumstances, it does not seem too remote to consider the possibility

that Mr. Saturley and his assistants may have client telephone contact at various locations in the Halifax branch other than their personal work spaces. Meeting rooms would be an obvious example. [ 38 ] As one would expect, Mr. Saturley and his two assistants were discovered by CIBC. I do not know the contents of those examinations, but it presumably included questions relating to client telephone calls. [ 39 ] At the point in the trial where counsel for CIBC concluded that the expanded records for the entire branch might be relevant, we had only heard evidence from Ms. Ditchfield, Mr. Saturley, Mrs.

Saturley, Ms. Harris and representatives of service providers authenticating home and cellular telephone records for various clients. There does not appear to be any new information in that evidence which would not have been available to counsel for CIBC well in advance of trial. [ 40 ] I conclude that if CIBC is now of the view that the records are relevant and should be admitted, that determination could and should have been made prior to trial, and the records disclosed at that time.

As I have noted, the revised Avotus records have no greater status than the originals, and the fact that they only came into possession of CIBC in May, 2012 does not change my opinion. [ 41 ] Since there should have been disclosure of the Avotus records, the provisions of Rule 51.03 are triggered and I must consider whether exclusion would work an injustice. [ 42 ] One of the issues which I dealt with in my decision of April 19, 2012 ( 2012 NSSC 155 ) was a request by CIBC to call witnesses not included on their initial witness list.

That involved a consideration of Civil Procedure Rule 4.18(2) , which provides as follows: Witness List 4.18

(2) A party may only call at trial a witness named on the party’s witness list, unless the witness is called only to impeach the credibility of another witness or the trial judge permits the party to call the witness in order to avoid an injustice. [ 43 ] Counsel for Mr. Saturley argues that the concept of avoiding injustice found in this Rule is analogous to Rule 51.03(1) and, as a result, the same considerations should apply. I agree with that submission. I described the approach to be taken in an assessment of injustice at paras. 38 and 39 of my earlier decision:

(38) In considering this question, I believe that there are a number of factors which should be considered, and these include: • The significance of the witness’ evidence and whether it is simply corroborative of other evidence which will be presented. • Whether the witness and their potential evidence was known or ought to have been known prior to the delivery of the party’s witness list. • The explanation for the failure to include the witness’ name on the witness list. • The prejudice, if any, to the other party arising from the failure to give timely notice of the witness’ name. • The impact on the trial and, in particular, whether the evidence can still be completed within the allocated time.

(39) The burden is on the party wishing to call the additional witness to satisfy the court that permission should be granted, keeping in

mind the above considerations. The approach to be taken by the court should be somewhat flexible and take into account all of the circumstances which may exist. Some of the above considerations may have greater weight depending upon the situation. In the present case, the fact that insufficient days were set for trial is of significant concern. [ 44 ] In my view, the five factors set out in para. 38 are equally applicable to the analysis which I must undertake, and I will review each of them.

Significance of the Evidence [ 45 ] Neither of the parties have indicated whether the records for the additional extensions include references to calls with any of the identified clients. Obviously if they do, that evidence is potentially significant. Similarly, the absence of any such contact could be of assistance. Not having any of these records, would leave the Court in the position of simply not knowing what evidence may exist relating to client contact from other office locations.

When was the Evidence Known [ 46 ] Clearly, counsel for CIBC knew of this evidence in the spring of 2011, although he may not have fully appreciated its potential relevance at that time. The Explanation for the Failure to Disclose Earlier [ 47 ] The explanation offered by counsel for CIBC for non-disclosure was the assessment that the information was not relevant. For the reasons noted above, I believe that counsel was in error in coming to this conclusion, or at least should have reassessed that opinion prior to trial.

I accept counsel ’ s submission that the determination was made in good faith and was not an intentional decision to withhold information which he knew to be relevant. The Prejudice from Late Disclosure [ 48 ] In my view, this is the most important factor affecting the admissibility of the Avotus records. Counsel for Mr. Saturley argued very strongly that he was prejudiced due to the timing of disclosure. He says that Mr. Saturley ’ s case may well have been presented differently had the information for the additional extensions been provided earlier.

What is missing from these submissions are any examples of how the presentation of the case may have changed. [ 49 ] Presumably, if there are no references to client contact in the new records, there is no basis upon which additional witnesses could be called, nor any further questions to put to Mr. Saturley or Ms. Harris. If there are examples of client contact in these records, I would have expected counsel for Mr. Saturley to point these out in argument, given that he has had this information for five and a half months. [ 50 ] Counsel for Mr.

Saturley received the records for the entire branch for the months of July, 2007 and August, 2008 prior to closing his case. He did not indicate that he wished time to review them or wanted to consider calling additional witnesses to testify. [ 51 ] Mr. Saturley had the complete records in May, 2012 and so would not have been prejudiced in preparing for the examination of Mr. Salian, which took place in October. [ 52 ] As a final point, I note that Mr.

Saturley has the opportunity to call rebuttal evidence which would include any witnesses who may have relevant evidence concerning the additional branch extensions.

[ 53 ] I am not satisfied that Mr. Saturley has suffered any significant prejudice as a result of the timing of the delivery of the complete Avotus records for the CIBC Halifax branch. Impact on the Trial [ 54 ] Any potential impact on the trial

schedule and required time arising out of the late disclosure of the Avotus records has already taken place. It relates primarily to the necessity of having Mr. Salien testify by video conference. There is nothing before me to suggest that there is anything which arises out of the Avotus records that could not be dealt with in the time set aside for rebuttal evidence and closing arguments. CONCLUSION [ 55 ] The unredacted Avotus records ought to have been disclosed prior to trial in accordance with the requirements of

Part 5 of the Civil Procedure Rules . Civil Procedure Rule 51.03(1)(

b) requires me to exclude this evidence unless CIBC can satisfy me that it would be unjust to do so. This requires me to consider all of the circumstances and to weigh factors such as significance of the evidence, the reason for the failure to disclose, the prejudice to the other party and the impact on the trial. [ 56 ] I have considered the relevant factors and, in particular, the potential significance of the evidence and the lack of any substantial prejudice to Mr. Saturley.

I have concluded that it would be unjust to prevent CIBC from entering the complete Avotus records for the CIBC Halifax branch in the particular circumstances of this case. As a result, these records will be admitted into evidence. The reliability of this evidence and the inferences, if any, to be drawn will be determined following completion of the evidence and the submissions of counsel. [ 57 ] Rule 51.03(2) requires me to consider ordering CIBC to indemnify Mr. Saturley for expenses caused by the introduction of this evidence.

I will reserve my decision on these cost issues until after the trial has been concluded and I receive submissions from counsel. [ 58 ] As a final matter, I note that when Mr. Salien testified by video conference from Mumbai, the electronic exhibit which he viewed had a preparation date in May, 2012, whereas the version available to the Court and counsel in Halifax had a preparation date of June, 2012. It may be that this was simply an electronic date stamp which was inserted when the particular version of the document was saved.

Once the original electronic document is received from India, the parties will have the opportunity to compare it with the electronic version in the possession of the Court and counsel. If either party determines that there are any differences other than this date, they are free to bring the issue before me if they believe it affects the admissibility or reliability of the exhibit. _________________________________ Wood, J.