The Plaintiff commenced an Action for fraudulent and negligent misrepresentation in relation to the value of shares her ex-husband held at the time of divorce proceedings. The Plaintiff claimed for 50% of the value of the shares, which was ultimately granted. The issue at Trial was whether the Defendant ex-husband knew about an impending share sale at the time of the divorce.

The Plaintiff argued that the Court should draw an adverse inference because the Defendant failed to call certain witnesses at the Trial. The Plaintiff ex-wife claimed these witnesses could shed light on whether the Defendant knew about the impending share sale.

In considering whether to draw an adverse inference by the absence of the witnesses, Chief Justice Moreau cited the four-part test under former Rule 296.1 established by former Chief Justice Wittmann in Howard v Sandau, 2008 ABQB 34 (CanLII), which required consideration of:

1. Does the witness have material evidence to give?

2. Is the witness the best source of the evidence?

3. Is the witness equally available to both parties? and

4. Is there a legitimate explanation for the witness’s failure to attend?

The Court noted that no notice had been served by the Defendant under Rule 8.15, and the Defendant therefore presumptively bore the risk of not calling these witnesses. However, the Court noted that one of the witnesses had filed an Affidavit which became an agreed exhibit at Trial, which neither party referred to for their case. The fact the witness had sworn an Affidavit entitled the Plaintiff the right to cross-examine him on it, which she did not do. Chief Justice Moreau found that the Plaintiff had failed to avail herself of certain mechanisms available to her in the discovery process to ascertain what the accounting firm knew and when.

As a result, Moreau C.J. declined to draw an adverse inference from the Defendant ex-husband not calling these witnesses. In the result, Moreau C.J. held that the Defendant was liable for negligent misrepresentation and the Plaintiff was entitled to 50% of the Defendant’s shares.