Court File and Parties

CITATION: Dharsi v. Manji, 2016 ONSC 703

COURT FILE NO.: CV-12-00450094-0000 DIVISIONAL COURT FILE NO.: 445/15

DATE: 20160128

SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT

RE: THE ESTATE OF HASSANALI DHARSI by its Estate Trustee MOEZ DHARSSI, Plaintiff/Appellant AND: SADRUDIN DHARSSI MANJI a.k.a. SAUDRUDIN DHARSSI MANJI and LEADER FOOD AND NUT IMPORTERS LTD., Defendants/Respondents

BEFORE: Thorburn J.

COUNSEL: James Morton, for the Plaintiff/Appellant Albert Formosa, for the Defendants/Respondents

HEARD at Toronto: January 28, 2016

ENDORSEMENT

Overview

[1] The Plaintiff/Appellant, Moez Dharssi, appeals from the final order of Master B. McAfee dated August 18, 2014.

[2] In her reasons, Master McAfee dismissed the Appellant’s motion for an Order for leave to withdraw admissions respecting ownership of property and corporate shares. She also dismissed his request to consolidate an Application with an action dealing with the estate and subject property.

[3] Master McAfee ordered the sale of the property on the basis of a consent order of Pollak J. dated September 6, 2013. In that Order, Pollak J. held that,

“all necessary inquiries be made, accounts taken, costs assessed and steps taken by the Master at Toronto for the sale of the land described…in accordance with the interests of the parties entitled to share in it, as determined by the Master. This court further orders that the land be sold under the direction of and in accordance with the terms set by the Master, there being no encumbrances on the land, and that the purchaser pay the purchase money into court to the credit of this proceeding subject to the further order of the court.”

[4] Master McAfee held that the Plaintiff failed to provide an adequate explanation for changing his position about ownership of the property and consolidating the proceedings and that to permit him to do so now would be contrary to the terms of the consent order rendered over a year earlier.

[5] The Appellant claims the Master made an error of law or misapprehended the evidence such that there was a palpable and overriding error on a matter that is vital to the Plaintiff.

[6] The Appellant claims the Master erred in law and fundamentally misapprehended the evidence by holding the consolidation of the application and action would delay the sale of the property. The Appellant claims consolidation and amendment of the pleading would not result in delay as all parties agreed to the sale of the property, and to have the proceeds paid into court.

[7] The Appellant agreed that the test for withdrawing admissions is that a reasonable explanation for the change in position regarding the withdrawal of admissions must be provided. The Appellant claims he did not become aware of the new facts as information was provided to him in piecemeal form.

[8] The Appellant claims the Master failed to consider that the proceedings are at an early stage and the admission made was by facts discovered only after the commencement of the proceeding. In so doing, the Appellant claims she failed to properly apply the law to the facts.

Background Facts

[9] In or about 1974, Hassanali Dharsi and his two brothers, Sadrudin Dharssi Manji and Saudrudin Dharssi Manji, established Leader Food and Nut Importers Ltd. (“Leader”), a business importing and distributing grocery products in Canada. In 1986, the three brothers purchased a property at 28 Skagway Avenue, Scarborough, Ontario and took title as tenants in common.

[10] After Hassanali Dharsi’s death, title to the Property was transferred to his two brothers as tenants in common with an equal interest. Hassanali Dharsi’s son, Moez Dharssi, is the estate trustee for Hassanali Dharsi’s estate.

The Proceedings

[11] On February 8, 2012, Manji commenced an application against Moez in his capacity as estate trustee, seeking an order directing the sale of the Property and an order directing a reference to determine all issues relating to the conduct of the sale and the taking of accounts. Leader is not a party to the Application.

[12] On March 29, 2012, Moez, in his capacity as estate trustee, commenced this action against Manji and Leader for, among other things, damages for misappropriation and/or conversion of funds and/or property and oppression.

[13] On July 31, 2013, Leader commenced an action against Moez personally, not as estate trustee, seeking damages for unpaid rent arrears in relation to a sublease of the Property.

The Consent Order of Pollak J.

[14] The parties to the Application consented to an order regarding the sale of the Property. On September 6, 2013, Pollak J. ordered that, “all necessary steps be taken by the Master to sell the land, in accordance with the interests of the parties entitled to share in it as determined by the Master.” She further held that, “the land be sold under the direction of and in accordance with the terms set by the Master … and that the purchaser pay the purchase money into court to the credit of this proceeding, subject to further order of this court.”

The Motion to Withdraw Admissions and to Consolidate the Action before Master McAfee

[15] On May 26, 2014, Moez brought a motion to withdraw admissions with respect to ownership of the Property, and to amend the Statement of Claim and to consolidate the Application, Action and Arrears Action.

[16] The Respondents consented to an Order that leave be granted to amend the Statement of Claim with respect to many proposed amendments. The Respondents contested the Appellant’s motion to these proposed amendments on the grounds that they are an abuse of process, scandalous, frivolous and/or vexatious (and would have been struck if pleaded originally), or were admissions already made.

[17] Master McAfee dismissed the Appellant’s motion with respect to the contested proposed amendments. The Master was not satisfied that there was a reasonable explanation for the change in the Appellant’s position.

[18] The Master also dismissed the Appellant’s motion to consolidate the Application, Action, and Arrears Action on the grounds that the order sought was contrary to Pollak J.’s order. The Master held that, in any event, she was not satisfied that consolidation is the most efficient or least complex manner for these matters to proceed.

The Standard of Review

[19] The standard of review in an appeal from the order of a master is correctness for an error of law, palpable and overriding error for an error of fact, and correctness or palpable and overriding error for a question of mixed fact and law, depending on whether there is an extricable legal principle. (Zeitoun v. Economical Insurance Group 2008 20996 (ON SCDC), [2008] O.J. No. 1771 at para. 40, 91 O.R. (3d) 131 (Ont. Div. Ct.), (2009) ONCA 415 at para. 1 and Wellwood v. Ontario Provincial Police, 2010 ONCA 386 at para. 28).

The First Issue: The Request to Amend the Pleading

[20] There is no absolute right to amend a pleading although the general rule is that amendments are presumptively approved. (Marks v. Ottawa, 2011 ONCA 248 at para. 19).

[21] Where the proposed amendment involves withdrawal of an admission, Rule 51.05 provides that the amendment may be withdrawn on consent or with leave of the court. The onus is on the party requesting the amendment to satisfy the court that it should be permitted to withdraw admissions. (Bradhill Masonry v. Simcoe County District School Board, 2011 ONSC 6230 at paras. 18 - 19, 2011 CarswellOnt 11350).

[22] A party seeking to withdraw an admission must establish that:

(i) there is a triable issue with respect to the amendment;

(ii) there is a reasonable explanation for the change in position; and

(iii) there is no prejudice to the other party that cannot be compensated by costs.

(194388 Ont. Inc v. The Toronto-Dominion Bank, 2014 ONSC 215 at paras. 21 - 22, 2014 CarswellOnt 659)

[23] The Appellant sought to withdraw a clear admission that the property was jointly owned by the Respondents Dharsi and Manji. He sought to revoke that admission and instead, to assert that the property and shares of the corporation were held in trust by them for the benefit of the corporation.

[24] The Master concluded that the Appellant did not have a reasonable explanation for its change in position about ownership of the property. She held that, “I am not satisfied that there is a reasonable explanation for the change in the plaintiff’s position” or that the change in the plaintiff’s position was a result of newly obtained documentation from Manji. (Pepper v. Zellers (2006), 2006 42355 (ON CA), 83 O.R. (3d) 648 at para. 19 (CA), Central Okanagan School District No. 23 v. Renaud, 1992 81 (SCC), [1992] 2 S.C.R. 970 at para. 26).

[25] In coming to this conclusion, she correctly considered the Appellant’s position in the context of the evidence as a whole. She concluded that:

(a) the change in the Appellant’s position was not the result of newly obtained documentation from Manji;

(b) the Appellant had the relevant documents before issuing the Statement of Claim;

(c) the Appellant had retained an accountant in June 2011 to review the financial records;

(d) the Appellant had all the relevant documentation before consenting to the Order of Justice Pollak; and

(e) there was no evidence that the Appellant’s admission that the Property is owned by Manji and Dharsi was inadvertent or resulted from wrong instruction.

[26] The Appellant had also retained counsel to advise him and to draft the pleading prior to the alleged discovery of this admission.

[27] The Appellant claims she failed to take into account that the proceedings are at an early stage and new facts were discovered after the commencement of the proceedings (although no details as to when and how are provided).

[28] I find that the Master made no error in coming to her conclusion as the Appellant provided no reasonable explanation for the request to Amend his pleading to withdraw a clear admission although it was made (a) over a year after the consent order of Pollak J., (b) long after the Appellant had engaged an accountant and legal counsel to assist him, and (c) after they had all of the documents to establish ownership of the shares and the property. The pleadings have been ongoing for several years and in any event, even if the Claim has not greatly advanced, there must be a reasonable explanation for the request to withdraw an admission and there was not.

[29] For these reasons, I do not agree that the Master made an error of law or misapprehended the evidence.

The Second Issue: Consolidation of the Action

[30] The Master found that consolidating the Action and the Application would be contrary to Justice Pollak’s Order, which was made on consent and that it would result in further delays. I agree.

[31] Justice Pollak’s Order was clear that the property was to be sold in accordance and that the interests of the parties entitled to share in it were to be determined by the Master.

[32] The Master held that even if the process for dealing with the Property had not already been determined, she would decline to consolidate the Action, the Arrears Action and the Application because consolidation in this case, would lead to increased complexity.

[33] The Master correctly noted that the Action is, “largely about Leader and the alleged improprieties of Manji”, whereas the Application, “only relates to the sale of the [Property]” and the Arrears Action is a leasing dispute between Leader and Moez in his personal capacity, not in his capacity as Estate Trustee. The Master made no error in coming to this decision.

[34] The Appellant has not sought an order for consolidation in the Notice of Appeal although given the fact that the Respondents had actual notice that this argument would be advanced, this alone may not have proved fatal to the Appellant’s argument.

[35] Finally, the Appellant’s argument on consolidation, that all proceedings would be dealing with the same issue (namely ownership and division of the Property), depends on the Appellant successfully withdrawing its admission with respect to ownership of the property. The admission was not withdrawn.

[36] I see no error in the Master’s reasons or her conclusion that consolidation would increase the delay.

Conclusion

[37] For these reasons, the Appeal to allow the Appellant to Amend its Claim to withdraw admissions respecting ownership of a property and shares of the corporation, and for leave to amend the Statement of Claim, and to consolidate the proceedings brought by these parties is dismissed.

[38] On the agreement of the parties as to quantum, costs in the amount of $8,000 are payable by the Appellants to the Respondents.

Thorburn J.

Date: January 28, 2016