DATE: 2001-12-13
DOCKET: C36502/C36634

COURT OF APPEAL FOR ONTARIO

RE:

NELSON GUERETTE (Plaintiff/ Respondent) v. DEMETRIOS KARAOUZAS (also known as JIM KARAOUZAS) and ELISA RENEE KARAOUZAS (Defendant/Appellant)

AND BETWEEN:

NELSON GUERETTE (Applicant/ Respondent to Appeal) v. DEMETRIOS KARAOUZAS (also known as JIM KARAOUZAS) and 1145393 ONTARIO LIMITED and ROBERT ZIERLER (Respondent/Appellant)

AND BETWEEN:

NELSON GUERETTE (Plaintiff/Respondent) v. ROBERT ZIERLER (Defendant/Appellant)

AND BETWEEN:

ROBERT ZIERLER (Plaintiff by Counterclaim/Appellant) v. NELSON GUERETTE and SUSAN GUERETTE (Defendants to the Counterclaim/Respondent)

BEFORE:

BORINS, MACPHERSON AND CRONK JJ.A.

COUNSEL:

A. Irvin Schein, for the appellant Robert Zierler

Demetrios Karaouzas appearing in person

Stanley G. Mayes, for the respondent Nelson Guerette

HEARD:

December 6, 2001

On appeal from judgment of Justice John A. Desotti dated May 30, 2001.

E N D O R S E M E N T

[1] This is an appeal by Robert Zierler (“Zierler”) from a judgment against him for $113,453 in favour of Nelson Guerette (“Guerette”), as well as from a judgment dismissing his counterclaim against Susan Guerette. In addition, Demetrios Karaouzas (“Karaouzas”) appeals from a judgment against him for $89,857 in favour of Guerette. The judgments resulted from a motion for summary judgment brought by Mr. and Mrs. Guerette.

[2] The appellants submit that there are two grounds on which their appeal should be allowed:

(1) That the motion judge erred in exceeding the role of a judge hearing a motion for summary judgment by assessing the credibility of witnesses and by making findings of fact.

(2) That there exists a reasonable apprehension that the motion judge was biased in favour of the respondent, Guerette.

[3] In our view, there is merit to each ground of appeal.

[4] These proceedings arise out of separate actions brought by Guerette against Zierler and Karaouzas, as well as an application and counter-application between these parties for remedies under the Ontario Business Corporations Act (“OBCA”). The proceedings were joined together and the motion judge appears to have assumed management of them. He heard a number of interlocutory motions prior to the motion for summary judgment. In respect to procedural motions that he heard on February 9, 2001 and March 29, 2001, the motion judge delivered extensive reasons. In addition, he delivered lengthy reasons allowing the motion for summary judgment.

[5] From the record, it is clear that the dispute between the appellants and the respondent centers upon their shareholdings or investments in 1145393 Ontario Limited (“the company”) and its operation. The operation of the company, in part, is the basis for remedies sought under the OBCA. The main dispute appears to center on whether Guerette advanced funds to the appellants as personal loans to them, or whether the money that he advanced was in the nature of a shareholder’s advance to the company. The record relating to these issues undoubtedly contains conflicting evidence from the perspective of the parties. There is no question that it discloses conflicting evidence on virtually every issue raised in the three proceedings.

[6] Notwithstanding the conflicting evidence, the motion judge made findings of fact suggesting that the respondent had loaned funds to Zierler and Karaouzas, who had refused , or neglected, to repay the loans. In doing so, he rejected the evidence in support of the appellants and accepted the evidence in favour of the respondent. He thereby exceeded the role of the court on a motion for summary judgment, which is limited to assessing the threshold issue of whether a genuine issue exists as to material facts requiring a trial. In our view, the record indicates that there is a genuine issue for trial in respect to virtually every issue raised in these proceedings. We would, therefore, give effect to this ground of appeal.

[7] Although this is sufficient to allow the appeal, there are two reasons why we are obliged to consider the second ground of appeal.

[8] First, in the interests of justice appellate courts have a supervisory role in relation to the conduct of judicial proceedings which extends, in proper cases, to a review of remarks made both by counsel and the presiding judge. In this case, regrettably, the transcripts of the motion judge’s reasons in procedural motions on February 9, 2001 and March 29, 2001, which preceded the motion for summary judgment, reveal several inappropriate and unfortunate comments by the motion judge that may well have created the impression that he had formed prematurely a view of the subject matter of the motion for summary judgment adverse to the appellants. In these circumstances a reasonable apprehension of bias arises, warranting our intervention. In this regard, we would affirm what this court said in Bisoukis v. Brampton (City) (1999), 1999 CanLII 3825 (ON CA), 180 D.L.R. (4th) 577 at 608.

[9] Second, counsel for Zierler has indicated that there may be further interlocutory proceedings. In addition, based on the result of the appeal, there will also be a trial. We were asked to order that the motion judge be precluded from any involvement in any further proceedings. Although it may be unusual for this Court to make such an order, regrettably, such an order is warranted in this case.

[10] Zierler has also appealed from the dismissal of his counterclaim against Susan Guerette. Having regard to the manner in which Zierler framed his claims against her, we find no reason to interfere with the result reached by the motion judge. Accordingly, this aspect of Zierler’s appeal is dismissed.

[11] For the foregoing reasons, we would allow the appeals, set aside the judgment of the motion judge, except for paragraphs 1, 2 and 6, and order that the motion for summary judgment against Zierler and Karaouzas be dismissed. In addition, it is ordered that any subsequent proceeding in relation to these three proceedings, be it by way of motion or trial, be heard by a judge other than the motion judge.

[12] As for costs, the costs of the motion are reserved to the trial judge. The appellant Zierler is entitled to his costs of the appeal. The appellant Karaouzas argued the appeal in person, and while he is entitled to costs, the costs are limited to those properly recoverable by an unrepresented litigant.

“S. Borins J.A.”

“J. C. MacPherson J.A.”

“E. A. Cronk J.A.”