Canada: Mehedi v. 2057161 Ontario Inc.: Deference Not Owed To Motion Judge's Conclusory Reasons For Refusing To Re-Open Trial

The Ontario Court of Appeal's decision in Mehedi v. 2057161 Ontario Inc. addresses the factors motion judges should consider in deciding whether to re-open a case to permit new evidence to be admitted after final decisions. Despite giving considerable guidance, the Court declined to consider the comparative applicability of a 2001 Supreme Court of Canada decision, 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., and a 1998 Ontario Court of Appeal decision, Tsaoussis (Litigation Guardian of) v. Baetz. Indeed, the Court expressed doubt that there is any real difference between these two precedents. On this case, for a unanimous Court of Appeal, Justice Lauwers held that the motion judge's conclusory denial of a request to re-open meant deference that would usually be due to him was not appropriate. In the "most unusual" circumstances of this case, Justice Lauwers allowed the appeal and ordered the case re-opened. Rather than actually admit the evidence and determine the case on the merits, however, he remitted the case to the original trial judge to decide in light of the new evidence.

Background

The case arose from unique facts. The plaintiff originally sued the defendants for breach of contract, alleging that they promised to facilitate his obtaining a job. He paid the defendants a very hefty fee. The trial judge dismissed the claim, finding that there was no credible evidence that the defendants made any promise to the plaintiff that they failed to fulfill. The Court of Appeal dismissed his appeal from that decision.

Shortly after the Court of Appeal's first decision, the CBC broadcast a report which cast doubt on the defendants' evidence, upon which the trial judge had relied. As we have previously analyzed, Justice Juriansz directed the plaintiff to bring a motion to adduce fresh evidence and re-open the trial in the Superior Court. The motion judge (not the original trial judge) dismissed that motion. His reasons, in their entirety, read:

On July 30, 2014, Juriansz J.A. in chambers directed the plaintiff to bring a motion in the normal course regarding the admission of new evidence and a new trial as a result. I am not persuaded that this is an appropriate case to exercise my discretion to reopen this matter that had already been tried by Justice Himel [Hainey]. Even if the new evidence was allowed, I do not believe that that would reasonably affect the outcome. The action [sic] is dismissed. Costs to the defendant of $500.00 payable forthwith. Order as appropriate.

Standard of Review

Justice Lauwers held that deference is normally owed to a motion judge on a decision refusing to re-open a case. However, that was not appropriate here:

[12] A motion judge's decision under rule 59.06(2)(a) is discretionary and attracts considerable deference from a reviewing court, unless the motion judge errs in principle, misapprehends or fails to take account of material evidence, reaches an unreasonable decision (Young v. Tyco International of Canada Ltd., 2008 ONCA 709), or if the reasons do not set out the judge's reasoning process and reflect consideration of the main relevant factors: R. v. Sheppard, 2002 SCC 26; Diamond Auto Collision Inc. v. Economical Insurance Group, 2007 ONCA 487, at paras. 11-12; Barbieri v. Mastronardi, 2014 ONCA 416, at paras. 22-23.

[13] The test under rule 59.06(2)(a) to re-open a trial that applies after the judgment or other order has been issued and entered was set out by Doherty J.A., speaking for the court, in Tsaoussis (Litigation Guardian of) v. Baetz (1998), 41 O.R. (3d) 257, [1998] O.J. No. 3516, at paras. 41 and 44. As he noted, the onus is on the moving party to show that all the circumstances "justify making an exception to the fundamental rule that final judgments are exactly that, final." In particular, the moving party must show that the new evidence could not have been put forward by the exercise of reasonable diligence at the original proceedings. The court will go on to evaluate "other factors such as the cogency of the new evidence, any delay in moving to set aside the previous judgment, any difficulty in re-litigating the issues and any prejudice to other parties or persons who may have acted in reliance on the judgment."

[14] In this case, the motion judge's reasons for refusing to re-open the trial are inadequate. While he briefly states what he views as the appropriate test, the motion judge does not describe the proposed new evidence or relate the test to it. He does not explain why the new evidence fails to meet the test, or why it would not, in his words, "reasonably affect the outcome", given the critical importance of the trial testimony of the respondents, Hameed and Lacombe, to the trial judge's decision. In the result, this court is unable to meaningfully review the basis for his dismissal of the appellant's motion.

Re-Opening the Trial and Determining the Correct Test for Doing So

Justice Lauwers concluded that under the guidance from either Baetz or Sagaz, the trial should be re-opened. However, he declined to determine whether and in what circumstances Sagaz as opposed to Baetz should be followed in the future. It seems apparent that certain factors need to be considered rather than any mechanical "test". These non-exhaustive factors include the length of the delay, the reliance of parties on the final decision and prejudice that would arise through re-opening the trial, the reason for the delay in proffering the new evidence, the cogency of the evidence, and the overall factor of fairness to all affected:

[15] In my view, the appellant has met the test under rule 59.06(2)(a) as articulated in Baetz. It is plain that the proposed new evidence was not available at the time of the first trial or the first appeal. The appellant did not delay in seeking relief. The new evidence is cogent, in that it is apparently credible and, if accepted, would probably have affected the result at trial; the new evidence could serve to undermine the evidence given by the respondents and bolster that of the appellant. That is because the video shows representatives of Job Success apparently making the same or similar promises to others that the trial judge found to be "unrealistic and unreasonable" with respect to the appellant. Finally, I see no prejudice to the respondents if the trial were re-opened.

[16] Amicus submits that the motion judge erred in applying the test for re-opening a trial described by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 S.C.R. 983. The Sagaz test was articulated in a case in which the judgment at issue had not yet been issued and entered. In the present case, while no formal judgment was taken out, the trial decision had been appealed. Amicus asserts that the motion judge ought to have applied the Baetz test, which includes the consideration of a number of different factors, including balancing fairness against the interest in finality.

[17] In Sagaz, the Supreme Court accepted, at paras. 20 and 64, the motion judge's application of the two-part test for re-opening a trial described by the High Court in Scott v. Cook, [1970] 2 O.R. 769:

First, would the evidence, if presented at trial, probably have changed the result? Second, could the evidence have been obtained before trial by the exercise of reasonable diligence?

[18] Courts citing Sagaz often seem to boil the test down to these two questions (see, for example, 1057854 Ontario Inc. v. Kara Holdings Inc., [2005] O.J. No. 1144, at para. 40; Wesbell Networks Inc. (Receiver of) v. Bell Canada, 2013 ONSC 7814; Irving Shipbuilding Inc. v. Schmidt, 2014 ONSC 5089, at para. 57; Madock v. Grauer, 2010 BCSC 1709). However, the Supreme Court, at para. 60, added this important direction: "Appellate courts should defer to the trial judge who is in the best position to decide whether, at the expense of finality, fairness dictates that the trial be reopened." Plainly then, fairness is also an important factor, including prejudice to others who have acted in reliance on the judgment, as Baetz notes.

[19] I further note that in Sagaz, the Supreme Court, at para. 63, approved the following comments by Lord Denning in Ladd v. Marshall, [1954] 1 W.L.R. 1489 (C.A.), at p. 1491:

It is very rare that application is made to this court for a new trial on the ground that a witness has told a lie. The principles to be applied are the same as those always applied when fresh evidence is sought to be introduced. To justify the reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible. [Emphasis added by Justice Lauwers.]

[20] In my view, properly understood, the test in Sagaz goes beyond the two questions of whether the new evidence, if presented at trial, would probably have changed the result, and whether the evidence could have been obtained before trial by the exercise of reasonable diligence. It includes considerations of finality, the apparent cogency of the evidence, delay, fairness and prejudice, factors that were articulated by this court in its decision in Baetz. The error in this case was not in the motion judge's decision to apply Sagaz rather than Baetz, but in his application of the test, as I have already described. In this case, the new evidence meets both the Baetz and the Sagaz tests for re-opening a trial assuming there is any real distinction between the two. [Emphasis added by Osler.]

Disposition

Justice Lauwers thus held that the motion judge had erred and ordered the case re-opened. However, he refused to decide whether to actually admit the evidence and how to dispose of the case. He held that the original trial judge should decide that. He nonetheless set aside all costs orders against the plaintiff:

[21] Because of the nature of the inquiry, a motion under rule 59.06(2)(a) to reopen a trial decision based on fresh evidence should be brought before the trial judge, who is in the best position to contextualize the fresh evidence and to direct the trial of an issue if appropriate: Janjua v. Khan, 2014 ONCA 5 at para. 11. See Sagaz, at para.60. This is the practice that should be followed unless there is some real impediment to the trial judge dealing with the motion.

[22] I would allow the appeal, re-open the trial and remit the matter to the trial judge for reconsideration in light of the fresh evidence. It will be for the trial judge to determine the admissibility of the new evidence and its effects, if any, on the merits of the case.

[23]  In the circumstances, I would set aside all previous cost orders against the appellant in this matter, including the costs of the first trial, the appeal to this court from the first trial judgment and the costs of the motion before the motion judge. It will be for the trial judge to determine appropriate costs dispositions, based on his reconsideration of the case.

[24] I would also award the appellant $2,000 for the costs of this appeal, inclusive of disbursements and all applicable taxes.

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