By David Debenham
Documents do not speak for themselves. A document tendered by itself as here is hearsay, and hearsay is presumptively inadmissible. Unless there is a “hearsay” exception that admits them documents prove nothing in themselves[1]. They need a live witness to testify as to the truth of the documents’ contents to prove their contents.
A primary source is a document written by someone who was a witness to the events described in the document. By contrast, a secondary document is written by someone who was not a witness to the events described in the document.[2] Thus a source document is proven by someone with first hand knowledge of its contents, while a secondary document is generally proven by someone who collated source documents already admitted into evidence. Otherwise it is ”double hearsay”, an unsworn document based on other unsworn documents.
In accounting we start with the bookkeeper recording (journalizing) transactions in a daily record, using double entry methodology. From there entries are transferred (posted) into ledgers, which are secondary documents that provide a summary of similar transactions during the accounting period, such as the ledger of purchases account. From the ledger, the various items are posted as specific entries in the financial statements. It follows that to prove financial statements in court that you need to prove the ledger and the journal by one or more witnesses unless an exception to the hearsay rule applies.
What about an expert witness? The role of the expert witness is to assist the court through the provision of an independent and unbiased opinion about matters coming within the expertise of the witness and beyond the ken of the ordinary person. The expert gives an opinion based on what they are told or read before trial, which is hearsay. The expert disclosed this second-hand evidence (hearsay) to show the information on which their expert opinion is based, not as evidence going to the existence of the facts on which the opinion is based. In other words, the hearsay upon which the expert bases his or her opinion must be proven by other witnesses for the expert’s opinion to have any weight at all.
There is no rule governing the necessity of expert evidence to prove damages. Where actuarial calculations are necessary, for example, there is no requirement that they be introduced into court by an expert. There is no question that expert actuarial evidence is valuable in cases involving complex calculations, such as claims for future lost income or medical care which must be discounted for various contingencies. Nonetheless, the jurisprudence suggests that there is no requirement per se that a plaintiff obtain an actuarial assessment in every such case. Indeed, one could easily conceive of a situation in which the plaintiff did not have the resources to retain an expert, but had other persuasive documentary or testimonial evidence at their disposal.
Although it is customary that expert evidence is called there is no legal requirement to do so. I would adopt the position expressed by Ferguson J. in Buksa v. Brunskill,
The usual instruction to the jury is to suggest that if it finds that there will be a future loss of income it should determine the average annual loss and then consider the present value and then consider the various contingencies. These calculations are customarily explained by an expert witness but in my view the jury must make its own calculations whether or not there is expert evidence.[3]
One case has suggested to some that expert evidence is necessary to collate and present damages to a judge or jury. n Fermar Paving Limited v. 567723 Ontario Ltd. o/a Winter’s Pit[4] the Plaintiff 2010, Fermar entered into a construction contract with the Ontario Ministry of Transportation (“MTO”) to provide road construction on a portion of Highway 26 in Simcoe County (the “Project”). To complete the Project, Fermar required two types of aggregate: granular “A” and granular “B”. The aggregate was required to meet the Ministry’s specifications. The Defendant operating as Winter’s Pit (“Winter’s Pit”), approached Fermar to discuss Fermar’s needs for aggregate. After some discussion, Fermar sent a document (“the Document”) to Winter’s Pit setting out the proposed terms of an agreement. Winter’s Pit requested a higher price for the granular A and granular B but asked for no other changes. The Document was signed by both parties on September 3, 2010.[5] A few days later, through its solicitor, Winter’s Pit said that it could not provide as much aggregate as it was required to in accordance with the signed Document. There were discussions over several months, but no new signed agreement was reached. In November 2010, Fermar was told to leave the site or Winter’s Pit would commence proceedings for trespass. Fermar brought an action for breach of contract by repudiation of the agreement and sought damages to compensate Fermar for the cost of having to source the aggregate from elsewhere. a) The Document was an enforceable agreement; and (b) c) Winter’s Pit repudiated the terms of the agreement such that it was responsible to pay the respondent damages in the amount of $816,436.37. The Ontario Court of Appeal found that the trial judge erred in her determination of damages, and referred the issue of damages back to the trial division for re-trial.
The Court of Appeal agreed that Fermar had a right to source its aggregate elsewhere and sued Winter’s Pit for breach of contract. The trial judge correctly held that as a result of Winter’s Pit’s repudiation of the agreement, Fermar was entitled to be restored to the position that it would have been in had Winter’s Pit met its obligation to supply all necessary aggregate. Fermar was required to find other sources of aggregate and incurred costs for equipment rental, cost of the aggregate, transportation, labour and other valid expenses. The trial judge awarded Fermar damages in the amount of $816,436.37, which she found to be the difference between what Fermar would have paid to Winter’s Pit and the amount it did pay to the third-party suppliers for the aggregate. In so doing, the trial judge relied on only two documents. The first was a document entitled, “Cost Summary for Alternate Sourcing of Granular “A” and Granular “B” by Supplier”, which purported to summarize approximately 1000 pages of invoices and other documents. The second was a document entitled, “Production Cost Analysis”, which compared the costs that Fermar says it would have paid to Winter’s Pit and the costs it paid to third parties for the aggregate. These documents were adduced at trial through E, Fermar’s project manager.
The trial judge noted that E was responsible for planning all assigned projects, preparing contracts, progress certificates, payments and completion of the projects. He oversaw the completion of this project and obtained alternate sources of aggregate. E testified that Fermar obtained the requisite Granular A from Brock Pit and Granular B, as well as some additional Granular A, from Walker’s Pit. E testified that he had to approve all invoices used in the analysis when they were originally received and did not review them again for purposes of preparing the summary.
E prepared the cost analysis using the costs that were prepared, analysed and collated by the Accounting Department of Fermar. He stated that he did not do an independent analysis himself, as the information came from a reliable source, namely Fermar’s Accounting Department.
It was the position of the defendant that these costs were not valid and should be rejected, given that they were not prepared by an accountant or an expert in the area, but rather by the Project Manager of Fermar, who was not an accountant. Further, it was the position of the defendant that the evidence given was opinion evidence and he had not been qualified as an expert. Finally, the defendant submits that the evidence was not “business record evidence” and no backup material was provided in support of the summaries. This was argued at the time of trial and it was the position of the plaintiff, and acknowledged by the defendant that approximately 1000 backup documents had been provided by the plaintiff as regards the cost summary but not produced at trial.
The trial judge found that the evidence adduced by the plaintiff pursuant to the testimony of E was not “opinion evidence”. He presented evidence in the form of a cost summary based on Fermar accounting information, including the invoices he had previously reviewed and approved for payment, on the basis of which approval, said invoices had been paid and that he had compiled with the assistance of the accounting department. “This was substantive evidence” according to the trial judge. Further, the trial judge found that “while it would have been useful to have the supporting documentation, I am not satisfied that this was necessary in the circumstances of this case. I find Mr. E’s evidence to be credible. He testified in a straightforward clear, uncontradicted manner.”
The court of appeal found that it was not possible on this record to calculate the amount of the appellant’s damages because the source documents were not part of the trial record, nor was there agreement on the quantum of damages at trial. Because it is not possible for this court to make the factual findings necessary to determine these issues on the existing trial record, the Court of Appeal returned these issues to a judge of the Superior Court to quantify the damages.
So what does all of this mean?
- Expert opinions may be introduced at trial to give an opinion as to damages if the damages calculation is complex, and involves factors upon which the expert has expertise. On the other hand, it is not necessarily the case that an expert opinion is required.
- An accountant or other professional may be collating information from source documents and introducing them in court. That does not make the witness an “expert”, such that they must meet the qualifications of an expert as possessing expertise beyond the scope of the ordinary citizen. Where the case involves the calculations that are relatively simple mathematics, no expert is required,[5] and the witness should not be qualified as an expert to testify regarding the calculations.
- Collated secondary/summary documents remain hearsay, such that the underlying source documents need to be produced, and proven at trial, before the secondary
[1] Cambie Surgeries Corporation v British Columbia (Attorney General), 2017 BCSC 861 (CanLII),
[2] Chippewas v Attorney General (Canada), 2016 ONSC 672 (CanLII),para 4
[3] [1999] O.J. No. 3401 (S.C.J.) at para. 5:
[4] 2020 ONCA 173 (CanLII), varying 2018 ONSC 5485.
[5] Graff v. Bennett, 1995 CanLII 4000 (SK CA)