Date: 20030728
Docket: T-241-02
Citation: 2003 FC 924
OTTAWA, ONTARIO, THIS 28th DAY OF JULY 2003
PRESENT: THE HONOURABLE MR. JUSTICE MARTINEAU
BETWEEN:
EXPRESS FILE, INC.
Applicant
and
HRB ROYALTY, INC.
Respondent
REASONS FOR ORDER AND ORDER
[1] This is an appeal by Express File, Inc. (the "applicant") pursuant to Rule 51 of the Federal Court Rules, 1998 SOR/98-106 of the Order of Mr. Richard Morneau, Prothonotary, dated November 22, 2002, which, inter alia, struck out the portion underlined below in paragraph 6 of Mr. Gary Porter's affidavit dated July 26, 2002:
My earlier affidavits referred to that fact that there are, and have been for many years, Canadians who reside in Canada but are employed in the United States. These individuals either travel to the United States to work each day or for a greater period of time and are Canadians resident in Canada working for United States companies as sales agents, representatives and the like. As they are employed in the United States or by United States companies, they must pay United States income tax. I am advised by my counsel, Kenneth D. McKay, and verily believe, that a television program entitled "The National" which aired April 22nd, 2002, at 10:00 p.m. EST included a program segment entitled "Cross Border Quest". This documentary attests to the fact that about 50,000 Canadians resident in Canada work in the United States or for U.S. companies and earn and are paid in U.S. dollars by the Companies. A copy of the audio/video tape of the show and a transcription of the dialogue is attached to the Affidavit of Geraldine Lonergan which I understand from my counsel will be filed along with my affidavit.
[2] The Prothonotary also ordered that paragraphs 2 to 4 of Mrs. Geraldine Teresa Lonergan's affidavit dated July 29, 2002 (the "first Lonergan affidavit") be struck out:
2. At the request of Kenneth D. McKay, counsel for the Applicant herein, I viewed the audio/video tape of a portion of The National which appears on the CBC Television Network entitled "Cross Border Quest". Attached as Exhibit A is a copy of that audio/video tape. This segment appeared on the April 22nd, 2002, edition of The National.
3. I then visited the website for The National at http://cbc.national/transcripts and downloaded the transcript for the programme segment CROSS BORDER QUEST. A copy of that transcript is attached as Exhibit B to my Affidavit.
4. I have compared the transcript (Exhibit B) to the audio/video tape (Exhibit A) and confirm that the transcript accurately transcribes the audio portion of Exhibit A.
[3] Essentially, the Prothonotary concluded that the portions of the two affidavits quoted above (the "paragraphs at issue") constitute hearsay, which is admitted by the parties. This includes the program segment entitled "Cross Border Quest" ("the CBC report"). However, the applicant submits that the Prothonotary should have refused HRB Royalty, Inc.'s (the "respondent") motion to strike the paragraphs at issue on the grounds that it is:
a. Premature;
b. The evidence objected to is reliable and necessary; and/or
c. The evidence objected to has a substantial guarantee of trustworthiness.
[4] Moreover, the applicant submits that the Prothonotary also erred in dismissing the applicant's counter motion to file Ms. Lonergan's supplementary affidavit dated October 2, 2002 (the "second Lonergan affidavit") which, inter alia, details the attempts and efforts made by the applicant to obtain better evidence.
[5] In the case at bar, the applicant has failed to convince me that the impugned order is clearly wrong, in the sense that the exercise of discretion by the Prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or that in making it, he improperly exercised his discretion on a question vital to the final issue of the case (see Canada v. Aqua-Gem Investments Ltd. (C.A.), [1993] 2 F.C. 425 at 454).
[6] Rule 50 provided the Prothonotary with the jurisdiction to hear the motions made by the parties. Rule 81 requires that, except on motions, affidavits be confined to facts within the personal knowledge of the deponent, but this does not necessarily exclude hearsay evidence, provided the latter is "reasonably necessary" and "reliable": see Lecoupe v. Canadian Armed Forces (1994), 81 F.T.R. 91 at para. 10; and Merck Frosst Canada Inc. et al. v. Canada (Minister of National Health and Welfare) et al. (1995), 91 F.T.R. 260 at paras. 9-10).
[7] In recent years, the Supreme Court has taken a somewhat more flexible approach to hearsay "rooted in the principle and the policy underlying the hearsay rule rather than the strictures of traditional exceptions": R. v. Khan, [1990] 2 S.C.R. 531 at 540 ("Khan"). In R. v. Smith, [1992] 2 S.C.R. 915 at 931-32 ("Smith"), Lamer C.J., referring to the comments made by McLachlin J. in Khan, supra, notes:
"McLachlin J. proceeded to observe that, while in England the House of Lords decided in Myers v. Director of Public Prosecutions, [1965] A.C. 1001, that the development of further exceptions to the hearsay rule required intervention by Parliament, this Court in Ares v. Venner, [1970] S.C.R. 608">[1970] S.C.R. 608, declined to follow the majority in Myers, preferring instead the dissenting opinion of Lord Donovan where he said, at p. 1047, that "[t]he common law is moulded by the judges and it is still their province to adapt it from time to time so as to make it serve the interests of those it binds." Having concluded that it is open to the courts to create new exceptions to the hearsay rule on the basis of principle, McLachlin J. stated the principles that should govern the creation of such exceptions, and the admission of such evidence, to be the "necessity" of the evidence to prove a fact in issue, and the "reliability" of this evidence (at pp. 546-47):
The first question should be whether reception of the hearsay statement is necessary. Necessity for these purposes must be interpreted as "reasonably necessary". The inadmissibility of the child's evidence might be one basis for a finding of necessity. But sound evidence based on psychological assessments that testimony in court might be traumatic for the child or harm the child might also serve. There may be other examples of circumstances which could establish the requirement of necessity.
The next question should be whether the evidence is reliable. Many considerations such as timing, demeanour, the personality of the child, the intelligence and understanding of the child, and the absence of any reason to expect fabrication in the statement may be relevant on the issue of reliability. [Emphasis added.]
[My emphasis]
[8] In R. v. Starr, [2000] 2 S.C.R. 144, Iacobucci J. states that "the essential defining features of hearsay are the purpose for which the evidence is adduced, and the absence of a meaningful opportunity to cross-examine the declarant in court under oath or solemn affirmation as to the truth of its contents", and further observes that "[t]he first stage of the hearsay analysis is to ask whether [the] out-of-court statement [...] is sought to be adduced in order to prove the truth of its contents" (paras. 162 and 165).
[9] The applicant characterized the purpose for which it wishes to introduce into evidence the paragraphs at issue as follows:
16. The impugned paragraphs of the Affidavits of Gary Porter and Geraldine Teresa Lonergan deal with evidence as to the existence of resident Canadian citizens who travel to the United States ("U.S.") on a daily basis from Canada or are employed by U.S. companies and are paid by those U.S. companies in Canada and as a result, they pay U.S. income taxes.
17. This evidence is very important to the Applicant, Express File Inc., to establish that Canadian residents do in fact work in the U.S. or work for U.S. corporations and therefore file and pay U.S. taxes. The Applicant provides an electronic U.S. tax preparation and filing service which it makes available to U.S. and Canadian residents in order to pay U.S. income taxes.
18. This issue of use of the Applicant's trade-mark EXPRESS FILE in Canada and particularly by Canadians working in the U.S. or for U.S. companies is squarely an issue on the appeal.
19. The evidence objected to relates to a documentary television programme Canadian Broadcasting Corporation ("CBC") aired on The National dealing with the very fact of Canadian citizens living in Canada who work and are paid by U.S. based companies and travel to the U.S., sometimes on a daily basis, to perform their employment duties.
20. The programme speaks of 50,000 plus Canadians who are employed in this fashion. [...]
[10] After having carefully reviewed the reasons accompanying the impugned order, I am satisfied that the Prothonotary did not misunderstand the nature of the proceedings and the questions in the case at bar. Despite the Prothonotary's use in his reasons of such expressions or words as "appeal by application for judicial review", "plaintiff", "defendant", and "allegations", when referring to the appeal made by the applicant, the parties, and the paragraphs at issue, they are in no way linked to the Prothonotary's actual reasons for striking out the paragraphs at issue.
[11] I also cannot infer here that the Prothonotary has chosen to ignore the legal principles established by the jurisprudence with respect to hearsay and its recognized exceptions. It is true that apart from the quote of the Federal Court of Appeal in P.S. Partsource Inc. v. Canadian Tire Corp. (2001), 267 N.R. 135 at 138 (F.C.A.) ("Partsource"), there is no other reference to the case law. However, a close reading of the Prothonotary's reasons shows that, based on the applicable principles, the latter properly asked himself whether or not the applicant has demonstrated that the hearsay evidence contained in the paragraphs at issue and exhibits herein are reliable and reasonably necessary (see paras. 10-13 of the reasons).
[12] Again, the applicant's suggestion that the Prothonotary failed to consider, in making such a legal determination, the second Lonergan affidavit, is totally unfounded. To the contrary, at paragraph 13 of his reasons, the Prothonotary specifically notes that "[a]s to the requirement of reliability, the allegations at issue do not, any more than the second Lonergan affidavit, provide any information about the particulars of the activities, research and study behind the CBC report" (my emphasis).
[13] Clearly, the hearsay evidence which the applicant wishes to introduce here does not meet the threshold of reliability, and I completely agree with the statement made by the Prothonotary that "[t]he fact that it was alleged that it is the latter corporation [CBC] which produced the said report does not as such suffice [...] to establish the proper degree of reliability". Concerning the "public" nature of the CBC documentary, which allegedly attests to the number of Canadians working across the border in the U.S., contrary to what the applicant is suggesting, the documentary, if erroneous in any way, could not have been rectified since the "public" is limited to a very negligible number of people competent to detect an error, and further, there is no guarantee that the "public" actually viewed the documentary. Moreover, despite applicant's counsel's able argument, I am unable to see in the supplementary evidence mentioned at paragraphs 5 to 9 of the second Lonergan affidavit, which incidentally is also hearsay evidence, any "circumstantial guarantee of trustworthiness" (Smith, supra, at pp. 929-30).
[14] Since the Prothonotary did not err in determining that the requirement of reliability is not satisfied, it is not necessary that I examine the applicant's submissions with respect to the requirement of necessity, which the applicant argues is met here. That being said, I am far from being convinced that broadcast documentaries or newspapers articles can be adduced in court proceedings in order to prove the truth of their contents, simply because a litigant is encountering difficulties in collecting first hand evidence from reliable sources, governmental or otherwise. The principle advocated by the applicant seems to be an unwarranted extension of the recognized exceptions to the inadmissibility of hearsay evidence. I note that no case has been cited by counsel on such use of documentaries and articles.
[15] In Partsource, supra, the Federal Court of Appeal noted that "[i]n the case of motions to strike based on hearsay, the motion should only be brought where the hearsay goes to a controversial issue, where the hearsay can be clearly shown and where prejudice by leaving the matter for disposition at trial can be demonstrated" (Ibid at para. 20). In the case at bar, the Prothonotary has decided that the paragraphs at issue "should be struck here, since they clearly constitute hearsay on a matter which Express File [the applicant] itself acknowledged was an important point" (at para. 14). As to the element of actual prejudice, he further states that "HRB [the respondent] could not conduct an effective and valid cross-examination here in opposition to the allegations, since the persons making the affidavits could provide no information other than that already contained in their affidavits". Therefore, the Prothonotary concluded that the striking out of the paragraphs at issue, requested by the respondent, is necessary at this stage.
[16] In view of the applicable legal principles and the particular facts of this case, I find that the Prothonotary did not act prematurely and did not improperly exercise his discretion in allowing the respondent's motion to strike the paragraphs at issue. For the reasons stated above, I also find that the Prothonotary did not err in dismissing the applicant's motion to file the second Lonergan affidavit.
ORDER
THIS COURT ORDERS that the motion to appeal the decision of Mr. Richard Morneau, Prothonotary, dated November 22, 2002, wherein he allowed the motion brought by the respondent to strike various allegations contained in affidavits filed by the applicant and dismissed the applicant's counter motion to file Ms. Lonergan's supplementary affidavit, be dismissed with costs.
This order is applicable mutatis mutandis and will be entered in the record of file
T-1059-02.
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-241-02
STYLE OF CAUSE: EXPRESS FILE, INC. v. HRB ROYALTY INC.
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: JULY 7, 2003
REASONS FOR ORDER
AND ORDER BY : THE HONOURABLE MR. JUSTICE MARTINEAU
DATED: JULY 28, 2003
APPEARANCES:
MR. K. McKAY FOR THE APPLICANT
MS. MARGARET WELTROWSKA FOR THE RESPONDENT
SOLICITORS OF RECORD:
SIM, HUGHES, ASHTON & McKAY FOR THE APPLICANT
TORONTO, ONTARIO
FRASER, MILNER, CASGRAIN FOR THE RESPONDENT
MONTREAL, QUEBEC
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