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Evidence – Hearsay

Posted on July 19, 2016 | Posted in Civil Litigation, Five Liners

Pfizer Canada Inc. v. Teva Canada Ltd. 2016 FCA

The plaintiff drug company had established liability. A trial was held to determine damages. The measure of damages was what would have occurred, but for the defendant’s conduct. The damages were to place the plaintiff in the position it would have been had the wrong not been committed. The plaintiff had to prove that it would have and could have ordered and supplied material. It bore the burden of doing so. In essence, the plaintiff had to prove that it would have been able to obtain a sufficient supply of the drugs and sell that supply. The major question in that regard was whether the plaintiff’s supplier was able and willing to supply the required quantity.

 

The plaintiff’s vice-president testified that the supplier was willing and able. He said that he had received positive oral representations from a site visit to the supplier and, by way of emails between his subordinates and the supplier, provided testimony of the supplier’s willingness and ability to supply. Nobody testified on behalf of the supplier. The makers of the emails did not testify Notwithstanding protestations from the defendant relating to the hearsay nature of the evidence, the trial judge allowed the evidence and found it to be reliable on the supply issue.

 

The Federal Court of Appeal set out rules for the admission of evidence and, in particular, the problem with hearsay evidence. The court did not like the trend towards flexibility (i.e. allow all relevant evidence to be admitted as admissible, subject to later assessment of weight). It held that the trial judge had to take a rigorous approach to admissibility, making that determination before all others, such as the weight to be given to admissible evidence.

 

Hearsay was defined as an oral or written statement made out of court by someone other than the person testifying at the proceedings, which the witness repeats or produces in court in an effort to prove that what was said or written is true. That was distinguished from the use of the hearsay statement solely to prove that the statement was made. As an example, a document from a supplier stating that the supplier would supply the material is still hearsay if it is tendered to show that the supplier would do so.

 

The Court therefore struck from evidence all of the emails that had not been proven as authentic (which the vice-president could not do because he did not receive or send them) and, in any case, could not be used for the truth of their contents if they were from the supplier. The court allowed the evidence of the vice-president’s first-hand knowledge as to what he saw on his visit.

 

The court did not use the Khan exception to the hearsay rule. It ruled that the hearsay evidence was not “necessary.” The plaintiff’s employees and the supplier’s employees could have testified. Further, the hearsay evidence was not reliable. The supplier had an incentive to say whatever had to be said to keep its customer, the plaintiff, pleased and give the impression that it could satisfy its customer’s needs, when, actually, it could not.

 

Since the trial judge had admitted the evidence and used it, regardless of the weight, the Court of Appeal set aside the trial judge’s award. However, rather than dismiss the claim, it referred the calculation of damages back to the trial judge to determine whether there was otherwise sufficient evidence to make an award in light of the decision of the Court of Appeal. That quantification had to be made on the basis of the evidence that had already been presented. No further oral evidence was to be allowed.

 

Jonathan Speigel

 

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.

 

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