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Use of Expert Denied Again
Published in the January 2007 issue of Litigation Notes - View Article
The Quebec Superior Court recently rejected an expert’s report produced in support of the plaintiff’s case, in litigation between a manufacturer of roofing shingles and two of its customers.
IKO Industries Ltd. (“IKO”) is a manufacturer of roofing materials and Everest Supply Inc. (“Everest”) and Produits Pour Toitures Fransyl Ltée (“Fransyl”) are two of IKO’s distributors in the Province of Quebec.
IKO’s distributors were entitled to certain volume discounts and year-end rebates based on the quantity of product purchased from IKO. For the period of July 1, 2004 to June 30, 2005 Everest and Fransyl disputed the calculation of the year-end rebates. They furthermore alleged that they had been unable to meet their sales targets by reason of an allocation system imposed by IKO with respect to certain of its products. As a result they withheld payment of amounts owing to IKO and IKO sued them. They counterclaimed for the rebates to which they felt they were entitled.
IKO retained the accounting firm of Pricewaterhouse-Coopers LLP (“PWC”) to prepare an expert’s report for the purpose of quantifying the year-end purchase rebate entitlements of Everest and Fransyl and to determine whether thay would have met their purchase targets if they had purchased all of the product allocated to them.
The defendants opposed the production of this expert’s report on the basis that it would not add anything to the judge’s understanding of the case. The Quebec Superior Court considered the caselaw with respect to the admissibility of experts’ reports, beginning with the 1994 decision of the Supreme Court of Canada in R. Mohan. That case established that there are four conditions which must be met for an expert’s report to be admissible: (1) the evidence must be relevant;(2) the evidence must be necessary to assist the trier of fact; (3) there must be no exclusionary rule otherwise prohibiting the receipt of the evidence; and (4) the evidence is given by a properly qualified expert.
The defendants alleged that the second of these criteria was not met in this case and the Court agreed. Expert evidence is only admissible where it is necessary to assist the Court to understand the facts and to appreciate the evidence. Expert evidence is generally only necessary where the case turns on technical or scientific questions of some complexity. Where the facts are straightforward and the judge is as capable as the expert of understanding them and arriving at the proper conclusion, expert evidence will not be admissible.
In this case, the facts were not particularly complicated.
Essentially, the dispute turned on the entitlement of the defendants to rebates based on their interpretation of their contract with IKO. Contractual interpretation is within the competence of the trial judge and no specialized accounting knowledge was required for the purpose of calculating the amount of the applicable rebate. PWC’s report was not admitted.
A similar result was reached in a case decided last year by the Ontario Superior Court of Justice. Dulong v. Merrill Lynch Canada Inc. was an action brought by an investor to recover stock market losses allegedly sustained by reason of the negligence of his investment advisors.
The plaintiff sought to introduce expert testimony from a Mr. Malcolmson, a securities lawyer who had worked for the Ontario Securities Commission (“OSC”) and in that capacity had become familiar with the policies, rules and regulations of the OSC and of the Investment Dealers Association. He had subsequently worked for the Toronto Dominion Bank and assisted in the development of the Bank’s retail brokerage arm. However he had never worked as retail stock broker and was not qualified to testify about the standards and practices of the retail brokerage industry in Ontario. Judges do not require an expert to interpret policies, rules or regulations which they are perfectly capable of reading for themselves. Consequently Mr. Malcolmson’s evidence was not admitted.
Whether a case is being decided by a judge alone or a judge with a jury, expert evidence must be used judiciously. As Justice Sopinka of the Supreme Court of Canada said in R. v. Mohan:
“There is a danger that expert evidence will be misused and will distort the fact-finding process. Dressed up in scientific language which the jury does not easily understand and submitted through a witness of impressive antecedents, this evidence is apt to be accepted by the jury as being virtually infallible and as having more weight than it deserves.”
IKO Industries v. Produits pour toitures Fransyl Ltée, 2007 QCCS 33 (CanLII)