Blizzard Uranium Corp. v. Nathanson, Schachter & Thompson LLP

2024 BCSC 2163 Blizzard Uranium Corp. v. Nathanson, Schachter & Thompson LLP

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Blizzard Uranium Corp. v. Nathanson, Schachter & Thompson LLP, 2024 BCSC 2163 Date: 20241016 Docket: S186535 Registry: Vancouver Between: Blizzard Uranium Corp., Eros Resources Corp. and Blizzard Finance Corp. Plaintiffs And Nathanson, Schachter & Thompson LLP and Murray Clemens Defendants Corrected Judgment: The front cover page of the judgment was corrected on February 28, 2025 Before: The Honourable Justice Branch Oral Ruling re Admissibility of Stock Price Evidence Counsel for the Plaintiffs: H. Poulus, K.C. J. Ensom T. Latowsky K. Graham N. Hasegawa, Articled Student Counsel for the Defendants: C. Dennis, K.C. M. Ferreira Place and Date of Trial: Vancouver, B.C. October 16, 2024 Place and Date of Judgment: Vancouver, B.C. October 16, 2024 [1] THE COURT: During the testimony of the plaintiffs' key witness, Mr. Beruschi, the plaintiffs sought to admit evidence of the stock price performance of a public company known as "Paramount". This evidence is said to be relevant to the plaintiffs' claim for loss of use of the funds arising from a delayed settlement negotiated by the defendants. The terms of this settlement, and the timing of the availability of the funds, are a core subject of this litigation. [2] More specifically, the plaintiffs indicate that they intend to argue that if the settlement funds had been delivered at an

earlier date, there was an agreement between the main shareholders of the recipient firm to invest a large portion of those funds into Paramount, an oil and gas company. The oral evidence of such an agreement is already before the Court through Mr. Beruschi's testimony and was not the subject of an objection. Where the evidentiary issue arises is in relation to documentary evidence the plaintiff wishes to introduce regarding the historical share price of Paramount. [3] Initially, the plaintiffs signalled an intention to put this evidence before the Court by way of entering into evidence as an exhibit a printout of the Paramount stock price, which purports to come from the "Yahoo Finance" website. [4] When the time came to argue the point more fully, the plaintiffs also proposed that the evidence of the share price for two relevant dates could also be admitted through the oral testimony of Mr. Beruschi pursuant to Rule 12-5(71). Specifically, the two facts the plaintiffs intended to bring in through that route were Paramount's stock market price on October 30, 2011 (when the plaintiffs say the settlement funds should have been available), and June 1, 2014, the day after the settlement funds were actually delivered. The plaintiffs argue that this evidence could be admitted under Rule 12-5(71), notwithstanding that it would otherwise be hearsay. [5] Alternatively, the plaintiffs

argue that the Court is entitled to simply take note of Paramount's stock price as a matter of judicial notice. [6] The parties agreed that the Court should first determine whether it was possible to resolve the admissibility issue without considering the issue of relevance. The parties indicated that more time would be needed for argument if relevance itself was squarely in issue. [7] I will begin by addressing the admissibility of the proposed document from the "Yahoo Finance" website, even though the plaintiffs laterally suggested that this should be treated as their first alternative basis for admission of the evidence. [8] I find that the document itself should not be admitted. In my view, the admissibility issue can be resolved based solely on the application of Rule 7-1(21), which reads: Unless the court otherwise orders, if a party fails to make discovery of or produce for inspection or copying a document as required by this rule, the party may not put the document in evidence in the proceeding or use it for the purpose of examination or cross‑examination. [9] The purpose of this rule is to prevent trial by ambush: Cambie Surgeries Corporation v. British Columbia (Attorney General), 2019 BCSC 1221 at para.

13. The burden is on the plaintiffs to establish that the court should exercise its discretion to allow use of the document notwithstanding the failure to produce it earlier in the proceeding. See Cook v. Kang, 2020 BCSC 575 at para. 27: [27] The case law under what is now Rule 7-1(21) directs the court to consider a number of factors deciding how to exercise this discretion. These factors can be summarized as follows: (a) whether the opposing party will be prejudiced by the proposed use of the document; (b) whether a reasonable explanation has been provided for the failure to properly disclose the document; (c) whether refusing permission to use the document would be an impediment to determining the merits of the case; and (d) whether, in the circumstances of the case, the ends of justice require that permission be given to use the document despite the failure to properly disclose it. [28] Some of the factors may "tilt in favour of permitting use of the document", while others may "tilt" against it. The court is required to weigh and balance all of the relevant factors in deciding whether to permit use of a document at trial despite the failure to make proper disclosure. [Citations omitted.] [10] The stock price chart was not produced before the trial and was not listed in the plaintiffs' list of documents. Hence, the onus is on the plaintiffs to establish that the Court

should exercise its discretion to "otherwise order". I find that the plaintiffs have not established a sufficient basis to justify such an exercise of the Court's discretion. [11] I rely on the following factors: 1. For the purposes of the present analysis, I will assume that the document is relevant and could assist the plaintiffs in establishing their claim for damages. That said, I find that this factor is overwhelmed by the following additional factors.

2. The document was clearly available to the plaintiffs for years before the trial.

3. The plaintiffs offered no explanation why the document could not have been produced before trial.

4. There would be prejudice to the defendants if I were to allow the document to be admitted at this late date. Specifically: a) the defendants were not in a position to ask questions about the document on discovery; b) the defendants would not have adequate time to obtain expert assistance about topics arising from the document, such as whether the stock was so thinly traded that there may not have been an available market for such a large purchase volume of Paramount stock had the settlement funds been distributed at an earlier date. Further, it is possible that the order itself could have inflated the price and minimized the alleged losses; c) the change in the stock price between the two dates suggests that the loss the plaintiffs may be seeking under this theory could be more than $10 million, a figure that seems inconsistent with the description of more constrained losses outlined in the plaintiffs' opening. The massive size of the claim underpinned by this (new) theory suggests the defendants should have been given every reasonable opportunity to obtain evidence that could undercut the theory based on proportionality concerns; and d) the defendants are already hamstrung in rebutting this theory as a result of the fact that the counterparty to the alleged agreement, Mr. Ron Netolitzky, is no longer well enough to give evidence at trial: see Cook, para. 47.

5. The exclusion of the document will not prevent the Court from considering and determining the plaintiffs' damages arising from the delay of the receipt of settlement funds. There are a variety of theories that will remain open to the plaintiffs even if the document itself is not admitted.

6. In terms of the ends of justice, parties should be encouraged to think about their damages case as early as possible and to produce the documentation supporting that case as early as possible. It is not enough to simply say that the defendants could have probed the plaintiffs' possible damages theories in greater depth on discovery or through demands for particulars. As noted at the outset, our Rules of Court are designed to prevent such a trial by ambush to the extent possible. [12] As noted, the plaintiffs also seek to get the basic information regarding Paramount's stock price into evidence through the operation of Rule 12-5(71). Again, however, I find that this rule is an insufficient basis to justify admission. [13] In terms of the evidence coming in through Mr. Beruschi, such evidence would be hearsay. There is no evidence that Mr. Beruschi had direct firsthand knowledge of Paramount's stock price. He is not a principal, employee, officer, or director of Paramount or the relevant stock exchange on which the security was listed. In terms of the principled approach to the hearsay rule, I do not have sufficient evidence to find that the "Yahoo Finance" website is a reliable recorder of public‑sector stock quotes: see Peterson v. Ram, 2008 BCSC 252 at paras. 50 and 57. In terms of necessity, as I have found above, there were other ways to get this information before the

Court had greater and earlier care been taken before trial. For example, it may have been possible to (1) serve a notice to admit, (2) call a witness from Paramount, (3) call a witness from the stock exchange, or (4) secure an expert report opining on Paramount's stock price and the plaintiffs' ability to obtain the benefit of the prices quoted: Peterson at para. 58 and Sen-Laurenz v. Napoli, 2019 BCSC 1379 at paras. 170-171. Simply because the information is coming forward late does not make short-circuiting the rules of evidence "necessary". [14] Moving to the next alternative the language of Rule 12-5(71) provides as follows: At or before trial, the court may order that evidence of a fact or document may be presented at the trial in any manner, including: (a) by statement on oath of the information and belief; (b) by documents or entries in books; (c) by copies of documents or entries in books; or (d) by a specified publication that contains a statement of fact. [15] The first point to note about this rule is that its focus is on simplifying how evidence may be presented: Abermin Corp. v. Granges Exploration, 1990 CanLII 2127 (BC CA), 48 B.C.L.R. (2d) 125 at para. 13 (considering the prior version of the rule). Specifically, its primary usage has been to allow the court to receive an affidavit without necessarily requiring that the affiant be available for cross-examination: Arsenovski v. Bodin, 2015 BCSC 1964 at para.

42. It is not intended to otherwise short-circuit the rules of evidence: Allen v. Richardson Greenshields of Canada Ltd., 18 B.C.L.R. (2d) 360, 1987 CarswellBC 1568 at para.

9. Challenges to authenticity are still possible, for example: Allen at para. 9. [16] The second point is that the use of this Rule is discretionary. It provides that a court may use it to admit facts at trial. [17] The plaintiffs accepted that the Court was entitled to consider necessity and reliability as part of its analysis of the availability of the Rule, but suggested that the Court should not consider the question of prejudice. I find that potential prejudice to the other side should be considered. Trial fairness must always be a concern of the court when exercising any discretion on evidentiary issues. [18] The third point is that a court's approach to the exercise of its discretion under this Rule should be exercised cautiously and restrictively: Abermin Corp. at para. 10; Frederick M. Irvine et al, British Columbia Practice, 3rd ed (Toronto: LexisNexis Canada Inc.) (loose-leaf updated 2024, release 101) at Rule 12-5(71). This is particularly so in light of the fact that the rules of evidence now allow for the potential admission of hearsay evidence even without invoking the rule through the application of the principles of necessity and reliability: G. Peter Fraser, John W. Horn & Susan A. Griffin, The Conduct of Civil Litigation in British Columbia, 2nd ed (Toronto: LexisNexis Canada Inc., 2007) (loose-leaf updated 2024, release 47) at 25.19. [19] I find that the

same concerns discussed above also suggest that the Court should not exercise its discretion under this Rule: a) the plaintiffs have no good excuse as to why this issue was not raised earlier as part of a more formal pre-trial application; British Columbia Practice at Rule 12-5(71); b) the defendants may suffer prejudice from their inability to properly prepare for such evidence; and c) from the questioning, it is quite clear that Mr. Beruschi is unlikely to have any direct knowledge of Paramount's share price on the particular days. He would require aid from a document or some other source. [20] To the extent that the plaintiff argued that the comments of Justice Southin in Canada Deposit Insurance Corp. v. Commonwealth Trust Co. (Liquidator of), 83 B.C.L.R. (2d) 49, 1993 CanLII 1230 (BC CA) at para. 34, suggests that such material may be admitted: a) the comment made therein regarding the use of the Rule for stock prices was in obiter, and b) I do not read her discussion to be depriving the court of its discretion to consider whether evidence of an individual stock price should be admitted, considering factors such as those which I have reviewed above. [21] The last potential avenue for admission of this evidence proposed by the plaintiffs is the concept of judicial notice. If the Court were to find that this avenue was available, then there would be no need to submit the

document, or to call evidence from Mr. Beruschi. Rather, the plaintiff would be entitled to simply rely on the facts in final argument. [22] I find that judicial notice cannot be applied in this situation. The test for when a court can take judicial notice was described by the Supreme Court of Canada in R. v. Find, [2001] 1 S.C.R. 863, 2001 SCC 32 (CanLII) at para. 48: ... Judicial notice dispenses with the need for proof of facts that are clearly uncontroversial or beyond reasonable dispute. Facts judicially noticed are not proven by evidence under oath, nor are they tested by cross‑examination. Therefore, the threshold for a judicial notice is strict: a court may properly take judicial notice of facts that are either: (1) so notorious or generally accepted as to not be the subject of debate among reasonable persons; or (2) capable of immediate and accurate demonstration by resort to readily accessible sources of indisputable accuracy [23] In my view, the price of Paramount stock is not notorious in the manner contemplated by the SCC's expression of the test. I am confident in saying that most judges have no idea what a particular stock price is at on a particular day, let alone what the price of such a stock was going back as far in history as is proposed here. [24] In terms of the second route identified in Find allowing the court to take judicial notice, I cannot find that

the stock price is capable of immediate and accurate demonstration by resorting to readily accessible sources of indisputable accuracy. As suggested earlier, I simply do not have enough information to say whether "Yahoo Finance" should be treated as a source of "indisputable accuracy". [25] There is authority supporting the view that courts can potentially take judicial notice of general macroeconomic stock market trends, but the performance of the major indices is far more notorious than the price of a particular stock, which may or may not form part of a broader index: Crerar v. Crerar Estate, 61 B.C.L.R. (3d) 55, 1998 CanLII 5375 (BC CA) at para. 29. [26] In Dykeman v. Dykeman, 256 N.B.R. (2d) 207, 2002 NBQB 395 (CanLII) at para. 119, the court took judicial notice of the collapse of the Nortel share price held by one of the parties to a family law case, but Nortel was a far larger component of the Canadian stock market during the relevant period, and its performance was a matter of general media reporting and discussion. [27] As such, I decline to allow the evidence to be admitted through the operation of judicial notice. "The Honourable Mr. Justice Branch"