1309395 Ontario Ltd. v. Pronesti Investments Inc., 2014 ONSC 4466
CITATION: 1309395 Ontario Ltd. v. Pronesti Investments Inc., 2014 ONSC 4466
DIVISIONAL COURT FILE NO.: 336/14
DATE: 20140725
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
1309395 ONTARIO LTD.
Appellant/Plaintiff
– and –
PRONESTI INVESTMENTS INC., VINCENZO PRONESTI, FRANCESCA PRONESTI, deceased and DOMINIC PRONESTI
Respondents/Defendants
AND BETWEEN
PRONESTI INVESTMENTS INC. and VINCENZO PRONESTI
Respondents/Plaintiffs by Counterclaim
-and –
1309395 ONTARIO LTD., SATT BALROOP and SHAM BALROOP, a.k.a. SHAMSHAD BALROOP
Appellants/Defendants to the Counterclaim
Paul Neil Feldman, for the Respondents/ Defendants, Plaintiffs by Counterclaim
In Person, Shakeel Balroop and Sham Balroop
HEARD at Toronto: July 25, 2014
CORBETT J. (orally)
[1] The corporate plaintiff has been without counsel since January 17, 2014 when Mr. Klotz was removed from the record by the order of Master Glustein.
[2] The Balroops have been acting as agent for the corporate plaintiff since and profess unfamiliarity with court rules and procedures. I understand that now they propose to have Mr. Milosevic become counsel for the plaintiff and he is expected to return from vacation in early August. I am not prepared to delay the matter before the Court today until Mr. Milosevic`s return. The immediate concern is, who will be responsible and have control over the sales of the subject properties. This matter has been in litigation for many years and has a tortured procedural history. I am going to address the claims for relief on an item-by-item basis with that history in mind.
[3] First is the appeal from Master Muir’s order for security for costs. Master Muir granted an order for security for costs on December 3, 2013. It required the plaintiff to post $15,000 in security for costs within 120 days. The plaintiff has not complied with this order. The plaintiff now seeks leave to appeal from this decision and an extension of time within which to bring that appeal.
[4] The order for security for costs is interlocutory. No leave is required to appeal from it. Such an appeal lies to a judge of the Superior Court of Justice, in accordance with s. 17(a) of the Courts of Justice Act. An appeal is commenced by serving a notice of appeal within seven days of the order appealed from, as specified in Rule 62.01(2). A motion to extend the time to appeal is made to a judge of the appellate court, which in this case would be a judge of the Superior Court, as is established by Rule 3.02(3).
[5] The second matter that is raised before me is an appeal from Master Muir’s reference report. An appeal does not lie from a Master’s reference report. The reference in this case was directed by Pollack J. As here, where an order directing a reference does not require the referee to report back, the report is confirmed fifteen days after the report has been filed unless a notice of motion to oppose confirmation of the report is served within that time – that is, within fifteen days of the report being filed.
[6] Master Muir’s report was issued on December 9, 2013 and his costs endorsement was issued on February 11, 2014. His findings on the reference, both in respect to the issues of substance and costs, were incorporated in the final report signed on February 26, 2014, issued and entered by the Court on April 4, 2014. A motion to oppose confirmation of Master Muir’s report had to be filed within fifteen days after a copy was filed with proof of service on the parties – Rule 15.09(3)(b). The Rules require the report being entered “immediately after it has been confirmed” - Rule 54.07(2). I do not know precisely when Master Muir’s report was confirmed; the latest possible date is April 3, 2014, the day before the report was entered, though it was likely around fifteen days after the final report was signed on February 26th, that is around mid-March 2014. No motion was brought to oppose confirmation of the report. What the moving parties seek here is really an extension of time to move to oppose confirmation of Master Muir’s report.
[7] The third item sought by the moving parties is leave to appeal the order of O’Marra J. dated April 23, 2014. The defendants moved before O’Marra J. to proceed with the power of sale of the subject properties and the plaintiffs sought an adjournment of that motion because they were “out of the country for religious reasons.” O’Marra J. declined the adjournment and granted the defendants’ motion. The plaintiffs filed a notice of appeal from the order of O’Marra J. in the Court of Appeal, but did not bring a motion to stay O’Marra J.’s motion until they understood that the power of sale proceedings were still ongoing.
[8] The plaintiff then moved for a stay from the Court of Appeal and MacFarland J.A. ruled that the order of O’Marra J. is an interlocutory order of the Superior Court and thus that an appeal from that order could only be brought to the Divisional Court with leave from a judge of the Divisional Court.
[9] The plaintiff now moves for leave to appeal the order of O’Marra J. and if leave is granted, the stay of O’Marra J.’s order pending determination of the appeal.
[10] Finally, the plaintiff seeks to appeal the costs order of MacFarland J.A.
[11] My analysis is as follows. I will start with the easiest issue first: this Court has no jurisdiction to hear an appeal from the Court of Appeal. The only recourse from the order of MacFarland J.A. is a motion to a panel of the Court of Appeal to vary or set aside the Judge’s order. Such a motion is to be served within four days from the day the order is made and a motion for an extension of that time would have to be made to a single judge of the Court of Appeal under Rule 3.02(3). The request for relief respecting the costs order of MacFarland J.A. is dismissed as being beyond the jurisdiction of this Court.
[12] Second, I will address leave to appeal from O’Marra J. I would extend the time for a motion for leave to appeal from O’Marra J. The plaintiff had a timely intention to appeal and took steps to do so, albeit, steps in the wrong court. I do not think that the plaintiff should be denied the opportunity for a decision on the merits of the request for leave to appeal because it chose the wrong appeal route. I would not, however, grant leave to appeal from the decision of O’Marra J.
[13] The test for leave to appeal is set out in Rule 62.02(4). There are no conflicting decisions with the decision of O’Marra J., so clause (a) of that rule does not apply. Under clause (b) I see no reason to doubt the correctness of the decision of O’Marra J. either on the merits or in respect to denying the adjournment.
[14] In respect to the former, the defendants’ materials establish a basis for the order and the plaintiff filed no significant evidence to the contrary. In respect to the adjournment, I do not accept that the motion caught the plaintiff by surprise, and alternatively, to the extent that it did, this is the plaintiff’s own fault for failing to appoint new counsel or obtain an order permitting a non-lawyer to represent the plaintiff corporation. Further, the record establishes eloquently that the plaintiff has been responsible for extensive delays in this case. The Master delivered his findings in December 2013 and was entirely reasonable for the motions judge to refuse the adjournment in April 2014.
[15] Further, and in any event under clause (b), even if there had been some basis for concern about what happened before O’Marra J., which there is not, the proposed appeal does not involve matters of importance within the meaning of the Rule. The plaintiff claims that it may stand to lose $300,000. If this is true, this is no doubt important to the plaintiff. However, none of the issues is important to the development of the law, which is the gravamen of the test under clause (b) of the Rule for leave to appeal to the Divisional Court.
[16] I should remark here that I am not persuaded on the record before me that the plaintiff truly stands to lose here. The agreement of purchase and sale relied upon by the plaintiff is redacted, thus preventing the defendant from investigating it. The plaintiff has provided no principled justification for these redactions. I appreciate the plaintiff’s comments that there is not a lot of trust between the plaintiffs and the defendants here, but there seems to be a fundamental misunderstanding by the plaintiff about its position as debtor. The mortgage lender for a mortgage in default, as has been found, is entitled to control the sale, and the debtor has relief available to it if the mortgage lender abuses its position by improvident realization of its security. But apart from that, it is ordinarily the case that the lender, where the mortgage is in default, as has been found here, is entitled to sell the property and realize upon its security. As a debtor in default, the plaintiff would have been well advised, if it had an advantageous offer to sell the property, to provide it to the lender so that the maximum proceeds could be realized on a sale of the property.
[17] In the event that the lender sells the property for proceeds that are significantly below what the property is worth, it will be open to the plaintiff to pursue a remedy in improvident realization, but it is restricted to that remedy in these circumstances.
[18] I would not adjourn this motion or provide relief to permit the plaintiffs to correct their failure to provide the kind of documentation that the Court requires to establish that there really is a bona fide offer of purchase and sale which the lender could investigate by doing its due diligence, or to prove that the deposit, as meager as it is, has actually been paid. I am simply not prepared to extend the plaintiff a further accommodation in order to prove these matters that should have been proved as part of this motion.
[19] Accordingly, for these reasons, the motion for leave to appeal from O’Marra J.’s order is dismissed.
[20] The motions to extend the time to appeal Master Muir’s order for security for costs and to oppose confirmation of Master Muir’s final report should be made to a single judge of the Superior Court and should be scheduled through the regular motions office. However, I wear both hats as a judge of the Divisional Court. Rule 62.02(1.1) provides that a motion for leave to appeal to the Divisional Court from the order of a judge will be heard by a judge of the Divisional Court sitting as a Superior Court Justice. So, I am already wearing both hats simultaneously as I sit in my chair today.
[21] In my view, certainly it would be improvident for everyone to require a separate appeal route in the circumstances here, and as a single judge of the Superior Court of Justice, I will deal with the requests in respect to the decisions from Master Muir.
[22] I decline to extend the time to appeal Master Muir’s order for security for costs. There is no evidence that I accept that there was an intention to appeal within the seven day deadline. There is no explanation that I accept as to why no steps were taken to implement the intention to appeal for more than six months from the time of Master Muir’s decision. The plaintiff has unpaid costs orders in addition to not having complied with Master Muir’s order for security for costs. The proposed appeal in respect to the order for security of costs appears to me to be without merit. In all of these circumstances, I see no basis for extending the time to appeal that order.
[23] Further, there is no basis to suppose that a review of Master Muir’s order would constructively advance the issues of principle between the parties here. Indeed, I am fortified in this conclusion by the statement of the principals of the plaintiff today, that if I was to stay or otherwise prevent the sale of the property pending an appeal from the reference report, that then they would pay the security for costs into court. If the security for costs is paid into court and it ultimately turns out that no costs are owing to the respondent, then those monies will be returned to the plaintiff. So, there will be virtually no prejudice at all to the plaintiff by having to comply with Master Muir’s order.
[24] The decision respecting a motion to oppose confirmation of the Master’s final report is a more difficult issue and there are several aspects of this issue. First, is the general finding that the plaintiff is in default and owes a substantial amount of money to the defendants and second, is the precise calculation of the plaintiffs’ indebtedness to the defendants.
[25] I do not see a basis for believing that the defendant has or believes it has a serious argument that it is not in default or does not owe substantial amounts to the defendant. It may well have counterclaims, but this would not be a basis to delay the defendants from realizing upon their security under the mortgages. Thus, whether I extend the time for a motion to oppose confirmation, I would not stay the order of O’Marra J. or otherwise interfere with the defendants’ exercise of the power of sale pending a motion to oppose confirmation of the final report. Thus, I would not interfere with the defendants’ exercise of its power of sale.
[26] It is not clear to me that there is a practical purpose to a review of the precise indebtedness of the plaintiff or a determination of the plaintiffs’ set off claims or counterclaims. If, as it appears, its indebtedness is greater than its assets in any event, then a review of the precise extent of its insolvency would be a gratuitous exercise and a needless expense to the defendants.
[27] If, however there is potentially some equity that the plaintiff could recover, I would not foreclose it from doing so.
[28] For all these reasons, Order to go:
(1) Dismissing the motion for relief from the costs order from MacFarland J.A.
(2) Dismissing the motion for an extension of time to appeal the order of Master Muir, dated December 3, 2013 respecting security for costs.
(3) Granting the motion to extend the time to seek leave to appeal, but dismissing the motion for leave to appeal from the order of O’Marra J. dated April 23, 2014.
(4) Granting the motion to extend the time for a motion to oppose confirmation of the final report of Master Muir, subject to the following terms:
(a) The plaintiff shall serve and file its complete motion materials respecting the motion to oppose confirmation and report of Master Muir by September 12, 2014.
(b) The plaintiff shall pay $33,675.70, being all costs awards currently outstanding to the defendants in certified funds by September 12, 2014.
(c) That the $15,000 in security for costs ordered by Master Muir is paid into Court by September 12, 2014.
(5) If the defendants proceed with their power of sale and do sell the property, they shall pay the net proceeds of sale into Court pending further order of the Court.
(6) The motion to stay the effect of the report of Master Muir is dismissed, except to the extent encompassed by my order set out above.
[29] The total amount owing of costs from prior orders on my math is $31,175.70, made up of $18,000 from the reference before Master Muir, $4,000 before MacFarland J.A. in the Court of Appeal, $8,425.70 before O’Marra J., and $750 before Master Muir on the motion for security for costs, plus whatever I award [see below].
[30] In addition, there is the order for security for costs itself for $15,000, that’s a $46,000 plus. The $15,000 is to be paid into Court. The $31,000 and change is to be paid to the defendants plus whatever I order today.
[31] What is the deadline by which you can make those payments? You don’t have to make them. If you don’t make them, then you don’t get to bring the motion to oppose confirmation of the Master’s report, but if you were to make those payments, what would be a reasonable deadline for you to do it? Sixty days? That’s reasonable. That’s fine.
[32] I will give you the same deadline as the deadline for filing your materials because you’re hardly going to pay Mr. Milosevic thousands of dollars to file all the materials if you’re not going to provide the security because it wouldn’t make sense. So, there is no point in having a different deadline, so I will give you until September 12, which is almost two months.
[33] If the plaintiff does not proceed with its motion to oppose confirmation of Master Muir’s report, then the defendants are not required to pay the sale proceeds into Court. If the net proceeds have already been paid into Court and the motion to oppose confirmation is subsequently not brought or is abandoned, then the defendants may apply to have any monies paid into Court by them, paid back out to them.
[34] My endorsement on the back of the Motion Record: “For reasons given orally, motion granted in part to extend the time to bring a motion to oppose confirmation of the report of Master Muir, on extensive terms provided orally. Balance of the motion dismissed. Copies of the transcript of the oral reasons shall be provided to both sides at the court’s expense. Defendants’ counsel shall provide the plaintiff with a draft order at the same time that he provides his proposed draft order to this court. The plaintiff shall provide any comments on the draft order to the court within seven days thereafter, with a copy of those comments to counsel for the defendants. Costs of this motion to the defendants fixed at $2,500 payable forthwith.”
D. L. CORBETT J.
Date of Reasons for Judgment: July 25, 2014
Date of Release: July 31, 2014
CITATION: 1309395 Ontario Ltd. v. Pronesti Investments Inc., 2014 ONSC 4466
DIVISIONAL COURT FILE NO.: 336/14
DATE: 20140725
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D. L. CORBETT J.
BETWEEN:
1309395 ONTARIO LTD.
Appellant/Plaintiff
– and –
PRONESTI INVESTMENTS INC., VINCENZO PRONESTI, FRANCESCA PRONESTI, deceased and DOMINIC PRONESTI
Respondents/Defendants
AND BETWEEN
PRONESTI INVESTMENTS INC. and VINCENZO PRONESTI
Respondents/Plaintiffs by Counterclaim
-and –
1309395 ONTARIO LTD., SATT BALROOP and SHAM BALROOP, a.k.a. SHAMSHAD BALROOP
Appellants/Defendants to the Counterclaim
ORAL REASONS FOR JUDGMENT
D. L. CORBETT J.
Date of Reasons for Judgment: July 25, 2014
Date of Release: July 31, 2014