Watterson v Canadian EMU

Republished in part / Image(s) & Emphasis added


NATURE OF PROCEEDING

[1]         Robert Watterson, his wife, Sandra Watterson, and Mr. Watterson’s corporation, Watterson Financial Services Inc. (collectively, “the defendants”), appeal to the Divisional Court from a judgment which the Small Claims Court rendered against them following a trial on August 8, 2014.  At the trial, the plaintiff, Canadian EMU Co-Operative Inc., (“EMU”), was permitted to call witnesses without giving the defendants advance notice of its intention to do so, as was required by the Rules of Small Claims Court, O. Reg. 258/98.  The defendants, not having been notified before trial of EMU’s intention to call witnesses, had not summonsed witnesses of their own, or prepared to testify themselves, and did not object to the calling of the witnesses by EMU.

[2]         The trial judge did not inform the defendants of their right to object to EMU’s calling witnesses without delivering a witness list in advance, or ask them if they required an adjournment for the purpose of preparing to cross-examine the witnesses.  At the conclusion of EMU’s evidence, the trial judge gave the defendants the opportunity to testify or call witnesses, but did not inform them of their right, in the circumstances, to request an adjournment for the purpose of preparing to testify or of calling witnesses in response.

[3]         Mr. Watterson, who was self-represented at the trial, and the other defendants, who were represented by Mr. Watterson, appeal from the verdict on the ground of procedural unfairness.  They argue that the trial judge erred in law by failing to advise them of their right to object to EMU’s witnesses, and of their right to request an adjournment for the purpose of calling witnesses, or of preparing to testify themselves, in response to EMU’s witnesses.  Additionally, they argue that the trial judge erred in drawing an adverse inference from their failure to testify.

[4]         The appeal requires the court to re-examine the role that a trial judge should properly assume in a trial in which a litigant is self-represented, when procedural irregularities arise which may afford the litigant a remedy, and the litigant displays a lack of knowledge of his/her procedural rights.

BACKGROUND FACTS

[5]         EMU is an incorporated cooperative, carrying on the business of farming large birds.  Mr. Watterson was a director and officer of Watterson Financial.  Through that corporation, he acted as EMU’s bookkeeper and insurance advisor.

[6]         EMU sued the defendants in Small Claims Court, claiming that they had enriched themselves by taking $15,000 which EMU had invested with them, and by converting the funds to their own use.  The defendants claimed that EMU paid the funds to them in repayment of monies that EMU owed to them for investments which it had made with them.

[7]         Mr. Watterson, who is not a lawyer, represented the defendants at the trial of the action in Small Claims Court.  The trial proceeded on August 8, 2014, before the trial judge.  None of the parties had served or filed with the court a list of proposed witnesses, as required by Rule 13.02(2) of the Rules of Small Claims Court.

[8]         EMU summonsed two witnesses to testify at the trial.  The trial judge permitted the witnesses to testify, notwithstanding EMU’s failure to deliver a witness list in advance.  The trial judge did not ask the defendants if they objected to EMU’s calling the witnesses without delivering a witness list before trial, or ask them if they required an adjournment for the purpose of preparing to cross-examine the witnesses.  Mr. Watterson did not, on his own initiative, object to EMU’s witnesses, or ask for an adjournment of the trial.

[9]         After the witnesses testified and were cross-examined by Mr. Watterson, the trial judge did not ask Mr. Watterson whether he required an adjournment for the purpose of summonsing witnesses of his own, or preparing to testify himself, in response to EMU’s evidence.  Instead, he simply asked Mr. Watterson whether he would be testifying or calling witnesses himself.

[10]      Mr. Watterson then indicated, for the first time, that he had understood that if a plaintiff did not deliver a witness list, it would not be calling any witnesses.  He stated that because EMU had not delivered a witness list, he had not summonsed any witnesses himself.  When asked whether he would be testifying himself, he replied that his evidence was in his Statement of Defence.

[11]      The trial judge did not point out to Mr. Watterson that his Statement of Defence, being a pleading, did not constitute evidence, and that the court would not treat it as evidence when determining the facts.  Additionally, he did not ask Mr. Watterson whether he required an adjournment for the purpose of summonsing witnesses, or for the purpose of preparing to testify himself.


PARTIES’ POSITIONS

[19]      The defendants submit that the trial judge made the following errors, which resulted in procedural unfairness to them:

a)           The trial judge permitted EMU’s witnesses to testify without requiring EMU to deliver a list of the witnesses in advance, as the Rules of Small Claims Court required.  The defendants assert that this took them by surprise, and deprived them of the opportunity to prepare for EMU’s evidence, and to respond to it.

b)           The trial judge based his findings as to the defendants’ position solely on their cross-examination of EMU’s witnesses, whose testimony took them by surprise.

c)           The trial judge unfairly drew an adverse inference against them based on their failure to testify or call witnesses, without considering EMU’s failure to give them notice of their intention to call witnesses as a satisfactory explanation for their failure to testify themselves.

[20]      The defendants submit that the trial judge had a duty to assist them, as self-represented litigants, in the following ways:

a)           By inquiring as to whether they objected to EMU calling witnesses without having delivered a list of the witness before trial;

b)           By inquiring as to whether they required an adjournment to prepare their cross-examination of EMU’s proposed witnesses;

c)           By pointing out to them that the court could not rely on their Statement of Defence as if it were evidence, and offering them an opportunity to request an adjournment for the purpose of consulting counsel and calling witnesses to testify in response to EMU’s evidence.

[21]      The defendants argue that the trial judge unfairly drew an adverse inference from Mr. Watterson’s failure to testify or call witnesses.  This was evident from the fact that the trial judge opined that Mr. Watterson may have declined to testify in order not to “compound his problems”, and from his conclusion that Mr. Watterson had weakened the defendants’ case by failing to testify or call witnesses.

[22]      The defendants argue that the trial judge failed to consider the obvious explanation for Mr. Watterson’s failure to testify or call witnesses.  Being ignorant of court procedures and the rules of evidence, Mr. Watterson was taken by surprise when EMU was permitted to call witnesses without having delivered a list of its witnesses in advance.  He failed to realize that he could request an adjournment to prepare a cross-examination of EMU’s witnesses, or to prepare to testify himself, or to call witnesses in response to those called by EMU.

[23]      EMU submits that the evidence called at trial supported the trial judge’s findings and that the defendants’ appeal should be dismissed.  EMU relies, in particular, on the evidence of its witnesses that:

a)           Mr. Watterson told EMU that he could invest $15,000 on its behalf with Sun Life Financial, but instead made the cheque payable to their company, 20158428, the predecessor of Watterson Financial.

b)           Mr. Watterson initially recorded investment earnings in EMU’s QuickBooks program, but omitted the record of earnings from the next update.

c)           In the spring of 2011, Mr. Watterson admitted that he had overpaid himself for bookkeeping services.  He signed a note promising to repay $1,982.80, but maintained that the investment was still in place.  EMU asked him on several occasions to return the funds, but he failed to do so.

d)           EMU finally contacted Sun Life Financial directly and spoke with Mr. Watterson’s manager, who informed EMU that there was no record of the investment with Sun Life Financial.

e)           EMU reported to the Ontario Provincial Police that Mr. Watterson had admitted that the money belonged to EMU, and that he had promised to repay it, but had failed to do so.

[24]      EMU submits that there was no procedural unfairness for the following reasons:

  1. a)         EMU made it clear at the outset of the trial that it intended to call two witnesses, and the defendants did not object.
  2. b)         After EMU named its witnesses, the parties discussed filing each party’s Document Brief, and again, the defendants made no objection to EMU’s stated intention to call its two witnesses.
  3. c)         Watterson was asked several times whether he wished to call witnesses, or testify himself, and replied that he did not have any evidence to add that was not already in his [Statement of] Defence.
  4. d)         In Mr. Watterson’s closing argument, he made no mention of EMU’s failure to deliver a list of its proposed witnesses.

ANALYSIS AND EVIDENCE

[25]      Section 134(1)(b) of the Courts of Justice Act (“the Act”) provides that the court to which an appeal is made may, unless otherwise provided, order a new trial.[1]  Section 134(6) of the Act states that the court shall not direct a new trial unless there has been a substantial wrong or miscarriage of justice.

[26]      Where the issue on appeal is one of procedural fairness, the standard of review is correctness.[2]

a)           Were the appellants denied procedural fairness?

  1. i)      Permitting EMU to call witnesses without delivering a list of witnesses in advance, and without offering the defendants an opportunity to object or request an adjournment

[27]      Rule 13.03(2) of the Rules of Small Claims Court requires all parties to serve on every other party and file with the court a list of proposed witnesses in advance of their mandatory settlement conference.[3]  The purpose of this requirement is to permit the opposing litigants to know who the intended witnesses will be and to contact them, if they wish, prior to trial, to discuss the case.[4]

[28]      Procedural fairness is denied where a party is taken by surprise and is unable to prepare adequately or call more evidence to address issues at trial.[5]  A denial of procedural fairness can amount to a substantial wrong or miscarriage of justice, and warrant setting aside the judgment and ordering a new trial.[6]

[29]      The opportunity for parties to adduce evidence and make submissions in respect of an issue is fundamental to the right to be heard.  When a party is not given that opportunity, a denial of natural justice can occur.[7]


[35]      It is a denial of natural justice not to give a party reasonable notice of the evidence he will have to meet.  In the present case, the trial judge could have remedied EMU’s failure to deliver a list of its witnesses before trial:

  •      by advising the defendants that they were entitled to object to the calling of the witnesses;
  •      by asking them, before they cross-examined the witnesses, whether they wished to request an adjournment to give them an opportunity to prepare their cross-examination; or
  •      by advising them, after the witnesses testified, that they could request an adjournment to summon witnesses to call in response, or to prepare to testify themselves in response.

[36]      The trial judge did not take any of these steps. In the absence of such judicial interventions, EMU’s failure to give the defendants advance notice of the witnesses it would be calling resulted in a failure of natural justice, and deprived the defendants of a reasonable opportunity to meet the case against them.

[37]      The trial judge faced a serious challenge, in the face of Mr. Watterson’s obvious unfamiliarity with the rules of procedure and evidence, to maintain the fairness of the trial without compromising his perceived impartiality.[11]  No amount of adjudicative assistance will place a self-represented litigant on the same footing as a party represented by capable and experienced counsel.  Indeed, substantive impartiality does not contemplate perfect parity, nor require adjudicators to assume the role of representative of one or both of the parties to achieve such parity.  In 1999, the Ontario Court of Appeal explained in Davids v. Davids:

Fairness does not demand that the unrepresented litigant be able to present his case as effectively as a competent lawyer.  Rather, it demands that he have a fair opportunity to present his case to the best of his ability.  Nor does fairness dictate that the unrepresented litigant have a lawyer’s familiarity with procedures and forensic tactics.  It does require that the trial judge treat the litigant fairly and attempt to accommodate unrepresented litigants’ unfamiliarity with the process so as to permit them to present their case.  In doing so, the trial judge must, of course, respect the rights of the other party.[12]  [Emphasis added]

 

[38]      The Canadian Judicial Council’s “Statement of Principles on Self-Represented Litigants and Accused Persons”, which are advisory in nature, encourage judges to provide substantive assistance to self-represented parties.[13]  The Statement suggests that judges help self-represented litigants by:

  1. a)         Explaining not just the applicable procedures, but also the relevant law and its implications;
  2. b)         Providing self-represented litigants with information to assist them in asserting their rights and raising arguments before the court; and
  3. c)         Ensuring that procedural and evidentiary rules are not used to unjustly hinder the legal interests of self-represented parties.[14]

[39]      The rules of fairness require the trial judge to ensure that the procedural rules are followed.  When they are not been followed, the trial judge must advise a self-represented litigant who is obviously unaware of his rights, where necessary, of the procedural options available to him.   In the present case, it was clear that Mr. Watterson did not know that where he had not been given notice in advance of EMU’s intention to call their witnesses, that he was entitled to request an adjournment to prepare to cross-examine their witnesses or to prepare his own evidence to respond to theirs.

WATTERSON:   I understood that to call a witness, you had to give a witness list prior to the court date.

THE COURT:            That would be correct.  Did you do that?

WATTERSON:   No, I did not.  And I never received a witness list, either.  I was not aware there would be witnesses.

THE COURT:            So, I’m going to overlook that problem and give you the opportunity to call a witness in any event, if you wish, now.

WATTERSON:   I did not make arrangements to have any other witnesses here because I didn’t think they could be presented, except myself.  I don’t know how I could state more than what I have already stated this, based on my defence, I can, I don’t know if presenting it in any way was the proper way, or just a summary?

THE COURT:            I am not going to give you legal advice.

WATTERSON:   No.

 [40]      Having regard to Mr. Watterson’s obvious lack of knowledge as to his procedural rights, it was incumbent on the trial judge to explain to him that, having regard to EMU’s failure to deliver a list of its intended witnesses in advance, the defendants were entitled to request an adjournment.  Mr. Watterson could have used that adjournment to prepare a cross-examination of the witnesses, or to prepare his own testimony, or to summons witnesses of his own to testify, in response to the evidence that EMU’s witnesses had given.

[41]      In Toronto-Dominion Bank v. Hylton, in 2010, the Ontario Court of Appeal ordered a new hearing based on the judge’s failure to grant a self-represented litigant’s request for adjournment, finding that in order for the court to fulfill its obligation to assist the self-represented litigant and ensure that he could present his case to the best of his abilities, the judge should have granted the request.

[42]      In the present case, the trial judge had an obligation to assist the self-represented litigant, Mr. Watterson, to the extent necessary to ensure that he could present his case to the best of his abilities.  He failed to comply with that obligation when he failed to advise Mr. Watterson that he could request an adjournment for the purpose of preparing to cross-examine EMU’s witnesses, or for the purpose of summonsing witnesses in response to EMU’s witnesses or preparing to testify himself in response to their evidence.

[43]      The trial judge failed to give the necessary explanations to Mr. Watterson, on the basis that doing so would be giving him advice as to how to conduct his trial.  There is a fundamental distinction between advising a litigant as to what he should do, and providing information to the litigant as to what his procedural rights are and what means are available to him for exercising them.  In failing to provide such information to Mr. Watterson, the trial judge increased the impact on the defendants of permitting EMU to call witnesses without delivering a list of its witnesses in advance.

[44]      By withholding from Mr. Watterson the information he obviously needed, the trial judge gave EMU an unnecessary and unfair advantage from having legal representation.  It was reasonable, having regard to the trial judge’s silence as to his right to request an adjournment, for Mr. Watterson to interpret the trial judge’s question as to whether he would be testifying, as an indication that his only choices were to testify then, or not at all.

[45]      Having regard to Mr. Watterson’s obvious lack of knowledge of his procedural rights, it was incumbent on the trial judge to ensure that the procedural rules were followed or, when they were not, to advise Mr. Watterson of his right to object and request an adjournment for the purpose of meeting the evidence that was to be called against the defendants.  Failing to do so compromised the fairness of the trial and resulted in a denial of natural justice.

ii)      failing to advise the defendants that their pleadings were not evidence, and offer them an opportunity, in light of that advice, to call admissible evidence


[50]      Courts have held that, even when a self-represented party does not explicitly request an adjournment, fairness requires that the adjudicator propose one.  In Audmax Inc. v. Ontario Human Rights Tribunal, in 2011, the Divisional Court overturned a decision of the Ontario Human Rights Tribunal on the ground that the adjudicator had failed to consider options, including a possible adjournment, for obtaining the evidence of a key witness for the self-represented respondent.[16]  In that case, the respondent gave the adjudicator a sealed envelope containing a letter from the witness, explaining why he was unable to attend the hearing, and setting out the substance of his evidence.  The adjudicator did not read the letter and refused to accept it as evidence.

[51]      The Divisional Court in Audmax held the Tribunal to a standard of correctness on the issue of procedural fairness.  It concluded that it was apparent from the self-represented respondent’s witness list and her attempts to introduce the witness’s letter that she wished to rely on the witness’s evidence in her defence.  According to the court, because the respondent was self-represented and not fully aware of her rights, it was incumbent on the adjudicator to consider the implications of refusing to admit the letter and to inform the self-represented litigant of the other options available to her.

b)           Did the trial judge err in drawing an adverse inference from the defendants’ failure to testify or call witnesses?

[52]      The court may draw an adverse inference against a party who fails to call a material witness only where the failure to do so is not satisfactorily explained.[17]  In the present case, Mr. Watterson’s failure to call witnesses at the trial, or to testify himself, was explained by EMU’s failure before the trial to deliver a list of the witnesses it intended to call.

[53]      The trial judge apparently drew an adverse inference when he stated, “[t]his lack of oral evidence weakened his case considerably.  Perhaps he did not wish to compound his problems by giving evidence under oath that would not be accurate.”  This compounded the unfairness that resulted from the judge failing to advise Mr. Watterson of his right to request an adjournment for the purpose of summonsing witnesses or preparing to testify himself.

[54]      In O’Brien the Court of Appeal held that the unfairness caused by the judge’s failure to advise the husband of his right to request an adjournment for the purpose of calling the witness whose notarized letter he had sought to introduce was compounded when she drew an adverse inference from the husband’s failure to present the witness.[18]  Similarly, in Audmax, the Divisional Court held that the unfairness resulting from the judge’s rejection of the sealed letter from the witness, and from not advising the litigant of her right to request an adjournment to call the witness, was compounded when the adjudicator drew an adverse inference from the witness’s failure to testify.[19]

[55]      The trial judge’s failure to assist Mr. Watterson to overcome his obvious ignorance of the rules of evidence, by advising him that his Statement of Defence was not evidence, and to ask him whether, having regard to that advice, he wished to testify or call witnesses, resulted in procedural unfairness amounting to a substantial wrong and caused a miscarriage of justice.

CONCLUSION AND ORDER

[56]      For the foregoing reasons, it is ordered that:

  1.          The appeal is allowed and the matter shall be returned to the Small Claims Court for a new trial.
  2.          If the parties are unable to agree on costs, they shall submit written arguments on this issue, together with a Costs Outline, by November 15, 2016.

Price J.

Released:          October 28, 2016

Citation: Watterson v Canadian EMU, 2016 ONSC 6744 (CanLII), <http://canlii.ca/t/gvcff>, retrieved on 2016-10-31

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