CITATION: Royal Bank of Canada v. Bodanis, 2017 ONSC 6850
DIVISIONAL COURT FILE NO.: 270/17 DATE: 20171124
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
ROYAL BANK OF CANADA Plaintiff/Respondent
– and –
DAVID BODANIS and IRENE BODANIS also known as IRENKA BODANIS Appellants/Defendants
Larry Keown, for the Respondent/Plaintiff Domenic Saverino, for the Appellants/Defendants
HEARD at Toronto: November 15, 2017
REASONS FOR JUDGMENT
LEDERMAN J.
NATURE OF APPEAL
[1] The appellants, David Bodanis and Irene Bodanis, appeal from the order of Master Short dated May 15, 2017 wherein he struck out the appellants’ statement of defence for failure to comply with interlocutory orders.
[2] Master Short’s Endorsement reads as follows:
Mr. Bodanis and Irene Bodanis did not attend although clearly aware of the motion date since sent material by fax at 10:16 a.m. to moving party’s counsel office (he was in court for this scheduled 10 a.m. motion) Rule 1.04 declares that the Rules are to be liberally construed to secure the “just most expeditious and least expensive determination of civil proceedings. Other Masters previously gave “Last Chance” Orders. My reading of the file and the failure to now attend convinces me that the only just result is to strike the Defendants pleadings with costs of motion fixed at $5,000.00. And I so Order.
BACKGROUIND
[3] In 1999, the respondent (“RBC”) obtained a judgment against David Bodanis but was unable to collect upon it. On April 11, 2014, RBC brought this action against the appellants seeking, inter alia, a declaration that the transfers of certain residential property constituted fraudulent conveyances and that David Bodanis is the owner of the property.
[4] The appellants’ statement of defence asserted that the property was purchased through funds acquired by Irene Bodanis, that there is no connection between David Bodanis and Irene Bodanis with respect to the ownership of the property, and that, at all times, Irene Bodanis had owned the property.
[5] Over the next three years, there has been a pattern by the appellants in breaching court orders and generally engaging in behaviour which appears designed to delay the action.
[6] On May 6, 2015, Master Dash made an order imposing a discovery plan (because the appellants had failed to cooperate in agreeing upon one). The discovery plan was very detailed in terms of the documents to be produced by the appellants. Among other things, it referred to all documents relating to ownership, transfer of ownership, trust arrangements and any other transaction involving the property, all documents relating to the expenses for the property, all documents relating to the financial status of the appellants from June 24, 1999 to the present and all documents relating to the transfer of funds between the appellants and third parties related to the ownership, transfer or trust agreements associated with the property. An Affidavit of Documents was to be delivered by June 30, 2015.
[7] The appellants failed to comply with Master Dash’s order and RBC moved to strike the statement of defence for the appellant’s breach of Master Dash’s order.
[8] On May 2, 2016, Master Graham noted that a year had passed since Master Dash’s order and the appellants had yet to deliver an Affidavit of Documents, that Irene Bodanis failed to attend to be examined for discovery and they had not paid the costs order against them. In his Reasons, at paras. 26 and 29, Master Graham stated:
Although the defendants’ conduct in breaching Master Dash’s order of May 6, 2015 is worthy of sanction, the appropriate order in this case is to give the defendants one more opportunity to comply with the order but to require them to pay the costs of the motion arising out of their breach on a full indemnity scale. My decision in this regard is similar to that of Eberhard J. in Schaer, supra, where she held that a plaintiff who had not paid a costs order of $10,000.00 be given a further opportunity “to comply with the cost order in order to continue to adjudication on the merits” (Schaer, paragraph 17).
I emphasize that my decision on this motion is a “close call” and that this order is intend[ed] to give the defendant one final chance to comply with Master Dash’s order, including the costs award.
[9] Master Graham thereby made it clear that he was giving the appellants one final chance to comply with their obligations that had been ordered by Master Dash.
[10] On October 5, 2016, RBC brought a motion to strike the appellants’ defence because of the breaches of Master Dash and Master Graham’s prior orders. It came on before Master Dash.
[11] In his Endorsement of October 5, 2016, Master Dash stated:
The behaviour of the Bodanises cannot be construed other than contumelious – as a flagrant disregard for orders of the court and their obligations as litigants. There is a compelling argument that they should have no further indulgences – not even a 30 day adjournment of this motion to give Mr. Kotnala time to address the issues. I note that Mr. Kotnala’s firm were the original lawyers of record for the defendants but obtained an order removing themselves on November 28, 2014. This action has been stalled by the actions and inactions of the defendants who have yet to supply the necessary information to justify the property having been transferred into the name of Mrs. Bodanis including all of the financial disclosure set out in the court ordered discovery plan.
For the defendants to stave off the striking of their defence they will be required to comply on very short order with outstanding court orders. Even then there is no guarant[ee] the defence will be permitted to proceed. That has yet to be determined. I am granting this brief adjournment for both Mr. and Mrs. Bodanis to show they will comply with their outstanding court ordered requirements as they now will, hopefully be able to retain Mr. Kotnala’s firm to advise them and possibly represent them. If they fail to comply with the outstanding orders I hold out little to no hope that the defence will not be struck on the return date. It will proceed on the next return date whether the Bodanises are represented or self-represented. Retaining yet new counsel will not be grounds for a further adjournment. The defendants will be responsible for the plaintiff’s full indemnity costs thrown away of this adjournment since the defendants’ behaviour, including the delay in contacting counsel, is reprehensible behaviour.
[12] The motion was adjourned to November 17, 2016, before Master Dash. The terms of the adjournment were that each appellant would serve their respective sworn Affidavit of Documents that included all documents as set out in the court ordered discovery plan by October 20, 2016 and pay outstanding costs orders by October 31, 2016.
[13] On November 17, 2016, the matter came back before Master Dash. In his Endorsement, he noted that the appellants had delivered $15,000 by way of payment of most of the outstanding costs orders, but pointed out that the Affidavit of Documents was still deficient in that important relevant documents were missing as to the conveyancing, contractual, financing and trust documentation from 1999 to 2013 which had been spelled out in the discovery plan. Also missing were the banking and tax records going back to 1999 and sale and trust agreements relating to the property. He concluded by saying:
“I agree with Mr. Keown that was has been done today is “too little, too late”; however, dismissal is an extreme remedy. The defendants have shown they are trying. They have paid the costs associated with their dilatory behaviour and they now know that any further breaches will continue to cost them and that such costs must be paid if they wish to defend this action”.
[14] Master Dash then made certain procedural orders that were to be followed. However, the appellants did not comply in that they did not serve a further and better Affidavit of Documents, and productions in compliance with the court ordered discovery plan which they were required to do within 60 days. They did not bring a Rule 30.10 motion to obtain documents from third parties, something they were required to do, if necessary within 30 days; they did not cooperate in the scheduling of examinations for discovery. Irene Bodanis failed without proper notice to appear at a court ordered mediation and they did not pay their share of the mediator’s fees. They have not paid costs of $4,000 that were ordered to be paid by January 20, 2016.
[15] This was all before Master Short on May 15, 2017 when he struck the appellants’ statement of defence.
STANDARD OF REVIEW
[16] A decision to dismiss an action or strike a pleading because of default is entitled to deference, unless that decision is shown to have been exercised on wrong principles or based upon a misapprehension of the evidence such that there is a palpable and overriding error: Starland Contracting Inc. v. 1581518 Ontario Ltd., 2009 CarswellOnt 3431 (Div. Ct.) at para. 26.
ANALYSIS
[17] The appellants argue that Master Dash, who had ordered the discovery plan to be implemented never did make a “last chance” order. Rather he acknowledged that the appellants had shown they had been trying to comply and only warned there would be costs consequences for any further breaches of court orders.
[18] The appellants submit that in view of the fact they paid most of the costs that were ordered, and have been largely self-represented, a further indulgence is warranted.
[19] However, Master Dash recognized that dismissal of the action is an extreme remedy and gave the appellants yet another chance, keeping in mind that he said previously, on October 5, 2016, that the appellants’ conduct was “contumelious” and constituted “a flagrant disregard for orders of the court” and that “there is compelling argument that they should have no further indulgences”.
[20] Master Short had jurisdiction to make the order that he did under Rule 60.12(b) which states that where a party fails to comply with an interlocutory order, the court may dismiss the party’s proceeding or strike out the party’s defence.
[21] The default in this case was particularly egregious. The Affidavit of Documents and production of documents that were required for by the court ordered discovery plan go to the very heart of this litigation namely whether the transfer of the property was bona fide or a fraudulent conveyance. The pattern of conduct of the appellants has been such that they never took the various orders of the Masters seriously even when they were told on more than one occasion it was their last chance to comply.
[22] Their conduct throughout this litigation has been one marked by delay, seeking adjournments and ignoring court orders, or complying only in a piecemeal way by paying some but not all of the costs orders.
[23] In the end, there has never been substantial compliance with the Masters’ orders as a proper Affidavit of Documents, essential to this litigation, was never delivered. As a result, although almost four years have passed since this action was commenced, and it has not advanced beyond the pleadings stage.
[24] This history of non-compliance of previous orders was before Master Short. He also took into consideration the fact that, although the appellants were aware of the motion to take place that morning before him, they deliberately chose not to attend or provide any explanation for their continuing defaults.
[25] The appellants submit that Master Short should have made inquiries about the fax they sent to RBC’s counsel that morning as it may have provided some explanations for their non-attendance.
[26] Given the appellants’ considerable litigation experience, one can reasonably assume they knew of the importance of attending on the motion if they wished to advance some excuse for further non-compliance. One can infer that the reason for their non-attendance is that they could advance no valid justification for their continuing defiance of court orders.
[27] This failure of the appellants to attend on that motion, together with the history of breaches of court orders entitled Master Short to make the order that he did.
[28] Having regard to the standard of review, his order is entitled to deference and taking into account the entire context of the proceedings, it cannot be said that he made any palpable and overriding error.
CONCLUSION
[29] For these reasons, the appeal is dismissed.
[30] RBC will have its costs of the appeal fixed at $8,000, all inclusive, payable by the appellants within 30 days.
___________________________ Lederman J.
Released: November 24, 2017
CITATION: Royal Bank of Canada v. Bodanis, 2017 ONSC 6850
DIVISIONAL COURT FILE NO.: 270/17
DATE: 20171124
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
ROYAL BANK OF CANADA Plaintiff/Respondent
– and –
DAVID BODANIS and IRENE BODANIS also known as IRENKA BODANIS Appellants/Defendants
REASONS FOR JUDGMENT
Lederman J.
Released: November 24, 2017