DIVISIONAL COURT FILE NO.: 054/16
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: JORGE BERNHARD, Applicant/Plaintiff
AND:
SHANDISS MCDONALD, A.K.A. SHANDISS WEWIORA, A.K.A. SHANDISS WEWIORA MCDONALD, Respondent/Defendant
BEFORE: Dambrot J.
COUNSEL: Timothy S.B. Danson, for the Applicant/Plaintiff
Peter F.C. Howard and Aaron L. Kreaden, for the Respondent/Defendant
HEARD: In writing
ENDORSEMENT
1Jorge Bernhard (“the applicant”1) seeks leave to appeal from the order of Wright J. dated November 25, 2015. This order dismissed the applicant’s motion for an interim order, pursuant to s. 104 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 44 of the Rules of Civil Procedure, compelling Shandiss McDonald (“the respondent”) to deliver up forthwith to the applicant the Irish sport horse, Rockfield Grant Juan (“Juan”).
Background
2The respondent and her husband (“the McDonalds”) aspired to become world class equestrians. By 2006, they had acquired some of their own horses and rode for various owners. At around that time, they were contacted by the applicant and his wife (“the Bernhards”), and the four of them agreed to an arrangement whereby the McDonalds would care for the Bernhards’ personal horses and look after their farm, and in exchange the McDonalds would be provided with room and board and access to the Bernhards’ riding facilities.
3In 2007, the Bernhards became interested in competitive eventing and started purchasing horses for that purpose, and the McDonalds successfully trained them. By 2010, as a result of the McDonalds’ success in training the Bernhards’ horses, the Bernhards wanted to acquire more horses that could be potentially trained to reach the upper levels of eventing.
4In 2010, the Bernhards and the McDonalds travelled to Europe together with the intention that the applicant would purchase some young horses to be trained as event horses. On November 22, 2010, the applicant did in fact purchase four horses, referred to as the Irish Horses, one of which was Juan.
5According to the respondent, these four horses were acquired in partnership between the McDonalds and the Bernhards. Although the applicant paid the upfront costs of the Irish Horses, they were selected on the advice and expertise of the McDonalds. The McDonalds further contributed to the partnership by agreeing to commit their time and expertise to caring for them without charging their standard rates. Ordinarily, they would have charged 10-15% commission for their recommendations on the Irish Horses and approximately $1200 / month to care for and train them. The McDonalds agreed to absorb these costs on the understanding that: i) the Irish Horses would be kept for the long-term; ii) the Bernhards would defer to the McDonalds on their development prospects for becoming upper level horses; and iii) the Irish Horses would not be sold out from under the McDonalds, unless the decision to do so was made jointly as among the McDonalds and the Bernhards.
6Again according to the respondent, upon their return to Canada, the Bernhards and McDonalds each initially lived up to their ends of the bargain: the Bernhards paid expenses until October 2012, and the McDonalds trained and added value to the horses, all without further cost to, or payment from, the Bernhards.
7In October 2012, again according to the respondent, the applicant advised that he was no longer comfortable with incurring the $7500-$8000 per month that he was paying to cover the expenses of the Irish Horses. The parties agreed to modify their arrangement such that the Bernhards’ monthly expenditures would be capped at $5000, with the McDonalds covering all additional amounts. Not only were the McDonalds absorbing the costs associated with training and caring for the Irish Horses, they were now paying approximately $2500-$3000 per month of their own money to cover the horses’ expenses. The applicant disputes the reason for the change, but he admits that the McDonalds began paying for expenses.
8In May 2013, again according to the respondent, Mr. Bernhard advised the McDonalds that, due to his financial situation, he no longer wished to incur any expenses relating to the Irish Horses. Rather than being forced to sell the horses, the McDonalds and the applicant agreed that the McDonalds would assume all of the expenses going forward in exchange for being given a one third ownership interest in the Irish Horses. The parties agreed to a modification of the Agreement in the subsequent weeks to account for the fact that the Bernhards wished to maintain ownership over Porsch Pride. Accordingly, the Bernhards continued to pay a portion of Porsch Pride’s expenses, while the other three Irish Horses were the exclusive responsibility of the McDonalds. Again, the applicant disputes the reason for the further change but admits that the McDonalds took over the expenses. More importantly, he denies that the McDonalds were given a one third ownership interest in the Irish Horses. However, he acknowledges that the McDonalds had, and now the respondent has, a one third interest in the proceeds of sale of Juan.
9As the McDonalds were then fully paying for the expenses of three of the Irish Horses, they decided that the timing was right for them to pursue their goal of competing in the United Kingdom. Before doing so, they raised this plan with the Bernhards. The applicant testified before Wright J. that he was reluctant to agree to this arrangement and to lose contact with the horses. However, a contemporaneous email from the applicant’s wife suggests that the Bernhards were fully supportive of the plan.
10In September 2013, the McDonalds left for the United Kingdom with the Irish Horses. In addition to paying for all of the expenses for three of the four horses (excluding Porsch Pride), the McDonalds’ conduct was consistent with the ownership rights they say they had been granted under the Agreement. Between October 2013 and June 2014, the McDonalds continued their training and competition regimen in the United Kingdom.
11On June 14, 2014, the respondent’s husband fell from a horse and died as a consequence of his injuries. In the months that followed, two of the four Irish horses were sold. Two thirds of the proceeds of sale went to the applicant, and one third to the respondent.
12The respondent’s work visa in the United Kingdom was for a two-year period. As a result, she returned to Canada in the summer of 2015, as did Juan. Around this time, the applicant advised the respondent that he was of the view that Juan was an investment and that it was in his and her best interests to sell Juan and divide the proceeds. The respondent was of the view that the applicant’s demand to sell Juan was inconsistent with their partnership, and, in particular, her one third ownership interest in Juan.
13The applicant brought an action against the respondent on September 23, 2015, claiming delivery of Juan on an interim and permanent basis; a declaration that he is the legal owner of Juan and has full control and decision making authority with respect to Juan; damages in the amount of $500,000 for theft and conversion; aggravated damages in the amount of $25,000; and punitive damages in the amount of $75,000.
14The applicant brought a motion for an interim order pursuant to s. 104 of the Courts of Justice Act and Rule 44 of the Rules of Civil Procedure compelling the respondent to deliver up Juan forthwith to him.
15On the motion before Wright J., the applicant claimed he is the sole owner of Juan, and he is entitled to possession. However, as I have already noted, he acknowledged that the respondent has a one third interest in the proceeds of sale of Juan.
The Reasons of the Motions Judge
16Justice Wright identified the only issue to be determined on the motion before her was whether the Court should compel the respondent to deliver up Juan prior to the trial of the action. She stated that the case law makes it clear that an order for interim possession pursuant to s. 104 of the Courts of Justice Act and Rule 44 of the Rules of Civil Procedure is a discretionary and extraordinary remedy only to be awarded in exceptional cases. The moving party must show substantial grounds for each of the factors contained in Rule 44. The test requires a high degree of assurance that the plaintiff will be successful at trial. Where there is documentation supporting the plaintiff’s position, the substantial grounds test will likely be met. However, in cases where issues of credibility will determine the action, the test is less likely to be met.
17Rule 44.01 requires the moving party to file an affidavit setting out: (1) a description of the property sufficient to make it readily identifiable; (2) the value of the property; (3) that the plaintiff is the owner of the property or lawfully entitled to possession of the property; (4) that the property was unlawfully taken from the possession of the plaintiff or is unlawfully detained by the defendant; and (5) the facts and circumstances giving rise to the unlawful taking or detention. The motions judge then considered each of these matters in turn.
18With respect to the third and fourth matters, the motions judge said that the parties have competing and diametrically opposing versions of the events which could not be resolved without findings of credibility best left to the trier of fact at trial. She provided a cogent summary of the credibility issues that had to be resolved.
19In view of the credibility issues that she identified, the motions judge was unable to conclude that the plaintiff is the sole owner of Juan or that he is lawfully entitled to possession of Juan. As a result, it could not be said that there is a high degree of assurance that the plaintiff will succeed at trial. She concluded that the motion failed on the substantial grounds test, and there was no need to go on to consider the balance of convenience. However the motions judge noted that the parties agreed that the applicant had at least partial ownership of Juan, and, as a result, she ordered the respondent to: disclose the whereabouts of Juan to the applicant, provide him with some form of access (which she later clarified was to be twice per month) and ensure that Juan was not relocated or moved without the express, written permission of both parties.
20The applicant applied for leave to appeal the decision of Wright J. to the Divisional Court, and identified some eleven grounds of appeal.
Test for Leave to Appeal
21The test for granting leave to appeal under Rule 62.02(4) is well-settled. Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere and that it is, in the opinion of the judge hearing the motion, “desirable that leave to appeal be granted.”
22Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – this aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is open to very serious debate. In addition, the moving party must demonstrate matters of importance that go beyond the interests of the immediate parties and involve questions of general or public importance relevant to the development of the law and the administration of justice.
Analysis
23I begin by noting that the notice of motion for leave to appeal was brought on February 1, 2016. In other words, the motion was brought more than two months after the pronouncement of the decision of Wright J. in the presence of the parties, well in excess of the 15-day time limit permitted by Rule 61.03(1). The applicant argues that he is not out of time, because a supplementary endorsement of the motions judge clarifying the access portion of the November 25, 2015 order was delivered on March 14, 2016. The applicant filed an amended notice of motion on March 29, 2016.
24In my view, there is no merit to the position advanced by the applicant. The motion for leave was brought out of time. In the alternative, in his factum, the applicant asks for an extension of time, simply on the basis that there is, in his submission, substantial merit to the proposed appeal, and the justice of the case requires it, together with an absence of prejudice to the respondent.
25I am not inclined to grant an extension of time in this case, but in light of my resolution of the merits of the motion, I do not need to finally decide the question of an extension of time. I turn now to the merits.
26The applicant argues that leave should be granted for the following reasons:
The decision conflicts with the decision of Molloy J. in Clark Door of Canada Ltd. v. Inline Fiberglass Ltd., [1996] O.J. No. 238 (Gen. Div.), who held that there is a broad residual discretion under Rule 44 to make whatever order is just, and made no mention of the remedy being “extraordinary” or “exceptional”;
While the decision in Clark Door imposes an onus on the plaintiff to establish “substantial grounds” for his or her claim and requires a “high degree of assurance that the plaintiff will be successful at trial”, these requirements are vague, uncertain and undefined, and do not mean that the remedy is extraordinary or exceptional;
While Clark Door is the leading case, it has never been considered by an appellate court and it is time for an appellate court to clarify the law;
The notion that the remedy is “extraordinary” or “exceptional” completely skews and distorts the legal analysis and burden the moving party must meet; and
The decision is inconsistent with the public policy of discouraging self-help.
27In my view, the arguments advanced by the applicant are little more than a plea to be permitted to reargue the case. There is no inconsistency between this decision and the decision of Molloy J. While she did not use the words “extraordinary” or “exceptional” in her decision, she did impose a heavy burden on a party seeking to employ Rule 44, and properly so. The remedy sought is analogous to execution before trial, which must be granted sparingly. Where the determination of a real credibility issue is fundamental to the granting of the relief sought, it is ordinarily best left to trial. I see no compelling need for this issue to be examined by an appellate court. Finally, I note that the words “extraordinary” or “exceptional” have been used in other cases. See, for example, Higher Ground LLC v. Langstaff, 2010 ONSC 4108, at paras. 10-11 and Manitoba Agricultural Credit Corp. v. Heaman, 1990 CarswellMan 203 (C.A.), at para. 26.
28Finally, I note that the concern about self-help is a red herring in this case. The applicant has never been in possession of Juan. The respondent has been in possession of Juan throughout, for the most part with the consent of the applicant. She simply refuses to give up that possession, arguing that she is lawfully entitled to it.
29While the applicant did not organize his arguments in terms of the two tests in Rule 62.02(4), I am of the view that neither test is met. The moving party has not established that there is a conflicting decision of another judge or court in Ontario or elsewhere and that it is desirable that leave to appeal be granted. Nor has he established there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted.
Disposition
30The motion for leave to appeal is dismissed.
31The parties have provided me with cost outlines, which include their detailed submissions on the issue. I award costs to the respondent fixed in the amount of $7,000 all inclusive, payable forthwith.
M. DAMBROT J.
Date: June 17, 2016
Footnotes
- I am not certain why the moving party has styled himself as the Applicant/Plaintiff, since he is the plaintiff in the action, was the moving party before Wright J., is the moving party before me and would be the appellant if leave is granted, but I will refer to him as the applicant to avoid additional confusion.