COURT FILE NO.: 188/09
DATE: 20090723
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
DSLC CAPITAL CORP.
Gregory Zidlofsky, for the Plaintiff
Plaintiff
- and -
CREDIFINANCE SECURITIES LIMITED, DONABO INC., GEORGES BENARROCH, MARJORIE ANN GLOVER, and CREDIFINANCE CAPITAL CORP.
John Longo, for the Defendants
Defendants
Heard: June 10, 2009
Ellen Macdonald J.
REASONS FOR DECISION
[1] The Defendant, Credifinance Securities Limited (“Credifinance”) seeks leave to appeal the order of the Honourable Mr. Justice Cameron made on April 20, 2009. Justice Cameron ordered Credifinance to pay $310,500 into court pursuant to rule 45.02. Rule 45.02 states:
Where the right of a party to a specific fund is in question, the court may order the fund to be paid into court or otherwise secured on such terms as are just.
[2] The motion before Justice Cameron was heard on March 30, 31, and April 7, 2009. The motion sought to continue until trial the interim Mareva injunction granted ex parte to DSLC Capital Corp. (“DSLC”) by Justice Morawetz on February 6, 2009. The order of Justice Morawetz was modified by Justice Cameron on February 12, 2009, when he discontinued the injunction as against Marjorie Ann Glover, but continued it as against the remaining Defendants.
[3] Credifinance (the moving party) requests that this court grant leave to appeal from the order of Justice Cameron with costs. According to rule 62.02(4), leave to appeal to the Divisional Court shall not be granted unless:
(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or
(b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.
[4] In this motion, Credifinance submits that the requirements of both r. 62.02(4)(a) and (b), above, are met here. First, with respect to (4)(a), it submits that there are conflicting decisions on the matters raised in the proposed appeal, and that it is desirable that leave to appeal be granted, since litigants in Ontario would benefit from a pronouncement by a full panel of the Divisional Court as to the scope of rule 45.02 jurisdiction.
[5] Second, even if the requirements of (4)(a) are not met, Credifinance submits that the requirements of (4)(b) are met. There is reason to doubt the correctness of Justice Cameron’s finding that a specific fund ever existed. Further, even if there was a specific fund at one time, Justice Cameron ought to have found that it ceased to exist once it was commingled with other funds. These doubts are significant not only as they relate to this case, and not only as they relate to this parties. Rather, they are of such general importance to the development of law and the administration of justice, that leave to appeal should be granted.
[6] DSLC counters that there are no decisions that conflict with the order appealed from, and no reasons to doubt the correctness of this order. Rather, Justice Cameron correctly found that the $310,500 in question was a specific fund. Further, DSLC submits that the order is of significance only to the parties, and that there are no general issues of public importance raised by Credifinace in this motion for leave.
[7] It is common ground that for the court to grant an order under rule 45.02, the following requirements must be met: (a) the plaintiff must claim a right to a specific fund; (b) there must be a serious issue to be tried regarding the plaintiff’s claim to the fund; and (c) the balance of
convenience must favour granting the relief sought. This motion for leave concerns the first branch of this three-part test. Justice Cameron’s reasons with respect to this branch are detailed and comprehensive. I refer specifically to paras. 56 and 57 of his decision:
To the extent the funds have been commingled, they cannot be subject to R. 45.02. To the extent they have not been commingled, I see no reason why they cannot be subject to R. 45.02. They are the remaining integral part of the $407,500.
The plaintiff claims it is entitled to the $407,524 originally held in a GIC with National Bank of Canada. It was held in a GIC until October 27, 2008 and then was placed in its bank account and used, to the extent of some $43,000, to pay creditors’ expenses. It reached as low as $364,000 on December 31, 2008 and is now at $392,334.86 plus $1,606.60 (U.S.). Subject to examination, these expenses appear to be in the normal course of business with the possible exception of the $20,300 consulting fee. I hold that while there was some commingling of monies, $310,500 constitutes a specific fund to which the plaintiff lays claim. To the extent of $310,500 of the $407,524, there was no commingling of funds.
[8] I agree with Credifinance that a party seeking a rule 45.02 order must claim a specific fund, and that even where a specific fund is claimed, a rule 45.02 order may be rendered unavailable to the extent that the specific fund has been commingled with other funds. The jurisprudence is clear on these points.
[9] Upon a thorough review of the record before Justice Cameron and the record before this court, however, I see no good reason to doubt the findings of Justice Cameron that these requirements were met in this case. A specific fund was defined in Rotin v. Lechcier-Kimel, [1985] O.J. No. 466 (H.C.J.), as “a reasonably identifiable fund earmarked to the litigation in issue’’ (emphasis added). It was reasonable for Justice Cameron to find that the right of DSLC to a specific fund was in question, notwithstanding that that DSLC’s claim is sounded in damages. Further, it was reasonable for him to find that while this fund was no long traceable in its entirety, there remained $310,500 which were directly traceable to the original fund, and which had not been commingled. There is therefore no conflict between Justice Cameron’s order and the case law concerning Rule 45.02, nor is there any other good reason to doubt the former’s correctness.
[10] Given my finding that Justice Cameron’s order is consistent with the case law, and that there is no other good reason to doubt its correctness, it is my opinion that an appeal is neither desirable, nor necessary to ensure the resolution of matters of public importance.
[11] For these reasons, this application for leave to appeal is dismissed.
[12] During oral submissions, counsel agreed that there would be no costs awarded if Credifinance proved successful on this motion, and that DSLC would receive $3,000 in the event this motion was dismissed. Accordingly, costs are awarded to DSLC in the amount of $3,000.
Ellen Macdonald J.
Released: July 23, 2009
COURT FILE NO.: 188/09
DATE: 20090723
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
DSLC CAPITAL CORP.
Plaintiffs
- and -
CREDIFINANCE SECURITIES LIMITED, DONABO INC., GEORGES BENARROCH, MARJORIE ANN GLOVER, and CREDIFINANCE CAPITAL CORP.
Defendants
REASONS FOR DECISION
Ellen Macdonald J.