Court File and Parties

Citation: Mullins v. Morgan, 2010 ONSC 5640 Divisional Court File No.: 28/09 Date: 2010-10-13

Ontario Superior Court of Justice Divisional Court

Between:

Michael Mullins Appellant (Moving Party/Defendant)

– and –

Henry D. Morgan Respondent (Responding Party/Plaintiff)

Counsel: Glen Perinot, for the moving party, Michael Mullins In person

Heard: September 13, 2010

Reasons for Decision

Molloy J.:

A. The Motion

[1] The appellant Michael Mullins has appealed from a Small Claims Court decision granting judgment to Earl Downham against Mr. Mullins and dismissing claims Mr. Mullins had made against Mr. Downham. That appeal is scheduled to be heard in the Divisional Court on October 15, 2010. In the meantime, Mr. Mullins has brought this motion to set aside an Order to Continue signed by the Registrar, which permitted this proceeding to be continued in the name of Henry D. Morgan instead of the original respondent, Earl Downham. The Registrar’s Order is based on a document, in writing and under seal, which purports to be an assignment from Earl Downham to Henry Morgan of the judgment Mr. Downham obtained in the Small Claims Court against Mr. Mullins. In addition to setting aside the Order to Continue, Mr. Mullins seeks an order setting aside the underlying assignment of the judgment.

Central to Mr. Mullins’ position on this motion is the fact that Mr. Morgan is a disbarred lawyer. Apparently, Mr. Morgan acted as an “advocate” for Mr. Downham in the Small Claims Court trial, with the permission of the trial judge. Mr. Mullins contends that the assignment of judgment is a sham put forward by Mr. Morgan to enable him to represent Mr. Downham in the Divisional Court, effectively acting as his legal counsel in contravention of the Rules and the Solicitors Act[^1].

B. Background

[2] Although it is not necessary to review in detail all of the dealings between the parties, a brief review of some of the history between them is important for context.

[3] In January 2006, Earl Downham and Michael Mullins entered into some form of agreement with respect to a trailer located on a lot in a recreational trailer park. Pursuant to the agreement, Mr. Downham was to pay Mr. Mullins $9000.00. Mr. Downham paid Mr. Mullins $7000.00 in January, but the balance of the contract price (which was to be paid by monthly installments over the course of the following year) was never paid. Mr. Downham alleged that Mr. Mullins had agreed to sell him both the trailer and the lot, but that he failed to give him possession of the trailer and in fact did not own title to either the trailer or the lot. Mr. Mullins sued Mr. Downham in Small Claims Court for the balance owing and for fees he alleged Mr. Downham was required to, but did not, pay. Mr. Downham sued for the return of his $7000 payment. There were also other claims advanced by each of them against the other, and considerable acrimony between them.

[4] Eventually, on September 17, 2008, a number of the actions were tried together before deputy Judge J. Armstrong. At this time, Mr. Mullins was represented by a paralegal, Mr. Mitchell, and Mr. Downham was represented by Henry Morgan. There had been a motion with respect to whether it was appropriate for Mr. Morgan to act in this capacity in light of the fact that he was a disbarred lawyer and a ruling was made that he could continue to represent Mr. Downham in the Small Claims Court matters.

[5] At the conclusion of the trial, the trial judge dismissed all of the claims made by Mr. Mullins and granted judgment against Mr. Mullins in favour of Mr. Downham in the amount of $7000.00, plus $925 costs, plus interest.

[6] Mr. Mullins appealed to the Divisional Court. He initially missed the time for filing the notice of appeal, but sought and obtained an order extending the time to February 27, 2009. He then served Mr. Downham with the notice of appeal on February 26, 2009.

[7] It is apparent that initially Mr. Morgan was assisting Mr. Downham in this Divisional Court appeal. There were a number of telephone calls and letters written by Mr. Morgan to the Court staff on Mr. Downham’s behalf. On April 27, 2009, the Registrar of the Divisional Court wrote to Mr. Downham, enclosing a three page letter dated April 23, 2009 that had been sent to the Court by Mr. Morgan. The Registrar advised Mr. Downham that an agent could not represent him in the Divisional Court without the Order of a judge and told him that his options were to: i) act in person; ii) retain a solicitor to represent him; or iii) bring a motion for leave to be represented by an agent.

[8] No such motion was brought. However, a notice of motion purporting to be brought by Mr. Downham in person was served on Mr. Mullins in late May 2009, returnable on June 11, 2009, seeking to have the appeal dismissed for delay or alternatively for security for costs or an order lifting the automatic stay of the Small Claims Court judgment. The motion material was clearly not drafted by Mr. Downham. On the return of the motion on June 11, 2009, Mr. Morgan appeared, as did counsel for Mr. Mullins. Mr. Downham did not. The motion was adjourned to June 26, 2009.

[9] That same day, June 11, 2009, Mr. Morgan requisitioned the Order to Continue. At the time of his requisition, Mr. Morgan filed a written document dated June 5, 2009, executed by Mr. Downham, which states that, for the sum of $2.00 “together with other good and valuable consideration,” Mr. Downham irrevocably assigned to Mr. Morgan the judgment against Mr. Mullins issued in the Small Claims Court and all moneys recoverable thereunder. The Registrar issued the Order to Continue on June 12, 2009. Before doing so, the Registrar spoke to Mr. Downham by phone and confirmed with him that he had in fact sold his rights under the judgment to Mr. Morgan. Thereafter, the appeal proceeded with Mr. Morgan as the named respondent in place of Mr. Mullins.

[10] Mr. Morgan’s motion to dismiss for delay was twice adjourned and ultimately resolved by Order of Jennings J. on September 17, 2009. Based upon the undertaking of Mr. Mullins’ counsel to perfect the appeal within seven days, the hearing of the appeal was expedited and the motion was otherwise dismissed, with costs to Mr. Morgan in the cause.

[11] Mr. Mullins then brought this motion to set aside the Order to Continue and the assignment of judgment upon which it is based. As the motion was returnable on September 13, 2010 and the appeal is scheduled to be heard on October 15, an order was made by Swinton J. on July 12, 2010 imposing a timetable on the parties. Any further affidavit from the appellant was to be delivered by July 23 and from the respondent by July 30; cross-examinations were to proceed in Toronto on August 16, 2010; the appellant’s motion factum was to be served by August 27 and the respondent’s by September 7. Although the appeal was scheduled for October 15, Swinton J. left it for the motion judge to determine whether that date would continue to be feasible.

[12] Although some of these steps were a day or two late, for the most part the parties have complied with this schedule and there was no prejudice to either party as a result of any delay. The only significant deviation was the failure of Mr. Downham to attend for cross-examination, which I will deal with in more particularity below.

C. Position of the Parties

[13] Mr. Mullins’ challenge to the Order to Continue is two-fold. First, he argues that the assignment is champertous and therefore invalid. Second, he alleges that the sole purpose of the assignment is to circumvent the rules prohibitting Mr. Morgan from appearing as agent for Mr. Downham in the Divisional Court and is therefore an abuse of process.

[14] Mr. Morgan submits that this is a legitimate transfer of interest from Mr. Downham to him, for valuable consideration, which he alleges was $6500. He argues that the agreement is not champertous and that there is no abuse of process.

D. Evidence on the Motion

Disputed Materials

[15] Each of the parties took issue with some of the material filed by the other.

[16] Mr. Morgan objects to the use of the word “agent” to describe his role in the proceedings before the Small Claims Court. He also objects to the right of Mr. Mullins to put before the Court the written reasons of the Law Society Discipline Committee for disbarring him, although he acknowledges that he was in fact disbarred in 1998. Further, Mr. Morgan argues that all of the references in Mr. Mullins’ affidavit as to what was told to him by his lawyer about a conversation he had with Mr. Morgan in court on June 11, 2006 should be struck out as hearsay. Finally, he seeks to strike those portions of a second affidavit sworn by Mr. Mullins which are based on information he received from Wade Clow and also from an employee of the Law Society, also on the grounds of hearsay.

[17] Counsel for Mr. Mullins objected to Mr. Morgan’s motion to strike material as having been served out of time. He also argues that the affidavit of Earl Downham filed by Mr. Morgan should be disregarded in its entirety because Mr. Downham failed to attend for cross-examination. Further, he objects to a supplementary affidavit sworn by Mr. Morgan dealing with the evidence of Wade Clow, particularly various pieces of information as to Mr. Clow’s general character.

Mullins’ Evidence re Information from Kraemer

[18] Mr. Mullins states in his affidavit that on June 11, 2009, Mr. Kraemer (his counsel at the time) attended in Divisional Court on his behalf with respect to Mr. Downham’s motion to dismiss for delay. Mr. Mullins then states that Mr. Kraemer told Mr. Morgan on that occasion that he could not represent Mr. Downham because he was not a lawyer and that Mr. Morgan replied that he would have the judgment assigned to him for the purposes of the appeal. Mr. Mullins relies on this conversation to show that Mr. Morgan’s motivation in taking the assignment was to circumvent the objection raised by Mr. Kraemer on June 11, 2009, and not for any legitimate purpose.

[19] Clearly, this is hearsay. It is tendered in support of an allegation of very serious conduct. No explanation is provided as to why Mr. Kraemer could not swear an affidavit himself. The effect of putting in Mr. Kraemer’s evidence through Mr. Mullins’ affidavit is to insulate it from cross-examination, which is particularly problematic in light of the seriousness of the allegations. Further, there is good reason to doubt that the details of this conversation are accurately recalled or recounted by Mr. Mullins. It is apparent from other material filed, that the assignment of judgment had already been executed prior to June 11, 2009. For example, there is a reference to it in an affidavit sworn by Mr. Morgan on June 8, 2009. It is therefore unlikely that Mr. Morgan would have said on June 11 that he was going to have the judgment assigned to him, as he had already done so.

[20] I am therefore of the view that the evidence with respect to what Mr. Kraemer told Mr. Mullins about that conversation should not be admissible through Mr. Mullins, or at the very least, I should pay no attention to it as it is untested by cross-examination, likely inaccurate, and inherently unreliable.

Evidence re Mr. Clow

[21] Mr. Mullins states in his affidavit that in early 2010 he received a telephone call from his friend Wade Clow, in the course of which Mr. Clow told him he had been at a social get-together in early 2010 when he heard Mr. Morgan and Mr. Downham telling others that they had “pulled a fast one” on Mr. Mullins and his lawyer by assigning the judgment so that Mr. Morgan could act in the Divisional Court appeal. He further states that he has been unable to reach Mr. Clow to have him provide an affidavit for this motion.

[22] The evidence provided by Mr. Mullins about this social get-together is vehemently denied by Mr. Morgan. He denies having said anything of the nature purportedly heard by Mr. Clow. According to Mr. Morgan, he has never in his life been to the trailer park where the get-together is alleged to have occurred and is not even sure where it is exactly. Mr. Morgan points out that he knows what Mr. Clow looks like from having seen him in the company of Mr. Mullins at the Small Claims Court and knows him to be a close associate of Mr. Mullins. He points to the improbability that he would say anything of the nature suggested by Mr. Mullins while this motion was outstanding.

[23] Given the directly contradictory affidavit from Mr. Morgan, and obvious logical difficulties in accepting that this conversation occurred as reported, it is unsafe to place any reliance on the hearsay evidence with respect to what Mr. Clow may have heard. There is no way to test it through cross-examination.

[24] In coming to that conclusion, I have not taken into account any of Mr. Morgan’s allegations about what Mr. Downham and Mr. Hurst told him, nor any of the information he claims to have acquired on the Internet with respect to Mr. Clow’s character.

Mullins’ Evidence re Law Society Investigation

[25] Whether there is, or is not, a current investigation by the Law Society involving Mr. Morgan is wholly irrelevant to anything I have to decide. There has been no determination of wrongdoing, even if there is an investigation. I have therefore disregarded Mr. Mullins’ evidence as to what he was told by the Law Society and Mr. Morgan’s evidence that he was told something different by the Law Society.

References to Mr. Morgan as Agent

[26] I see no difficulty with the appellant referring to Mr. Morgan appearing as “agent” for Mr. Downham in the Small Claims Court. Mr. Morgan clearly assisted Mr. Downham at the trial, in the same manner as an agent, paralegal or lawyer would have. Whether his assistance is labelled as being provided by an “agent” (as contended by Mr. Mullins) or “advocate” (as contended by Mr. Morgan) is irrelevant to the issues before me.

[27] Mr. Morgan acknowledged that he did not know Mr. Downham before he met him at the Small Claims Court and that he offered to assist Mr. Downham with his claim because he appeared to need help. He says that thereafter he became a “friend” of Mr. Downham. Again, I see no relevance to whether these two gentlemen were truly friends or not. Mr. Morgan claims that he was not paid anything to assist Mr. Downham at the Small Claims Court and there is no evidence to the contrary.

The Reasons for the 1998 Law Society Decision

[28] I have not taken into account the reasons given by the Law Society for disbarring Mr. Morgan. I do not need to. The relevant point is that Mr. Morgan was in fact disbarred and is not permitted to appear in the Divisional Court on behalf of anyone but himself. The issue is whether he is in fact appearing for himself, or whether the assignment is a sham designed to enable him to appear on behalf of Mr. Downham to argue this appeal. The reasons for the steps taken by the Law Society in 1998 do not assist in that inquiry.

Affidavit of Downham

[29] In addition to his own affidavit, Mr. Morgan filed an affidavit sworn by Earl Downham on October 8, 2009. Pursuant to the Order of Swinton J., counsel for Mr. Mullins was entitled to cross-examine on that affidavit on August 16, 2010. Counsel for Mr. Mullins mailed to Mr. Morgan a notice of appointment for the cross-examination of Mr. Downham, which Mr. Morgan indicated was received by him on August 13. Mr. Downham did not attend for cross-examination and a certificate of non-attendance was obtained.

[30] Mr. Perinot, for Mr. Mullins, submits that I should place no weight on Mr. Downham’s affidavit in light of his failure to attend as required for cross-examination. Mr. Morgan submits that the appointment for cross-examination was not served in accordance with the Rules. I believe Mr. Morgan is correct in that assertion. Rule 34.04(3)(b) provides that where a person is to be cross-examined on an affidavit filed by a party who is acting in person, the person to be cross-examined must be personally served. Service on Mr. Morgan by mail would only be valid if Mr. Morgan was in fact a lawyer representing a party, which he is not.

[31] When this issue was raised in oral argument, Mr. Morgan advised that he had tried to reach Mr. Downham when he received the Notice, but was unsuccessful. However, he did not advise Mr. Perinot of any problem contacting Mr. Downham, nor did he advise Mr. Perinot that he was taking the position that service was invalid. Further, Mr. Morgan knew well in advance that the cross-examinations were to proceed in Toronto on August 16, 2010. While I accept that Mr. Morgan did not know the exact location of the cross-examination until August 13, I consider it to be incumbent upon him to have advised Mr. Downham to make himself available for that date. It is Mr. Morgan who seeks to rely on the affidavit, and while he was not responsible for the improper service, I take a dim view of his seizing on this irregularity to insulate Mr. Downham from cross-examination.

[32] I will not strike the affidavit. It was validly filed and there was no valid service of an appointment to cross-examine on it. However, I am entitled to, and do, take into account the lack of cross-examination, and the lack of cooperation from Mr. Morgan to facilitate cross-examination. Accordingly, I place very little weight on the statements made by Mr. Downham in his affidavit. I will, however, consider the “hard evidence” provided at Exhibit D to the affidavit, being Mr. Downham’s banking records for the months from April to September 2009, which I am satisfied are authentic.

E. Analysis

Champerty and Mainenance

[33] Mr. Perinot, for Mr. Mullins, argues that the assignment of the judgment in this case constitutes champerty and maintenance and is unenforceable because Mr. Morgan had no financial interest in the cause of action prior to the assignment.

[34] For well over a century, champerty has been forbidden in Ontario by An Act respecting Champerty[^2] which states:

(1) Champertors be they that move pleas and suits, or cause to be moved, either by their own procurement, or by others, and sue them at their proper costs, for to have part of the land in variamce, or part of the gains.

(2) All champertous agreements are forbidden, and invalid.

[35] The definition of a “champertor” as set out in s. 1 of that legislation must be applied with care. The language is archaic and can be traced directly to a statute from 1305.[^3] The Ontario Court of Appeal has held that this language, when viewed in context, applies only to conduct that is meant “to stir up or excite” for an improper motive.[^4] The Court interpreted the statute in a manner consistent with the common law approach to champerty and maintenance. Hence, maintenance is defined as being directed against those who, for an improper motive, provide assistance to a party to the litigation so that the suit can be maintained. Champerty is defined as “an egregious form of maintenance in which there is the added element that the maintainer shares in the profits of the litigation.” Most importantly, the Court held that for champerty to exist there must be some “officious intermeddling, a stirring up of strife, or other improper motive.”[^5]

[36] In this case, it is clear there is no stirring up of litigation by Mr. Morgan. Mr. Mullins sued Mr. Downham, and Mr. Downham asserted a counterclaim against Mr. Mullins, both without any involvement of Mr. Morgan. Those claims were underway before Mr. Morgan and Mr. Downham even met. Mr. Downham obtained a judgment and Mr. Mullins appealed. Mr. Downham was a respondent in the Divisional Court proceedings. Taking an assignment of Mr. Downham’s position cannot possibly be said to be “stirring up” litigation; the litigation already existed well before the assignment.

[37] Mr. Perinot relies upon Pelligrini v. 854970 Ontario Ltd.[^6] to support his argument that an assignment of a cause of action is invalid as champertous unless the person acquiring the interest had a genuine pre-existing commercial interest in the cause of action. Pelligrini involved a tort claim for misrepresentation and negligence in connection with the purchase of an apartment building. The original plaintiffs were assigned into bankruptcy and the trustee in bankruptcy decided not to incur the expense of pursuing the litigation. The trustee sold the bankrupts’ interest in the litigation to Ms Pelligrini. Although Rivard J. accepted the argument that Ms Pelligrini had no commercial interest in the cause of action and that the assignment was champertous (relying upon a British Columbia Court of Appeal decision in Fredrickson v. Insurance Corporation of British Columbia),[^7] he went on to find that the assignment of a cause of action by a trustee in bankruptcy is authorized by law and cannot be found to be invalid even if it is champertous.

[38] What was assigned in Pelligrini was a bare cause of action in tort. In my view, that is distinguishable from the case before me, which is an assignment of a judgment. The more relevant case cited by counsel for Mr. Mullins is the decision of the Ontario Court of Appeal in Royal Bank of Canada v. Woodhouse[^8], although in my view it more supports the position of Mr. Morgan than that of Mr. Mullins. In that case, the appellant had been injured in a car accident and gave his bank an assignment of the proceeds of his insurance claim arising from the accident. Catzman J.A. noted the clear distinction between an assignment of a cause of action and an assignment of the proceeds of a cause of action. There is a public policy interest in preventing a hostile party from acquiring litigation interests that the true owners of the claim have no intention of pursuing. There is also a public policy interest in preventing “trafficking in litigation,” so as to ensure that judicial resources are reserved for the resolution of true disputes between parties. Those same concerns do not exist where it is the monies recovered in the litigation that are assigned, rather than the cause of action itself. For that reason, the Court held that the assignment to the Bank of the settlement proceeds, even before the settlement had been reached, was not champerty.

[39] Mr. Morgan’s situation is similar. His interest has attached to the proceeds of the litigation, not the litigation itself. A judgment is, quite simply, a debt. Mr. Morgan has acquired a judgment debt, not a bare cause of action. It is a common commercial practice for one party to assign an interest in a debt to another. Financial institutions, banks, and collection agencies do this all the time. The assignment of a judgment debt is no different from the assignment of any other kind of debt, except that, if anything, it is less likely to be followed by litigation to recover on the debt than would otherwise be the case. For this reason, the assignment of a judgment debt does not give rise to the kinds of policy concerns surrounding champertous agreements.

[40] In Greenstein v. C.H. Dress Co., Garrow J. of the Ontario High Court of Justice held that an agreement by which a debt is assigned to another person who then sets out to collect upon it is not champerty. This is consistent with the principle in Royal Bank of Canada v. Woodhouse that the assignment of the proceeds of litigation is not champertous and with dicta from the British Columbia Court of Appeal decision in Fredrickson v. Insurance Corporation of British Columbia that “the fruits of an action, as opposed to the action itself, are assignable.” [^9]

[41] Further, there is long-standing authority (from 1876) holding specifically that the assignment of a judgment debt is not champerty.[^10] That principle is stated succinctly in the more recent judgment of the British Columbia Supreme Court in Plant Software Inc. v. 9123 Investments Ltd.,[^11] a 1999 decision that relied on Fredrickson, which in turn had been relied upon in Pelligrini. In that case a bank held a judgment for $300,000 and security against Plant Software, which it assigned to 9123 Investments. In an action brought by 9123 Investments to enforce the judgment and realize on the security, Plant argued that the assignment was invalid because there was no legitimate commercial purpose underlying it and it was therefore champertous. Vickers J. held that the debt was property and could be assigned without meeting the test from Fredrickson with respect to prior commercial interest. He stated at paras. 9-10:

It is clear on reading the leading authority, Frederickson v. I.C.B.C. (1986), 3 B.C.L.R. (2d) 145 (C.A.) that the fruits of an action as opposed to the action itself are assignable. It is a debt and a cause of action in debt can always been assigned even though the debtor denies liability. I conclude the petitioner's cause of action has little, if any, merit as the assignment by the bank to 9123 does not constitute maintenance or champerty. There is no requirement that the assignment meet the test of legitimate commercial interest.

The debt is property which can be assigned and thus stands outside the rules of maintenance and champerty. . .

[42] In my opinion, these principles are directly applicable to the case before me. Mr. Morgan took an assignment of Mr. Downham’s property interest in a judgment debt. Such an assignment does not stir up litigation and is not champertous. Further, there is nothing in the agreement by which Mr. Morgan has agreed to share in the proceeds of litigation. He has purchased the debt. It may or may not be recoverable. If it is not, he will be out of pocket for the amount he paid to acquire it. Anything he does recover is strictly his own. There is nothing about such an agreement that offends the rule against champerty.

Striking the Assignment as an Abuse of Process

[43] In the alternative, counsel for Mr. Mullins submits that the assignment and/or the Order to Continue should be set aside as an abuse of process because its purpose is to circumvent the prohibition against non-lawyers appearing as agents for parties in the Divisional Court.

[44] If it was clear on the evidence that the assignment was a sham and that the whole scheme was devised in order to enable Mr. Morgan to appear as counsel in this court for the real party, Mr. Downham, I would consider that to be an abuse of process. However, I do not find that allegation to be supported by the evidence.

[45] The appellant has seized on an alleged conversation on June 11, 2009 between Mr. Kraemer (who was counsel for Mr. Mullins at the time) and Mr. Morgan and argues that as a result of this discussion, Mr. Morgan entered into the assignment in order to get around Mr. Kraemer’s position that he could not appear as counsel. As I have already indicated, there is no first hand evidence from Mr. Kraemer as to that conversation and it is denied by Mr. Morgan. Moreover, it is clear that the assignment was entered into prior to June 11. Notice of the assignment was mailed to Mr. Mullins on June 5 and the assignment was referred to in an affidavit sworn by Mr. Morgan on June 8.

[46] Counsel for Mr. Mullins also points to the lack of consideration for the assignment and submits that the stated consideration of $2.00 demonstrates it to be a sham. The assignment states the consideration to be “$2.00 together with other good and valuable consideration.” It is not unusual for a document of this nature to use this type of formulation rather than reciting the actual monetary consideration paid. Mr. Morgan has testified that the actual consideration for the assignment is $6500, of which $5500 was paid upfront and a remaining $1000 will be paid upon conclusion of the matter. He has produced a copy of his cheque to Mr. Downham in the amount of $5500 dated May 26, 2009. The cheque was certified and the back stamp shows it was deposited by Mr. Downham. Further, the records from Mr. Downham’s bank account demonstrate that the $5500 cheque was deposited on May 27, 2009, bringing the balance in his account to $5564. From May through to September 2009, Mr. Downham gradually drew down on those funds, in what would appear to be the normal course. His balance as at October 5, 2009 was just under $2500. It is also apparent from the bank records that Mr. Downham’s sole income is a monthly deposit of $962, which appears in his account on the last day of each month. That is consistent with the evidence of Mr. Morgan that Mr. Downham is disabled and lives on a government disability pension.

[47] I find that the physical evidence corroborates Mr. Morgan’s evidence as to the nature of the agreement between him and Mr. Downham. He has already paid $5500 for the assignment of the judgment and will pay a further $1000 when this matter is concluded. That is not consistent with the theory of the appellant that Mr. Morgan is being paid to act as counsel for Mr. Downham in the Divisional Court.

[48] I also do not agree with the submission from Mr. Perinot that the amount allegedly paid by Mr. Morgan is so improbable that I should disbelieve his evidence that these funds were paid in consideration for the assignment of a $7000 judgment. First of all, the judgment is not for only $7000; it also includes costs of $925, interest at 4.8% from January 18, 2006 to September 18, 2008 and post judgment interest at 6%. By my calculation, the total owing under the judgment by the time the appeal is concluded will be over $9500. It is not a foolhardy venture to purchase a $9500 judgment for $6500, but neither is it improvident for Mr. Downham. Mr. Morgan has taken on considerable risk. He first must undertake the time and expense of an appeal; he must be successful on the appeal; and then he must seek to recover on the debt from Mr. Mullins. In all of the circumstances, I do not see anything about this arrangement that is offensive.

[49] I certainly am not satisfied on this evidence that it would be appropriate to set aside the assignment as a sham or as having been entered into for an improper purpose. Such a finding would unfairly require Mr. Downham to return the $5500 paid by Mr. Morgan in circumstances where there is no evidence of his having done anything improper.

Residual Discretion to Strike the Order to Continue

[50] I have considered whether it would be appropriate to set aside the Order to Continue even though I see no basis on the evidence for setting aside the assignment itself. This might be appropriate if there was evidence that Mr. Morgan had acted improperly in taking this assignment so that he could personally argue the matter in the Divisional Court. However, I do not see anything in the evidence to support such a conclusion.

[51] Mr. Morgan testified that Mr. Downham became frustrated by his dealings with Mr. Mullins and with the process involved in the court system. Mr. Downham is a man of limited financial means. He had inherited the $7000 he paid to Mr. Mullins in January 2006. It was a long process to win the judgment in September 2008, and has been an even longer process to deal with the appeal in this court. Mr. Morgan is now retired. He has the time to deal with this matter, and the legal training to do so. His explanation for taking the assignment and the price he paid for it are plausible and not improper. Whether regarded as a business arrangement, or as a favour to Mr. Downham, the assignment is defensible. The fact that Mr. Morgan was once disbarred by the Law Society is not an impediment to his entering into such an arrangement, nor does it prevent him from appearing on his own behalf in the courts.

[52] I see no basis for setting aside the Notice to Continue.

F. Conclusion and Order

[53] The appellant’s motion is dismissed. Mr. Morgan is entitled to his costs as a self-represented person. If the parties are unable to agree on the quantum of costs, written submissions may be forwarded to me within 30 days.

Molloy J.

Released: October 13, 2010

Citation: Mullins v. Morgan, 2010 ONSC 5640 Divisional Court File No.: 28/09 Date: 2010-10-13

Ontario Superior Court of Justice Divisional Court

Between:

Michael Mullins Appellant (Moving Party/Defendant)

Henry D. Morgan Respondent (Responding Party/Plaintiff)

Reasons for Decision

Molloy J.

Released: October 13, 2010

[^1]: Solicitors Act, R.S.O. 1990, c. S.15, s.1 [^2]: An Act respecting Champerty, R.S.O. 1897, c. 327 [^3]: See reference to Diffinitio de Conspiratoribus (1305, 33 Edw.1) in Buday v. Locator of Missing Heir Inc., 16 O.R. (3d) 257, 108 D.L.R. (4th) 424, 68 O.A.C. 97 (C.A.)[Buday]. [^4]: McIntyre Estate v. Ontario (Attorney General), 61 O.R. (3d) 257, 218 D.L.R. (4th) 193, 164 O.A.C. 37 (C.A.) at paras. 36-47 [^5]: Ibid. at paras 26-29. See also Buday, supra note 3. [^6]: Pelligrini v. 854970 Ontario Ltd., [1999] O.J. No. 5027 (S.C.J.) [^7]: Fredrickson v. Insurance Corporation of British Columbia (1986), 28 D.L.R. (4th) 414 (B.C.C.A.) aff’d 1988 38 (SCC), [1988] 1 S.C.R. 1089 [Fredrickson] [^8]: Royal Bank of Canada v. Woodhouse (1997), 33 O.R. (3d) 47, 145 D.L.R. (4th) 206, 99 O.A.C. 110 (C.A.) [^9]: Fredrickson, supra note 7, at 420 and 428. See also Glegg v. Bromley, [1912] 3 K.B. 474 at 484. [^10]: Cole v. Bank of Montreal, [1876] O.J. No. 103 (Q.B.) at para. 28. [^11]: Plant Software Inc. v. 9123 Investments Ltd., [1999] B.C.J. No. 537 (S.C.).