Fazli v. Advantageous Mortgage Inc., 2023 ONSC 4295

CITATION: Fazli v. Advantageous Mortgage Inc., 2023 ONSC 4295

DIVISIONAL COURT FILE NO.: 536/22 DATE: 20230724

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: MARYAM FAZLI and ALI SHAMS, Appellants

AND:

ADVANTAGEOUS MORTGAGE INC. and MARYAM SANI, Respondents

BEFORE: Nishikawa J.

COUNSEL: Maryam Fazli and Ali Shams, in person

David A. Brooker, for the Respondents

HEARD at Toronto: July 21, 2023 (by videoconference)

ENDORSEMENT

Overview and Background

1The Appellants, Maryam Fazli and Ali Shams, appeal from the order of Associate Justice Frank, dated August 16, 2022 (unreported), striking their Statement of Defence and Counterclaim for failure to comply with a costs order (the “Decision”). The Appellants submit that the Associate Judge denied them procedural fairness and erred by refusing to consider the merits of their claim.

2The Appellant, Ms. Fazli, worked for the Respondent, Advantageous Mortgage Inc. until February 2019. The Appellant, Mr. Shams, is Ms. Fazli’s spouse. The Respondent Plaintiffs brought a claim for breach of contract, defamation, and fraud against the Appellant Defendants. The Appellants served a Statement of Defense and Counterclaim (the “Statement of Defence”), alleging misappropriation of personality and injurious falsehood, and seeking unpaid wages/damages for pay in lieu of reasonable notice.

3The Appellants failed to provide an affidavit of documents and to attend examinations for discovery. The Respondents brought a motion to compel the Appellants to attend examinations for discovery. On July 27, 2021, Associate Justice Josefo granted the Respondents’ motion compelling the Appellants to attend examinations for discovery and ordered $2,200 in costs to the Respondents, to be paid within 30 days, plus 2 percent interest per year (“the July 27 Order”).

4The Appellants did not pay the costs set out in the July 27 Order. The Respondents then brought a motion to strike the Statement of Defence. On January 12, 2022, the motion was adjourned because the Respondents had requested insufficient time. On May 27, 2022, the motion was adjourned again to allow the Appellants time to pay the outstanding costs. The Appellants were given until July 29, 2022 to pay costs to the Respondents.

5The day before the hearing on August 12, 2022, the Appellants submitted an affidavit sworn by Mr. Shams stating that their late filing resulted from their status as self-represented litigants. The affidavit stated that they could not afford to pay the costs order because Ms. Fazli’s income was low and because Mr. Shams was in ill health and could not work outside the home.

The Decision

6In the Decision, the Associate Judge set out the law on striking a defence or dismissing a proceeding under rr. 57.03(2) and 60.12 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, noting that it is a remedy of last resort. The Associate Judge found that while self-represented parties are entitled to be heard, orders must be binding and enforced regardless of the parties’ representation because failure to ensure compliance with court orders in litigation is corrosive of the entire justice system. The Associate Judge held that it was appropriate to strike the Appellants’ Statement of Defence.

7The Associate Judge found that the Appellants had provided insufficient evidence of impecuniosity and ill health. Further, even if Mr. Shams could not work outside of the home, there was no explanation of any attempts to work from home. The Appellants were found to have had several opportunities to comply with the order and had been granted an extension. The Associate Judge found that the Appellants’ explanation for not paying the costs order had changed over time. First, the Appellants said they would appeal the order (which they did not), then that they believed the only consequence of not paying would be that interest accrued and, finally, that they were unable to pay. The Associate Judge found that the Appellants were using their self-represented status as an excuse and that they were not taking steps to comply with the Rules. The Associate Judge further found that the Appellants’ proposal that they pay by monthly installments was not in good faith because they had advanced no payments on the July 27 Order to date.

Issues

8This appeal raises three issues:

(a) Did the Associate Judge deny the Appellants procedural fairness?

(b) Did the Associate Judge err by not considering the merits of the claim?

(c) Should certain documents submitted by the Appellants be admitted on this appeal?

Analysis

Standard of Review

9The standard of review for questions of law is correctness. For questions of fact, the standard is palpable and overriding error. For questions of mixed fact and law, the standard is palpable and overriding error, unless there is an extricable legal principle, in which case, the standard of correctness applies: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. The same standards of review apply to appeals from an Associate Judge: Zeitoun v. Economical Insurance Group (2008), 2008 20996 (ON SCDC), 91 O.R. (3d) 131 (Div. Ct.), at paras. 40-41, aff’d 2009 ONCA 415.

10Where a breach of procedural fairness is alleged, a correctness standard of review applies: Law Society of Saskatchewan v. Abrametz, 2022 SCC 29, 470 D.L.R. (4th) 328, at paras. 26-30, 129, 169, and 179; Mission Institution v. Khela, 2014 SCC 24, [2014] 1 S.C.R. 502, at para. 79.

Issue 1: Did the Associate Judge Deny the Appellants Procedural Fairness?

11The Appellants rely on the Supreme Court of Canada’s decision in Baker v. Canada, 1999 699 (SCC), [1999] 2 S.C.R. 817, and the Rules of Civil Procedure to argue that they were denied procedural fairness by the Associate Judge, especially given the amount of damages being sought by the Respondents. They submit that they had an expectation based on the July 27 Order that the only consequence of not paying costs was the accrual of interest. Further, the Appellants submit that they were not given the chance to prove their financial situation.

12The Appellants’ reliance on Baker, which deals with procedural fairness before administrative decision-makers, is misplaced.

13In my view, there is no basis to the Appellants’ argument that they were denied procedural fairness. The Rules, specifically rr. 57.03(2) and 60.12, provide for the striking of a statement of defence in circumstances where a party fails to pay a costs order or comply with an interlocutory order. The Appellants were afforded multiple opportunities to avoid the consequences of the Rules. They were provided with time to pay the costs, to put forward evidence of their financial circumstances and/or to oppose the motion. The motion was first brought in October 2021 and was adjourned twice. At the hearing on January 12, 2022, Associate Justice La Horey gave the Appellants, who sought to have the Respondents’ Statement of Claim struck, an opportunity to bring a cross-motion and information about supporting material. At the hearing on May 27, 2022, the time to pay the costs order was extended. In addition, at the hearing on August 12, 2022, the Associate Justice granted the Appellants leave to file their affidavit even though it was served at the last minute.

14The Appellants also had ample warning of the consequences of failing to pay. In his endorsement of May 27, 2022, the Associate Judge specifically noted that the Appellants were at risk of having their Statement of Defence struck for failing to pay the costs order. At the latest, it was clear by that time that a continued failure to pay the costs would not only result in the accrual of interest.

15The Appellants further submit that the Decision was unfair because the Respondents also failed to comply with the July 27 Order in that they failed to attend examinations for discovery. Respondents’ counsel had advised the Appellants that the Respondents would not attend examinations for discovery until the costs were paid. As of the August 12, 2022 hearing, however, the Respondents were not in non-compliance with the order because the Associate Judge’s May 27, 2022 endorsement stayed the requirement that the parties attend examinations for discovery until the costs were paid. In addition, despite having indicated that they would, the Respondents did not bring a motion to strike, or for other relief, based on the Respondents’ non-compliance with the July 27 Order. Having sought no relief before the Associate Justice, the Appellants cannot complain as to the one-sided nature of the relief ordered.

16Accordingly, I find that there was no breach of the duty of procedural fairness.

Issue 2: Did the Associate Judge err by not Considering the Merits?

17The parties agree that the Associate Judge’s striking of the Statement of Defence under either rr. 57.03(2) or 60.12 for failure to pay costs is a discretionary decision. An appeal court should not interfere with the exercise of discretion by an associate judge unless the discretion was exercised on the wrong principles or misapprehended the evidence such that there was a palpable or overriding error in the assessment: Paul v. Pizale, 2011 ONSC 3490, at paras. 19-20.

18The Appellants submit that in striking the Statement of Defence, the Associate Judge erred in failing to consider the merits of the case. However, the Appellants have not cited any authority for this position. To the contrary, as found by Corthorn J. in Assaly v. Assaly, 2019 ONSC 1953, at para. 35:

The existence of rules 57.03(2) and 60.12 does not ignore the merits of a defaulting party’s position. The rationale for those rules is predicated on the fact that there will be situations where a party’s position ought to be determined on the basis of procedural reasons arising from the failure of that party to abide by orders made by the court (Bottan v. Vroom, 2001 CarswellOnt 2382, (S.C.), at para. 26.)

19Similarly, in 10313033 Canada Inc. v. Kechichian, 2021 ONSC 7606, at para. 12, Associate Justice Kaufman observed as follows:

Rules 57.03(2) and 60.12 are predicated on the fact that, in some circumstances, a party’s position ought to be foreclosed for failure to comply with court orders. If the merits of a case always had to be determined before such remedies could be imposed there would be little room for the effective application of the rules.

20The grounds raised by the Appellants do not constitute an error of law or principle. Moreover, the Associate Judge correctly recited the principles to be applied when considering a motion to strike a defence under rr. 57.03(2) or 60.12, as set out in Rana v. Unifund Assurance Company, 2016 ONSC 2502 and Brim IPCO Inc. v. Horbatiuk, 2019 ONSC 878. I note that neither case mentions the merits of the claim or defence as a factor that must be considered before striking a defence.

21In addition, the Appellants have not demonstrated that the Associate Judge made any palpable and overriding errors of fact. The Associate Judge took into consideration the Appellants’ financial circumstances but found that the evidence of Mr. Shams’ health and the Appellants’ impecuniosity was insufficient. He made no palpable and overriding error in so finding: Mr. Shams’ affidavit contains five short paragraphs with no particulars about his health or financial circumstances and no supporting documentation.

22At the hearing of the appeal, the Appellants raised an issue about the proper identity of the Respondents and whether Ms. Sani is an officer or director of Advantageous Mortgage Inc. The Appellants had attached to Mr. Shams’ affidavit a corporation profile report for Advantageous Mortgage Inc. that identifies “Maryam Saniei” as the officer and director of the company. Mr. Shams argued that the Respondents are not who they claim to be and that he was precluded from arguing this point before the Associate Judge.

23While Mr. Shams’ affidavit attaches the corporation profile report for the company, the affidavit contains no further evidence or allegations of the nature that Mr. Shams sought to make at the hearing of the appeal. It is not for this court to inquire in every matter whether a party is who they claim to be, whether they have authority to act for a corporation or whether counsel properly represents a named party. Given that Ms. Fazli was formerly employed by Advantageous, it would have been open to the Appellants to adduce evidence of any irregularity on the motion. They failed to do so. In any event, whether the Respondents were proper plaintiffs was not raised as a ground of appeal in the Appellants’ notice of appeal.

24As a result, I find that the Appellants have failed to demonstrate any error on the part of the Associate Judge.

Issue 3: Should the Appellants’ Documents be Admitted on this Appeal?

25As there was no motion for fresh evidence, the Appellants ought not to have included in the record on appeal any documents that were not before the Associate Judge on the motion. Those include partial affidavits of documents produced by the Respondents, and a recording listed in Schedule B of the Appellants’ affidavit of documents. The corporation profile report referred to above was attached to Mr. Shams affidavit on the motion and was properly before this court.

26In any event, even if the additional documents were to be admitted, they would have no impact on the appeal.

Conclusion

27For the foregoing reasons, the appeal is dismissed.

28In the circumstances, the Respondents are entitled to their costs of the appeal on a partial indemnity basis. I heard brief submission on costs at the hearing and have reviewed the Respondents’ cost outline. The Respondents’ costs on a partial indemnity basis total $13,467.30, all-inclusive. Although the grounds argued by the Appellants were somewhat unclear, the issues were not complex. Accordingly, I fix costs of the appeal at $7,500, all-inclusive, payable by the Appellants within 30 days.