Court File and Parties

DIVISIONAL COURT FILE NO.: 571/17 DATE: 2017-10-19 SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT

RE: Danilo Ceballos, Plaintiff/Appellant AND: Honda Canada Finance Inc. et al., Defendants/Respondent

BEFORE: SPIES J.

COUNSEL: Danilo Ceballos, self-represented Amanda Smallwood, Duty Counsel Amicus Charles Neuwald for Honda Canada Finance Inc. Charles Sinclair, for the Proposed Defendants

HEARD at Toronto: October 12, 2017

Endorsement

[1] Danilo Ceballos brought a motion before me to extend the time to serve and file a motion for leave to appeal to the Divisional Court from the order of Madam Justice Akbarali dated May 17, 2017, dismissing his motion to set aside the default judgment obtained by the defendant against him, dismissing his motion for a declaration that the defendant’s lawyer Charles Neuwald in is contempt of court and for other declaratory relief and his motion for leave to amend his statement of claim to add a number of defendants and new causes of action.

[2] Both Mr. Ceballos and the respondents prepared their material to argue the motion on the basis that the order of Justice Akbarali is interlocutory. I raised my concern at the outset of the hearing that to the extent that she dismissed the plaintiff’s motion to set aside the default judgment obtained against him by Honda Canada Finance Inc., (Honda Finance) that it was a final order. As the parties were taken by surprise I proceeded to hear Mr. Ceballos’ submissions on his motion in their entirety. Over the morning break I had an opportunity to review some case law and when I returned to court I confirmed my view that the dismissal of the plaintiff’s motion to set aside the default judgment is a final order and so leave is not required. I then heard submissions from the respondents on the balance of the order of Akbarali J.

[3] After hearing and reserving the motion it occurred to me that Justice Akbarali’s dismissal of the plaintiff’s motion for leave to amend his statement of claim to add certain defendants and new causes of action, is also a final order. I advised Mr. Ceballos and all counsel of this by letter. In particular, I advised them of the cases that I reviewed in coming to my conclusion including Bryson et al. v. Kerr, 13 O.R. (2d) 672, (Div. Ct.) , 424317 Ontario Ltd. v. Silber, [1989] O.J. No. 1382 (HCJ), and Denton v. Jones et al. (1976), 13 O.R. (2d) 419 (HCJ). I also advised every one of the fact that there is an omission in the formal order of Justice Akbarali as it makes no reference to the fact that Mr. Ceballos was also seeking leave to amend his statement of claim to add new causes of action which was also dismissed. I noted that para. 3 of the Notice of Motion before Justice Akbarali specifically asked for leave to amend the statement of claim to incorporate the “new causes of actions” referred to in para. 2 of the Notice of Motion and to add certain defendants.

[4] In my letter I advised Mr. Ceballos and counsel that subject to any further submissions on this issue it seemed to me that the law is clear that the order of Justice Akbarali is essentially a final order in all respects, leaving the question of where the appeal properly lies.

[5] The amount of the default judgment is within the monetary jurisdiction of the Divisional Court although there has been some debate whether it is an order for payment or not in which case an appeal would lie to the Court of Appeal. This is discussed in Laurentian Bank of Canada v. Goldshmidt, 2013 ONCA 122 at paras. 3-6. As in Laurentian however, it is not necessary to resolve this debate in this case as Mr. Ceballos’ statement of claim seeks damages in the amount of $3 million. That clearly is beyond the jurisdiction of the Divisional Court.

[6] In my letter I advised everyone in light of the Laurentian decision that I proposed, again subject to further submissions, to dismiss the plaintiff’s motion without prejudice to Mr. Ceballos’ right to appeal the entire order of Justice Akbarali to the Court of Appeal. In the circumstances, as this issue was not flagged by respondents’ counsel, I proposed to make no order as to costs. I invited submissions in writing if anyone disagreed with my proposal or if anyone wished to make oral submissions. Ms. Smallwood advised me that although her role as duty counsel amicus is limited that she would speak to Mr. Ceballos about this new development to answer questions he might have. I thank her very much for her assistance to this Court.

[7] I heard from Mr. Sinclair by letter dated October 16, 2017 advising me that he accepts my conclusion that Mr. Ceballos’ right of appeal lies to the Court of Appeal. He submitted however that costs of the attendance before me be reserved to the Court of Appeal. He stated that while he appreciated that he did not raise the fact that Mr. Ceballos was in the wrong court, it was incumbent on Mr. Ceballos, although he is self-represented, to bring his appeal in the correct court. It is his position that even if he had identified the issue in advance the attendance would have been necessary and costs would have been incurred by his client. Mr. Neuwald sent a letter as well on October 16, 2017, adopting the position taken by Mr. Sinclair. I did not hear from Mr. Ceballos. I will come back to the issue of costs.

[8] On the hearing of the motion and in particular, Mr. Ceballos’ submissions with the assistance of Ms. Smallwood, I was able to better understand what I consider to be his grounds of appeal of the order of Justice Akbarali. I advised everyone that since Mr. Ceballos’ written material is somewhat confusing, no doubt since he is self-represented, that I would set out what I understood his concerns to be, hopefully to assist him in preparing to argue the appeal and assisting the respondents in responding to the appeal. I also stated that this would obviously in no way limit Mr. Ceballos in his argument of the appeal.

[9] Honda Finance is the company that financed Mr. Ceballos’ purchase of a Honda vehicle from Action Honda. Mr. Ceballos sued Action Honda for damages following a repair to his vehicle by Action Honda after it was in an accident. Mr. Ceballos alleges that Action Honda deceitfully concealed the true extent of the damage to the vehicle. Mr. Ceballos took the position that because of his action claiming damages against Action Honda that he did not have to continue to pay Honda Finance the amounts owing to Honda Finance. He also sued Honda Finance. Honda Finance counterclaimed, re-possessed the vehicle and sold it, which Mr. Ceballos alleges was unlawful because in his claim against Action Honda he has claimed injunctive relief to prevent the disposition of the vehicle which he says evidence in support of his claim for the non-disclosure of the true condition of the vehicle.

[10] The issues Mr. Ceballos has with the order of the motions judge, as I understand them, are as follows:

a) Mr. Ceballos argues that the motions judge erred in finding that there was no evidence before her of a close relationship between Honda Finance and Action Honda such that the principle of “close connectedness” would apply. He relies on the Conditional Sales Contract that was assigned by Action Honda to Honda Finance at the time Mr. Ceballos purchased the vehicle. On this basis he submits that Honda Finance became responsible for the negligence of Action Honda, relying on Canada Trustco Mortgage Company v. Gladding, [1995] O.J. No. 1207 (S.C.J.) and Federal Discount Corporation Ltd. v. St. Pierre, [1962] O.R. 310 (C.A.). It was on this basis that Mr. Ceballos claims that once he sued Action Honda he was legally entitled to stop paying the financing charges to Honda Finance, since he says that Honda Finance is responsible for the conduct of Action Honda.

b) Mr. Ceballos also submits he was not given the required reasonable notice before Honda Finance seized the vehicle as required by Prudent Financial Services Inc. v Akbary at paras. 28 -31. I do not know if this was argued before the motions judge.

c) Mr. Ceballos argues that the motions judge erred in not accepting his explanation for why he did not defend the counterclaim. This explanation is based on his receipt of a letter from Honda Finance advising him that the security on the vehicle had been discharged and the collateral security held in support of his borrowing ad been released. The details of the discharge are then set out. The letter begins by stating it is for information purposes only and “no action is require on your part” [emphasis in original]. Mr. Ceballos stated that because of this statement he believe that he did not have to take any further action. He alleges that he wrote to Mr. Neuwald twice to follow up on this as well as making telephone calls and according to Mr. Ceballos he was not told he had to defend the counter claim or that Honda Finance would be noting him in default.

d) Mr. Ceballos argues that the motion judge erred in finding he did not have a recognizable cause of action against Mr. Neuwald or any of the intended defendants for contempt of court, conspiracy or misrepresentation. In this regard, at least one of the claims Mr. Ceballos wishes to make against Mr. Neuwald and the other members of his firm is that he alleges they acted in bad faith in instructing the seizure and sale of the vehicle even though it was a necessary piece of evidence in Mr. Ceballos’ action against Action Honda. I understand this is what he relies upon in alleging that Mr. Neuwald was in contempt of court. Mr. Ceballos relies on Susin v. Susin, 2014 ONCA 733 at paras. 23-24 for the definition of contempt and the fact that breach of a prior court order is not the only type of conduct that will justify a finding of contempt. This ties in to his claim that the motion judge erred in finding that Mr. Neuwald and the others were acting in the scope of their employment. Mr. Ceballos relies on Wilson v. Alharayeri, 2017 SCC 3 at para. 50 for the proposition that bad faith can attract personal liability.

[11] I have considered the submissions of counsel with respect to the costs of this motion. Mr. Sinclair filed a Costs Outline for $3,152 in partial indemnity costs. Mr. Neuwald did not file a Costs Outline but submitted his costs were the same. Their combined claim for costs is excessive since there is a lot of duplication in the facta. However, for the reasons that follow, I do not need to fix these costs as I have decided that my initial proposal that there be no costs is the just decision with respect to costs. Had counsel taken the position that Mr. Ceballos was in the wrong court I do not accept their submission that an attendance would necessarily have been required, certainly not a lengthy attendance. Mr. Ceballos filed an affidavit in support of his motion and although there are issues with its form, he enclosed an audio recording of his conversations with staff at the offices of the Court of Appeal. He brought a proper affidavit to court, on the advice of Ms. Smallwood, which he served on counsel in court. In short Mr. Ceballos has deposed that he was advised on June 15, 2017 by someone at the offices of the Court of Appeal that his appeal was to the Divisional Court. In light of this I expect that had counsel contacted Mr. Ceballos that he would have consented to bringing his appeal in the Court of Appeal, particularly as it means he does not need leave. This would have avoided the costs incurred by counsel. Accordingly there shall be no order as to costs of this motion nor will I reserve those costs to the Court of Appeal as requested.

[12] For these reasons Mr. Ceballos’ motion to extend the time to serve a Notice of Motion for leave to appeal is dismissed without prejudice to his right to appeal the order of Justice Akbarali to the Court of Appeal. No order as to costs.

[13] Although Mr. Ceballos will not need to seek leave, in order to appeal to the Court of Appeal, he will have to request an extension of time to appeal to that court which, in the circumstances, I would hope the respondents consent to.

SPIES J.

Date: October 19, 2017