CITATION: R. A. Fox v. R.S. Fox, 2014 ONSC 1135
DIVISIONAL COURT FILE NO.: DC-12-00049-00
DATE: 20140303
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MATLOW, MARANGER & TOSCANO ROCCAMO, J.J.
BETWEEN:
ROBERT ALEXANDER FOX
Plaintiff (/Respondent in Appeal)
– and –
ROBERT SANDS FOX and 869297 ONTARIO INC.
Defendants (Appellants in Appeal)
Shayna Beeksma, for the Plaintiff (Respondent in Appeal)
Ruzbeh Hosseini, for the Defendants (Appellants in Appeal)
HEARD: October 24, 2013 at Brampton
AMENDED REASONS FOR JUDGMENT
MATLOW, J.
[1] At the conclusion of the hearing of this appeal I endorsed the appellant’s appeal book on behalf of the members of the panel as follows:
This appeal is allowed, the order in appeal is set aside, the order of Kruzick J. is set aside and the certificate of pending litigation pursuant to that order is vacated. Written reasons will follow. What follows are those reasons.
The order in appeal
[2] The motion before the motion judge, Justice Snowie, was brought by the defendants for an order setting aside the order of Justice Kruzick dated April 28, 2011, granting leave to the plaintiff to issue a certificate of pending litigation (“CPL”) with respect to the two properties that are the subject of the underlying action. By her endorsement the motion judge dismissed the motion and ordered that the defendants pay costs fixed at $15,000.
[3] Justice Snowie’s handwritten endorsement reads as follows:
It is clear that the Pl. Mr. Fox Sr. failed to make full disclosure of information in his initial motion materials for the CPL. However, I do not find that this lack of full disclosure was material to the granting of the CPL nor is it fatal to the CPL. I am content that the lack of this disclosure would not have made any difference to the granting of the CPL as there appears to be a genuine issue with respect to a beneficial &/or equitable interest in the said lands by the Pl. Mr. Fox Sr. The Defs’ motion to set aside the CPL granted on an ex parte basis is hereby dismissed.
Costs:
The Defs shall pay to the Pl. his costs fixed including gst & disbursements in the mount of $15,000 to be paid within 30 days.
[4] No copy of the formal order reflecting the motion judge’s endorsement was included in the material before us as required and it may even not have been taken out. Accordingly, I would direct that the formal order reflecting my earlier endorsement and these reasons is not to be signed out until a formal order reflecting Justice Snowie’s endorsement is taken out and a copy filed to complete the record of this appeal.
Leave to appeal granted
[5] Leave to appeal to this Court from the motion judge’s interlocutory order was granted by Justice Gray on June 27, 2012 but there is no copy of his order in the material either. Accordingly, a copy of his order is to be added to the list of orders set out in paragraph 4, above.
Justice Gray’s Reasons
[6] The following excerpts, as they appear in, Justice Gray’s extensive brief reasons given pursuant to rule 62.02 (7) summarize the material before the motion judge and describe the background of the underlying action. They also contain some important observations of significance to this appeal:
Background
[3] For the purposes of this motion, it is not necessary to set out the background in detail. It is sufficient to say that the action involves two properties in Burlington that are adjacent to each other. They have been referred to in the proceedings as the “residential” property and the “commercial “ property. In the action, the plaintiff claims that he is the beneficial owner of the residential property, and he claims he is entitled to an equitable lien for the unpaid purchase price for the acquisition of the commercial property.
[4] The personal defendant is the plaintiff’s son, and he claims that he was at all time the beneficial owner of the residential property. He claims that the commercial property, at the time it was registered in the plaintiff’s name, was held in trust for the plaintiff’s children.
[5] On the ex parte motion before Kruzick, J., there was filed a 32-paragraph affidavit sworn by the plaintiff in which he deposed that he purchased the commercial property in 1976 for purchase price of $112,500.00, and that the title was registered in his name.
[6] The plaintiff deposed that in 1987 he purchased the residential property for $139,500.00. The property is located immediately adjacent to the commercial property. He was advised by his solicitor not to place the residential property in his own name, in order to avoid the effect of the Planning Act. Thus, he instructed his solicitor to register the title of the residential property in his son’s name. He swore that all mortgage payments on that property were made by him.
[7] The plaintiff swore that in 1998 his son requested that title to the commercial property be transferred to him. The plaintiff swears that it was agreed that he would be paid the sum of $300,000.00 for doing so. He swears that he actually received only $48,000. Subsequently, title to the property was transferred to the other defendant, a numbered company.
[8] On the motion to set aside the CPL, there was filed the affidavit of the personal defendant, in which he claims that he purchased the residential property and the plaintiff was merely the guarantor of a mortgage on the property.
[9] Of some significance, the personal defendant deposed that the plaintiff was involved in a lawsuit with the Toronto Dominion Bank. He swore as follows:
In 1991, the Plaintiff was involved in a lawsuit with the Toronto-Dominion Bank (Ontario Court of Justice (General Division), Court File No.C7141/91). As a part of that civil action, the Examination for Discovery was held on October 2, 1991, during which the Plaintiff gave evidence, under oath, with respect to the residential and commercial properties. Attached hereto and marked as Exhibit “E” is a true copy of the Transcript from Examination for Discovery dated October 2, 1991 (the “Transcript”).
During the deposition, the Plaintiff explicitly admitted that I, Robert Sands Fox, was the owner of the residential property. Specifically, he stated that:
a. It was my idea to purchase the residential property because I wanted to buy the house before I got married (page 19, paras. 127-129) of the transcript;
b. I provided a down payment of approximately $21,000.00 to purchase the property (page 20, para. 136; and page 21, paras. 140-141 of the transcript;
c. The only reason why the Plaintiff signed the mortgage as guarantor on the residential property is to help me out because it was “the father and son thing to help”. (page 21, paras. 142-144 of the transcript);
d. The residential property was purchased for “the boy, for a home for himself”. (page 71, Para. Par 414);
e. The Plaintiff never owned the residential property (page 55, paras. 326 and 328 of the transcript);
f. The Plaintiff fabricated his financial statements when he claimed he owned the residential property (page 55, para. 331 and page 54, para. 323 of the transcript). Instead, it was I who owned the residential property (page 60, para. 352; and,
g. Finally, there was NO truth to the assertion that the reason for holding the residential property in my name was because the Plaintiff wanted to protect it from merging with the commercial property for the Planning Act purposes (page 77, para. 414).
- On October 2, 1991, during the Examination for Discovery, the Plaintiff stated the following about the commercial property:
a. The property was purchased in 1976 and that it was purchased for the Robert Fox in Trust for Uses, namely for the benefit of his children (pp 21-23; paras. 148-158 of the transcript;
b. The Plaintiff never had any written documentation supporting the trust set-up (page 25, para. 173 of the transcript);
c. The Plaintiff made a Statutory Declaration of the Trust in 1984 (page 26, para. 178 of the transcript);
d. I, Robert Sands Fox, was and am beneficiary of the Trust (page 28, para. 194; page 30, para. 203; page 34, para. 226 of the transcript);
e. The Plaintiff did not own the commercial property (page 55, paras. 326 and 328 of the transcript) instead the commercial property was held in Trust for my benefit (page 67, paras. 395-396 of the transcript);
f. The Plaintiff fabricated his financial statements when he claimed he owned the commercial property (page 55, para. 331 in conjunction with page 54, para. 324 and page 324 and page 60, para. 354 of the transcript) in order to obtained [sic] financing from the bank.
[Emphasis in original]
[10] The personal defendant also disclosed that the deed to the commercial property, when it was purchased, disclosed that the purchaser was “Robert Fox in Trust”, and that subsequently there was created the Robert A. Fox Family Trust, which was to have control of the property. The beneficiaries of the trust were the plaintiff’s children. Subsequently, the commercial property was transferred to the other defendant, a numbered company, the shares of which are owned by the personal defendant.
[11] The problem is that none of this was disclosed on the ex parte motion before Kruzick J.
[12] In an affidavit filed on the motion before Snowie J., the plaintiff attempted to explain the omissions. In that affidavit, he acknowledged that he lied in his evidence during the lawsuit in 1991. He deposed as follows:
I made the decision to lie about the ownership of the residential property when the finances of the brokerage took a sharp turn for the worse, and Todd McGowan Bank started to call its security. I did this intending to deceive Todd McGowan Bank, so that I could hold on to the property (even though it was registered in my son’s name) and not have it foreclosed on.
I never told my lawyer (William Dunlop) that I was lying in 1991. I attempted that deception entirely on my own.
I regret deeply the decision to lie in order to try and protect my property from foreclosure. It was not in character for me to do such a thing. I make no excuses for my decision, but I would like to say by way of explanation that I was at a very difficult time in my life. I felt that I had been disproportionately penalized and financially liable in the breakup of my brokerage, and I was afraid that I would lose everything to the bank, and have nothing with which to provide for my family.
[7] A review of the summary of facts set out, above, in the excerpts from Justice Gray’s Reasons, will demonstrate some of the material facts that the plaintiff failed to disclose. I agree with the accuracy, but not, with respect, all of the typography of that summary.
Analysis
[8] Section 103 (1) of the Courts of Justice Act, R.S.O. 1990, c. C-43 deals with certificates of pending litigation. Subsection (6) deals with orders discharging certificates. It reads as follows:
(6) The court may make an order discharging a certificate,
(a) where the party at whose instance it was issued,
(i) claims a sum of money of or as an alternative to the interest in the land claimed,
(ii) does not have a reasonable claim to the interest in the land claimed; or
(iii) does not prosecute the proceeding with reasonable diligence:
(b) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or
(c) on any other ground that is considered just,
and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.
[9] Rule 39 of the Rules of Civil Procedure deals with “Evidence on Motions and Applications”. Rule 39.01 (6) deals with “full and fair disclosure on motion or application without notice”. It reads as follows:
Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application. (emphasis added)
[10] A motion for an order issuing a CPL may, pursuant to rule 39.01 (3) be made without notice. The plaintiff elected this option when he brought his motion before Kruzick, J. Accordingly, the plaintiff was required to comply with rule 30.01 (6) and make “full and fair disclosure of all material facts”.
[11] The reason for requiring such disclosure is based on the recognition that the judicial officer hearing a motion has only the moving party or their counsel before him. There is usually no opponent present who can file opposing evidence and make opposing submissions. Accordingly, there is a heavy burden on a moving party to tender evidence that he might prefer not to tender so the judicial officer can obtain a reasonably balanced view of those facts that might reasonably affect the outcome of the motion.
[12] The burden that rests on the moving party is not to make full and fair disclosure of every fact relevant to the motion. That would be an undue burden that would require the moving party to disclose an unnecessarily large volume of facts of likely little to no probative value. The obligation to make disclosure of “all material facts” should be interpreted to mean only “all facts that might reasonably affect the outcome of the motion”.
[13] If the judicial officer hearing a motion is deprived of an opportunity to know about all of the material facts known to the moving party because the moving party fails to comply with rule 39.01 (6), the same rule creates a consequence for that moving party. It provides that his failure to comply, in itself, is sufficient ground for setting aside any order made on the motion. “In itself”, in this context means that the other party does not necessarily have to establish anything more than the moving party’s failure to comply.
[14] Accordingly, it was not essential, on the motion before Snowie, J., that the defendants established anything more than that the plaintiff had not complied with rule 39.01 (6).
[15] The motion judge’s endorsement records that it is clear that the plaintiff failed to make full disclosure of information in his initial motion materials for the CPL. However, she went on to say that she did not find that this “lack of full disclosure was material to the granting of the CPL nor is it fatal to the CPL”. By applying this test rather than the test described in paragraph 11, above, the motion judge erred in law in the meaning that she attributed to “material facts” and, inevitably to the outcome of the motion before her.
[16] Accordingly, the order in appeal fails to meet the requisite standard of review, correctness, and must be set aside.
[17] Counsel may make written submissions with respect to costs by exchanging them and then delivering them, in triplicate, to the office of this Court at Brampton within one month of the date of release of these Reasons failing which no award with respect to costs will be made.
Matlow, J.
Maranger, J.
Toscano Roccamo, J.
Released: March 3, 2014
CORRECTION NOTICE
Corrected decision: the text of the original judgment was corrected on March 5, 2014, and the description of the correction is appended:
In paragraph 12 of the judgment the word “is” has been added after the word “party” to read:
“The burden that rests on the moving party is not to make full and fair disclosure of every fact relevant to the motion.”
CITATION: R. A. Fox v. R.S. Fox, 2014 ONSC 1135
DIVISIONAL COURT FILE NO.: DC-12-00049-00
DATE: 20140303
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MATLOW, MARANGER & TOSCANO ROCCAMO, J.J.
BETWEEN:
ROBERT ALEXANDER FOX
Plaintiff (/Respondent in Appeal)
– and –
ROBERT SANDS FOX and 869297 ONTARIO INC.
Defendants (Appellants in Appeal)
AMENDED REASONS FOR JUDGMENT
MATLOW J.
Released: March 3, 2014