Abbott and Haliburton Co. Ltd. et al. v. WBLI Chartered Accountants, (2013) 330 N.S.R.(2d) 301 (CA)

• Judge: MacDonald, C.J.N.S., Oland and Beveridge, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: December 12, 2012
• Jurisdiction: Nova Scotia
• Citations: (2013), 330 N.S.R.(2d) 301 (CA);2013 NSCA 66

Abbott v. WBLI Chartered Accountants (2013), 330 N.S.R.(2d) 301 (CA);

    1046 A.P.R. 301

MLB headnote and full text

Temp. Cite: [2013] N.S.R.(2d) TBEd. MY.061

Abbott and Haliburton Company Limited; A.W. Allen & Son Limited; Berwick Building Supplies Limited; Bishop's Falls Building Supplies Limited; Arthur Boudreau & Fils Ltée; Brennan Contractors & Supplies Ltd.; F.J. Brideau & Fils Limitee; Cabot Building Supplies Company (1988) Limited; Robert Churchill Building Supplies Limited; CDL Holdings Limited, formerly Chester Dawe Limited; Fraser Supplies (1980) Ltd.; R.D. Gillis Building Supplies Limited; Yvon Godin Ltd.; Truro Wood Industries Limited/Home Care Properties Limited; Hann's Hardware and Sporting Goods Limited; Harbour Breton Building Supplies Limited; Hillier's Trades Limited; Hubcraft Building Supplies Limited; Lumbermart Limited; Maple Leaf Farm Supplies Limited; S.W. Mifflin Ltd.; Nauss Brothers Limited; O'Leary Farmers' Co-operative Ass'n. Ltd.; Pellerin Building Supplies Inc.; Pleasant Supplies Incorporated; J.I. Pritchett & Sons Limited; Centre Multi-Décor De Richibucto Ltée; U.J. Robichaud & Sons Woodworkers Limited; La Quincaillerie Saint-Louis Ltée; R & J Swinamer's Supplies Limited; 508686 N.B. INC. operating as T.N.T. Insulation and Building Supplies; Taylor Lumber and Building Supplies Limited; Two by Four Lumber Sales Ltd.; Walbourne Enterprises Ltd.; Western Bay Hardware Limited; White's Construction Limited; D.J. Williams and Sons Limited; and Woodland Building Supplies Limited (appellants) v. White Burgess Langille Inman, carrying on business as WBLI Chartered Accountants (first respondent) and: R. Brian Burgess (second respondent)

(CA 397520; 2013 NSCA 66)

Indexed As: Abbott and Haliburton Co. Ltd. et al. v. WBLI Chartered Accountants

Nova Scotia Court of Appeal

MacDonald, C.J.N.S., Oland and Beveridge, JJ.A.

May 24, 2013.

Summary:

The plaintiffs sued for negligent misrepresentation alleging that the audited financial statements of AWARD Wholesale and Retail Distributors Ltd. were prepared negligently by the defendants, contained incorrect and misleading information, were not performed in accordance with General Assurance and Auditing Standards, and contained material deviations from Generally Accepted Accounting Principles. The defendants denied the allegations and filed a motion for summary judgment. In response, the plaintiffs filed affidavits of O'Hearn, who dealt with AWARD as a sales representative, and MacMillan, an expert witness and partner at Grant Thornton in Halifax. The defendants moved to strike the entire O'Hearn affidavit and, in the alternative, portions thereof, and the entire MacMillan affidavit.

The Nova Scotia Supreme Court, in a decision reported at 317 N.S.R.(2d) 283; 1003 A.P.R. 283, struck numerous portions of the O'Hearn affidavit on the basis that they were opinion, innuendo, irrelevant, inadmissible hearsay, pleading and argument. The court then struck the affidavit in its entirety. The court also struck the MacMillan affidavit in its entirety, finding that MacMillan was in an apparent conflict of interest. The plaintiffs sought leave to appeal and, if leave was granted, appealed.

The Nova Scotia Court of Appeal denied leave to appeal respecting the plaintiffs' complaints that the motions judge committed reversible error in relying on Civil Procedure Rule 55.04, and in striking the O'Hearn affidavit. The court granted leave to appeal on the complaint that the motions judge erred in excluding MacMillan's affidavit, and allowed the appeal (MacDonald, C.J.N.S., dissenting) respecting the MacMillan affidavit.

Evidence - Topic 7000

Opinion evidence - Expert evidence - General - The plaintiffs used AWARD Wholesale and Retail Distributors Ltd., a federally incorporated company, to arrange purchasing economies of scale for their various operations in the building materials retail business - The plaintiffs sued the defendants, alleging that audited financial statements they prepared for AWARD were negligently prepared, contained incorrect and misleading information, were not performed in accordance with General Assurance and Auditing Standards, and contained material deviations from Generally Accepted Accounting Principles - The defendants denied the allegations and filed a motion for summary judgment - In response, the plaintiffs filed the affidavit of MacMillan, an expert witness and partner at Grant Thornton - The defendants moved to strike the entire MacMillan affidavit under rule 39, arguing that it contained opinions that were not independent and unbiased because of Grant Thornton's connections to the matter - The Nova Scotia Court of Appeal held that the motions judge erred in striking MacMillan's affidavit - "The sole test used by the motions judge to exclude her affidavit was that he was satisfied that a reasonable observer would not see her to be independent. This is not the correct test. The Mohan [SCC] criteria set the bar for admission of expert evidence: relevance; necessity in assisting the trier of fact; the absence of any exclusionary rule; and a properly qualified expert. There is no stand-alone requirement for a party to demonstrate that its expert witness is, or appears to be independent. That is not to say that a trial judge does not have a residual discretion to exclude proffered expert opinion evidence if she is satisfied that an expert is in fact biased, or is acting as an advocate, to such an extent that the potential prejudicial effect outweighs its probative value. Here the proffered evidence was in the context of a motion for summary judgment. The ultimate probative value of her opinion is for the trier of fact. Furthermore, the motions judge committed reviewable error in finding that a reasonable observer would believe that Ms. MacMillan would be seen as lacking independence, or that she somehow lacked independence disqualifying her as an expert." - See paragraphs 76 to 163.

Practice - Topic 3663

Evidence - Affidavits - Striking out - Opinion - The plaintiffs sued for negligent misrepresentation alleging that the audited financial statements of AWARD Wholesale and Retail Distributors Ltd. were prepared negligently by the defendants, contained incorrect and misleading information, were not performed in accordance with General Assurance and Auditing Standards, and contained material deviations from Generally Accepted Accounting Principles - The defendants denied the allegations and filed a motion for summary judgment - In response, the plaintiffs filed an affidavit by O'Hearn, who had dealt with AWARD as a sales representative - The defendants moved to strike the entire O'Hearn affidavit, and in the alternative, portions thereof - A motions judge struck numerous portions of the O'Hearn affidavit on the basis that they were opinion, innuendo, irrelevant, inadmissible hearsay, pleading and argument - The judge then struck the entire affidavit - What was left when the challenged provisions were struck was difficult to separate from the struck portions, and was difficult to understand (fundamentally defective) - Moreover, it was not the court's function to dissect an otherwise poorly drafted affidavit to try to preserve some admissible material - The Nova Scotia Court of Appeal denied the plaintiffs' application for leave to appeal the striking of the O'Hearn affidavit - See paragraphs 17 and 73.

Practice - Topic 3664

Evidence - Affidavits - Striking out - Hearsay - [See Practice - Topic 3663 ].

Practice - Topic 3665

Evidence - Affidavits - Striking out - Argument - [See Practice - Topic 3663 ].

Practice - Topic 3666

Evidence - Affidavits - Striking out - Irrelevant or improper matters - [See Practice - Topic 3663 ].

Practice - Topic 3704

Evidence - Affidavits - Validity of - Severability - [See Practice - Topic 3663 ].

Practice - Topic 5782

Judgments and orders - Interlocutory or interim orders or judgments - Appeals - [See Practice - Topic 8804 ].

Practice - Topic 8800

Appeals - General principles - Duty of appellate court regarding findings of fact - [See Practice - Topic 8804 ].

Practice - Topic 8800.2

Appeals - General principles - Duty of appellate court regarding findings of law - [See Practice - Topic 8804 ].

Practice - Topic 8804

Appeals - General principles - Duty of appellate court regarding discretionary orders - The Nova Scotia Court of Appeal granted leave to appeal part of a judge's decision on a preliminary motion - Since this was an interlocutory appeal of a discretionary order without a terminating effect, the court would intervene only if there was an error in legal principle or a patent injustice - Here, the legal principles involved the extent to which a proposed expert had to be seen to be impartial and the recourse open to the court when such issues were raised - When identifying and applying such principles, the judge had to be correct - However, a decision to exclude evidence also involved the factual findings and the exercise of discretion - In these two categories, the judgment under appeal was entitled to deference - For example, the court would defer to the judge's factual findings, unless they reflected palpable and overriding error (ex., whether the proposed expert lacked independence) - As well, the first instance judge would often be called upon to exercise discretion when considering the pros and cons of proposed evidence - This cost-benefit analysis also commanded deference - See paragraphs 14 to 23 and 72.

Cases Noticed:

Hartling et al. v. Nova Scotia (Attorney General) et al. (2009), 286 N.S.R.(2d) 219; 909 A.P.R. 219; 2009 NSCA 130, refd to. [para. 15].

Ellph.com Solutions Inc. et al. v. Aliant Inc. et al. (2012), 320 N.S.R.(2d) 244; 1014 A.P.R. 244; 2012 NSCA 89, refd to. [para. 19].

R. v. G.B. et al. (No. 3), [1990] 2 S.C.R. 57; 111 N.R. 62; 86 Sask.R. 142, refd to. [para. 20].

R. v. Mohan, [1994] 2 S.C.R. 9; 166 N.R. 245; 71 O.A.C. 241, appld. [paras. 20, 76, footnote 1].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 20].

Alfano v. Piersanti et al. (2012), 291 O.A.C. 62; 2012 ONCA 297, refd to. [paras. 20, 111].

R. v. D.D., [2000] 2 S.C.R. 275; 259 N.R. 156; 136 O.A.C. 201; 2000 SCC 43, refd to. [para. 21].

Geophysical Services Inc. v. Sable Mary Seismic Inc. et al. (2012), 315 N.S.R.(2d) 201; 998 A.P.R. 201; 2012 NSCA 33, leave to appeal denied (2012), 443 N.R. 398 (S.C.C.), refd to. [para. 22].

R. v. Roach (B.A.) (2011), 308 N.S.R.(2d) 38; 976 A.P.R. 38; 2011 NSCA 95, refd to. [para. 23].

MacIntyre v. Cape Breton District Health Authority (2011), 298 N.S.R.(2d) 223; 945 A.P.R. 223; 2011 NSCA 3, refd to. [para. 23].

Haché v. Board of Education of Lunenburg County District (2004), 222 N.S.R.(2d) 354; 701 A.P.R. 354; 2004 NSCA 46, refd to. [para. 23].

R. v. Abbey (W.) (2009), 254 O.A.C. 9; 2009 ONCA 624, refd to. [paras. 26, 76].

United City Properties Ltd. v. Tong, [2010] B.C.T.C. Uned. 111; 2010 BCSC 111, refd to. [paras. 27, 111].

Beazley et al. v. Suzuki Motor Corp. et al., [2010] B.C.T.C. Uned. 480; 2010 BCSC 480, refd to. [paras. 29, 111].

Lunenburg Industrial Foundry and Engineering Ltd. et al. v. Commercial Union Assurance Co. of Canada et al. (2004), 231 N.S.R.(2d) 378; 733 A.P.R. 378; 2005 NSSC 62, refd to. [para. 81].

Ocean v. Economical Mutual Insurance Co. et al. (2010), 293 N.S.R.(2d) 394; 928 A.P.R. 394; 2010 NSSC 315, refd to. [para. 81].

Tingley et al. v. Wellington Insurance et al. (2008), 270 N.S.R.(2d) 80; 865 A.P.R. 80; 2008 NSSC 317, refd to. [para. 81].

National Justice Compania S.A. v. Prudential Assurance Co.; Ship Ikarian Reefer, Re, [1993] 2 Lloyd's Rep. 68 (Q.B.), consd. [para. 87].

National Justice Compania S.A. v. Prudential Assurance Co.; Ship Ikarian Reefer, Re, [1995] 1 Lloyd's Rep. 455 (C.A.), refd to. [para. 90, footnote 2].

Whitehouse v. Jordan, [1981] 1 All E.R. 267 (H.L.), refd to. [para. 92].

R. v. Sussex Justices, Ex parte McCarthy, [1924] 1 K.B. 256, refd to. [para. 96].

R. v. R.D.S., [1997] 3 S.C.R. 484; 218 N.R. 1; 161 N.S.R.(2d) 241; 477 A.P.R. 241, refd to. [para. 96].

Fellowes, McNeil v. Kansa General International Insurance Co. et al. (1998), 79 O.T.C. 241; 40 O.R.(3d) 456 (Gen. Div.), refd to. [para. 117].

R. v. Bedford (T.J.) (2000), 131 O.A.C. 101; 143 C.C.C.(3d) 311 (C.A.), refd to. [para. 117].

Royal Trust Corp. of Canada et al. v. Fisherman et al., [2000] O.T.C. 425; 49 O.R.(3d) 187 (Sup. Ct.), refd to. [para. 118].

R. v. Klassen (R.E.) (2003), 179 Man.R.(2d) 115; 2003 MBQB 253, refd to. [para. 118].

R. v. Jackman (J.A.) (2008), 452 A.R. 164; 2008 ABPC 213, refd to. [para. 118].

R. v. Castillo (L.S.) (2004), 181 Man.R.(2d) 259; 2004 MBQB 45, refd to. [para. 118].

Stoddart v. National Parole Board, [2004] F.T.R. Uned. 798; 2004 FC 1350, refd to. [para. 118].

R. v. Inco Ltd., [2006] O.T.C. 429; 80 O.R.(3d) 594 (Sup. Ct.), refd to. [para. 118].

Shearsmith v. Houdek et al., [2008] B.C.T.C. Uned. 633; 2008 BCSC 997, refd to. [para. 118].

R. v. Violette (J.J.) et al., [2008] B.C.T.C. Uned. H19; 2008 BCSC 920, refd to. [para. 118].

Alfano v. Piersanti, [2009] O.J. No. 1224 (C.J.), refd to. [para. 119].

Field v. Leeds City Council, [2009] C.P.L.R. 833 (C.A.), refd to. [para. 125].

R. v. Secretary of State for Transport (U.K.); Ex parte Factortame Ltd., [2002] EWCA Civ. 932 (C.A.), refd to. [para. 125].

FGT Custodians Pty Ltd. v. Fagenblat, [2003] VSCA 33, refd to. [para. 125].

Authors and Works Noticed:

Bryant, Alan W., Lederman, Sidney N., and Fuerst, Michelle K., Sopinka, Lederman & Bryant: The Law of Evidence in Canada (3rd Ed. 2009), paras. 12.104 to 12.112 [para. 76]; 12.105, 12.107 [para. 129].

Goudge Report - see Ontario, Report of Inquiry into Pediatric Forensic Pathology in Ontario: Policy and Recommendations.

Horton, William G., and Mercer, Michael, The Use of Expert Witness Evidence in Civil Cases (2005), 29 Adv. Q. 153, generally [para. 104].

Kaufman Report - see Ontario, Attorney General, Report of the Commission on Proceedings Involving Guy Paul Morin.

McWilliams, Peter K., Canadian Criminal Evidence (4th Ed.) (2010 Looseleaf Update), pp. 12-64.8 to 12-74 [para. 104].

Michell, Paul, and Mandhane, Renu, The Uncertain Duty of the Expert Witness (2005), 42 Alta. L. Rev. 635, generally [para. 104].

Ontario, Attorney General, Report of the Commission on Proceedings Involving Guy Paul Morin (Kaufman Report) (1998), generally [para. 105].

Ontario, Report of Inquiry into Pediatric Forensic Pathology in Ontario: Policy and Recommendations (Goudge Report) (2008), generally [para. 105].

Osborne, Coulter A., Civil Justice Reform Project: A Summary of Findings and Recommendations (2007), generally [para. 106].

Paciocco, David M., Unplugging Jukebox Testimony in an Adversarial System: Strategies for Changing the Tune on Partial Experts (2009), 34 Queen's L.J. 565, generally [para. 104]; paras. 9 to 12 [para. 3].

United Kingdom, Access to Justice, Final Report to the Lord Chancellor on the civil justice system in England and Wales (Woolf Report) (1996), generally [para. 106].

Woolf Report - see United Kingdom, Access to Justice: Final Report to the Lord Chancellor on the civil justice system in England and Wales.

Counsel:

Wanda M. Severns and Renée Fougere (Student at Law), for the appellants;

Alan L.W. D'Silva, Erica Tait, and Aaron Kreaden, for the respondents.

This appeal was heard on December 12, 2012, in Halifax, N.S., by MacDonald, C.J.N.S., Oland and Beveridge, JJ.A., of the Nova Scotia Court of Appeal. The court delivered the following decision on May 24, 2013, which was comprised of the following opinions:

MacDonald, C.J.N.S., dissenting - see paragraphs 1 to 56;

Beveridge, J.A. (Oland, J.A., concurring) - see paragraphs 57 to 164.