On May 10, 2019, following a trial that was conducted over the course of a year, the British Columbia Supreme Court released a fascinating decision concerning the validity of two contracts of purchase and sale relating to commercial properties in Burnaby and Maple Ridge.

The case (Youyi Group Holdings (Canada) Ltd. v. Brentwood Lanes Canada Ltd. 2019 BCSC 739) is interesting and covers several important legal concepts, but at 133 pages, the judgment makes for a long afternoon of reviewing a detailed and complex factual scenario. Instead, we can look at one aspect of the case that could affect licensees when they’re called to give evidence during legal proceedings.

It shouldn’t come as any surprise that parties to lawsuits often have decidedly different views on the matters that brought them into conflict. Although they may sometimes agree on facts but disagree on the legal import of those facts, it’s usually the case that the parties take different views on what occurred between them.

The parties may disagree as to what was discussed between the licensee and client on matters such as the price to be offered, the subject clauses to include, or what needs to be disclosed on a property disclosure statement. Whatever the nature of the factual dispute, when evidence is given in trial and the parties have opposing views of what was said or done, the judge needs to find a way to either reconcile the versions or accept one version of events as correct.

In the above-noted case, the court was faced with dozens of days of evidence, during which many witnesses gave completely different versions of the same events. The judge wrote five pages commenting on the credibility issues with which the court was faced, and provided guidance on how the court goes about generally assessing the credibility of witnesses, which I’ve quoted below.

The assessment of a witness’s credibility is the process by which the court attempts to assess just how trustworthy the witness’s evidence is. As noted by the court,

“Credibility involves an assessment of the trustworthiness of a witness’ testimony based upon the sincerity of a witness and the accuracy of the evidence that the witness provides. In some cases, it becomes apparent that a witness has made a conscious decision not to tell the truth. In other cases, a witness may be sincere, but their evidence may not be accurate for a number of reasons.”

In other words, a witness whose evidence is not accepted in court is not always lying. The court may find the evidence given by the witness is simply not reliable, perhaps given the passage of time and the person’s ability to recall events from long ago.

It shouldn’t be surprising that you, as a real estate licensee, may not be able to recall exact conversations or details relating to a transaction from years earlier. In general, the limitation period governing lawsuits against real estate licensees is two years from the date upon which the plaintiff knew or ought to have known that they had a claim against the licensee.

For many of us, the details of conversations held just a few weeks ago can be difficult to remember, let alone those from two years ago. In cases where a licensee has not maintained detailed records of communication, the reliability of their evidence at trial may be suspect.

It’s often difficult for the court to assess the reliability of a witness’s evidence at trial, particularly where the parties give diametrically opposed sworn evidence. This court noted that it considered “the witness’ ability and opportunity to observe events, the firmness of their memory, their objectivity, whether the witness’ evidence harmonizes with independent evidence that has been accepted, whether the witness changes his pre-trial evidence by the time of trial or their testimony at trial during direct and cross-examination, whether the witness’ testimony seems implausible, and the demeanor of a witness generally.”

The court considers testimony on its own, in the context of the facts of the entire case, and for consistency with other testimony and documentary evidence. The judgement in this case noted that the court then determines “which version of events is the most consistent with the preponderance of probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.”

Of course, there are cases where witnesses are found to be lying in court. Sometimes, the false evidence won’t be directly related to the matters in the lawsuit; even small lies on tangential or minor aspects of a case can ruin a witness’ credibility. It leads the court to ask, if someone is willing to lie under oath on one aspect of their evidence, couldn’t they be lying in other parts as well? 

It should also be noted that, in the context of Supreme Court litigation, a licensee who is a witness is likely to be subject to questioning under oath two separate times. First, you may be examined for discovery, a pre-trial process where the opposing side is able to cross-examine you on matters relating to the litigation. If the matter proceeds to trial, you can be expected to give evidence again, under oath, in open court.

Lawyers often attempt to show inconsistencies between a witness’s evidence at an examination for discovery and at trial. Sometimes the inconsistencies can be explained, but a fundamental change of evidence can lead a court to conclude that the witness must have lied under oath at some point. This can be devastating to the defence of a claim.

Risk management for licensees

Consistency of oral evidence with documentary evidence can be an important part of the court’s assessment of a licensee’s reliability. This speaks to the need to keep good notes of all conversations with clients, and ensure that instructions and advice are confirmed in writing. Where a licensee’s evidence is consistent with their documentation, it will go a long way in convincing a court that their evidence is reliable.

It’s also important that a licensee is forthright and honest with their E&O-appointed legal counsel. In circumstances where mistakes have been made, it’s vital that they be identified early.

Hiding facts or falsifying evidence not only jeopardizes a licensee’s insurance coverage, and certainly may harm the prospects of a successful defence, but can lead to other consequences if discovered at trial, including potential sanctions from the court.