Windsor Family Credit Union Limited v. Barat, 2015 ONSC 783
CITATION: Windsor Family Credit Union Limited v. Barat, 2015 ONSC 783
DIVISIONAL COURT FILE NO.: 14-83-00ML
DATE: 20150203
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Windsor Family Credit Union Limited
Plaintiff
– and –
Nancy Barat in her Capacity as Estate Trustee for the Estate of Arthur Barat and Barat, Farlam, Millson
Defendants
AND BETWEEN:
Nancy Barat in her Capacity as Estate Trustee for the Estate of Arthur Barat and Barat, Farlam, Millson
Plaintiffs by Counterclaim
– and –
Windsor Family Credit Union Limited and The Corporation of the City of Windsor
Defendants by Counterclaim
COUNSEL:
Rodney M. Godard, for the Plaintiff Windsor Family Credit Union Limited (Defendant to Counterclaim)
David Silver, for the Defendants (Plaintiffs by Counterclaim)
No one appearing for the Defendant by Counterclaim The Corporation of the City of Windsor
HEARD: December 11, 2014
S.K. CAMPBELL J.:
Introduction
[1] The defendant seeks leave to appeal the decision of Aston J. made October 22, 2014. In that decision Aston J. dismissed the defendants’ motion to remove Kirwin Partners LLP (“Kirwin”) as counsel for the plaintiff and Mark Nazarewich (“Nazarewich”) as counsel for the City of Windsor. Initially the defendants’ motion sought leave to appeal the decision with respect to both Kirwin and Nazarewich. However, before argument, the defendants abandoned the motion as it relates to Nazarewich.
Facts
[2] Aston J. summarized the factual background in paras. 2 to 4 of his decision. Neither party took issue with that summary. I do not find it necessary to review the facts in detail.
[3] It is common ground that the plaintiff retained Kirwin to provide advice and services to enforce its security. This included advising the plaintiff about the strength of its mortgage. Kirwin was also involved with the sale of the secured property. This included resolving certain apparent problems with the title.
[4] Kirwin was then retained to commence and prosecute this action against the defendants Nancy Barat in her capacity as Estate Trustee for the Estate of Arthur Barat and Barat, Farlam, Millson (“Barat”). The defendants, in the course of their argument, referred to the dual retainer of Kirwin.
[5] The plaintiff’s amended statement of claim alleges the defendant Barat was negligent. Those allegations of negligence include failing to ensure the plaintiff’s mortgage was a first priority. The specific allegations relate to an encroachment and parking rental agreement. The latter alleged defect was found by this court not to affect the marketability of the title.
[6] The property was ultimately sold in December 2009. The City of Windsor was paid $385,136 by the plaintiff for an encroachment agreement. The defendants alleged that agreement was not necessary to enable the plaintiffs to sell the property. As found by Aston J. at para. 4 of his reasons, “The crux of the issue on this motion is that Paul Layfield, a partner at the Kirwin firm, and Mark Nazarewich, counsel for the city, played active roles in what the defendants characterize as the ‘mitigation and repair efforts’ of the plaintiff.”
Issues
[7] The issue is straightforward. Should leave be granted to the defendants to appeal the decision of Aston J. to the Divisional Court pursuant to r. 62.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The grounds on which leave may be granted are found in r. 62.02(4). That rule states:
(4) Leave to appeal 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.
[8] The parties agree that “within each branch of the test the rule is conjunctive but that each branch is disjunctive”: see Silver v. Imax Corp., 2013 ONSC 6751, 117 O.R. (3d) 616, at para. 33.
Position of the Parties
[9] The defendants argue that Aston J.’s decision conflicts with the existing decisions. In the course of its argument the defendants referred to two specific decisions: Urquhart v. Allen Estate, [1999] O.J. No. 4816, 1999 CarswellOnt 4126 (ONSC) and 1298781 Ontario Inc. v. Levine (“129”), 2013 ONSC 2894, [2013] O.J. No. 2263 (Master).
[10] Specifically, the defendants argued that it is desirable to grant leave because Kirwin’s dual retainer is an important and undisputed fact. Further, Mr. Layfield (“Layfield”) of Kirwin is a compellable witness with crucial evidence to provide to the court. Other witnesses cannot provide the knowledge and insight that can be provided by Layfield.
[11] In addition, the defendants argue that there is good reason to doubt the correctness of Aston J.’s decision; primarily because he concluded that the defendants cannot compel Layfield to testify at trial. This finding, the defendants say, was premature and not based on the proper weighing of the factors to be considered in making that decision.
[12] The defendants argue that Aston J. failed to appreciate the inherent conflict of interest and its impact on the administration of justice. That is what makes it important for leave to be granted.
[13] The plaintiff argues that the defendant has not made out either ground for granting leave to appeal. There is no reason to doubt Aston J.’s decision. He provided reasons and a decision based on the evidence and the law that Layfield was not a compellable witness. Aston J. was correct to find that the delay that may be caused by removing Kirwin would be inordinate. That delay was, in part, a result of the defendants’ delay in bringing this motion and that delay is unexplained. Further, the evidence of Layfield is available from other witnesses.
[14] The plaintiffs further argue that Aston J.’s decision is well-reasoned, thorough and sound. The reasons do not involve a matter of general importance.
[15] The plaintiffs submit that there are no conflicting decisions. It is not sufficient to show different results but necessary to show different principles. Finally, it is not desirable to grant leave given that the issue was only recently raised and would delay the trial in a proceeding that has been outstanding for a long period of time.
Analysis
[16] By the wording of r. 62.02(4) and the ensuing case law, it is clear that the criteria to be satisfied in order to grant leave are rigorous. The rule is framed in the negative and provides leave should not be granted unless both branches in r. 62.02(4)(a) or both branches in r. 62.02(4)(b) are met.
[17] To be successful on the first branch of the test in r. 62.02(4)(a) it is not sufficient to show that two different courts have reached different results. It must be established that there is a “difference in principle and not merely a difference in outcome”: see Holt v. Anderson (2005), 2005 38583 (ON SCDC), 205 O.A.C. 91, [2005] O.J. No. 4494 (Div. Ct.), at para. 10.
[18] Justice Aston referred to R. v. 1504413 Ontario Ltd., 2008 ONCA 253, 90 O.R. (3d) 122. Writing for the majority, Armstrong J.A. stated that the calling of the lawyer as a witness involved consideration of a number of factors: he listed six. One of those factors was the availability of other witnesses to give evidence. Justice Aston acknowledged that the checklist was non-exhaustive but that any one or more of the considerations may justify the quashing of a summons.
[19] In Urquhart, the court held at para. 19 that the removal of counsel should only occur to “relieve the risk of real mischief and not a mere perception of mischief”. That is, while the removal need not be based on a certainty of mischief, it must be based on a real likelihood.
[20] Here, Aston J. determined that since other witnesses were able to give evidence on the issue, Mr. Layfield was not a compellable witness. Justice Aston’s ruling on this issue was dispositive of the motion.
[21] Urquhart dealt with the difficulties raised by the likelihood that counsel would be called as a witness. After reviewing the facts, the court held the trial could not proceed without counsel being called as a witness. The court therefore ordered the removal of counsel.
[22] In this case, Aston J. came to the conclusion not to remove counsel. He made his determination on the basis that Mr. Layfield was not a compellable witness. He did not appear to weigh any of the other factors outlined by Armstrong J.A. in 1504413.
[23] I conclude that the approach of Aston J. conflicts with Urquhart and 129. In both of those cases the court approached the issue by weighing the different factors. Neither court adopted a single, paramount concern and found that that was dispositive of the motion. In my view, that is a difference in principle.
[24] It should be noted here that the moving party does not have to convince the court that the decision it seeks to appeal was wrong or even probably wrong. It is sufficient that they show there is good reason to doubt the correctness of the decision, given that the question is open to very serious debate: see Stamatopoulos v. Harris, 2013 ONSC 7844, 2013 CarswellOnt 17788 (Div. Ct.), at para. 20. In my view, the manner in which the different factors have been considered by different judges is a serious debate.
[25] I then need to consider the second branch of the test, is it desirable? I find that underlying principles are at issue. They are important issues which relate directly to the administration of justice. That issue is the right to counsel.
[26] Justice Aston raised concern about delay that might be created by removal of counsel. That is an entirely reasonable consideration. However a delay which might result from a mistrial, if the trial judge should conclude that Mr. Layfield is a compellable witness, is also of concern.
[27] I conclude that granting leave to appeal is desirable. There are significant issues which would benefit from appellate comment.
[28] I find it is not necessary for me to consider the second test under r. 62.02(4), given my conclusions with respect to the first branch of the test.
[29] Therefore, leave is granted to appeal the decision of Aston J. to the Divisional Court.
Original signed “Justice Campbell”
Scott K. Campbell
Justice
Released: February 3, 2015
CITATION: Windsor Family Credit Union Limited v. Barat, 2015 ONSC 783
DIVISIONAL COURT FILE NO.: 14-83-00ML
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Windsor Family Credit Union Limited
Plaintiff
– and –
Nancy Barat in her Capacity as Estate Trustee for the Estate of Arthur Barat and Barat, Farlam, Millson
Defendants
AND BETWEEN:
Nancy Barat in her Capacity as Estate Trustee for the Estate of Arthur Barat and Barat, Farlam, Millson
Plaintiffs by Counterclaim
– and –
Windsor Family Credit Union Limited and The Corporation of the City of Windsor
Defendants by Counterclaim
REASONS FOR JUDGMENT
Campbell J.
Released: February 3, 2015