Sedigh v. Lange

[Indexed as: Sedigh v. Lange]

52 O.R. (3d) 514 [2001] O.J. No. 491 Docket Nos. C34583, M26828

Court of Appeal for Ontario Feldman J.A. (In Chambers) February 13, 2001

Appeal--Abuse of process--Counsel for appellant instructed court reporter to stop transcribing transcript without obtaining order of judge of Court of Appeal--Respondent bringing motion to quash appeal on basis that Notice of Appeal was used as abuse of process of court by appellant and his lawyer--Actions of appellant and his lawyer could lead to appeal being struck as abuse of process--More appropriate remedy is to order security for costs of appeal to be paid into court within two weeks of order.

The respondent obtained judgment against the appellant for damages for assault, unlawful confinement, intentional infliction of mental suffering and past and future loss of earnings, as well as punitive damages. The appellant filed a Notice of Appeal, thereby staying enforcement of the judgment by the respondent. After ordering the transcript, the appellant's solicitor instructed the court reporter to stop transcribing without first obtaining an order of a judge of the Court of Appeal. The respondent sought to examine the appellant in aid of execution in respect of unpaid costs. At that examination, the appellant's solicitor failed to disclose that he had instructed the court reporter to cease transcribing the trial transcript, and instead led the respondent and her counsel to believe that the transcript was in the process of completion. That impression was perpetuated by subsequent letters from the appellant's solicitor. Counsel for the respondent was told by the court reporter that she had been instructed to stop transcribing until further notice. The appellant owed his lawyer $60,000 for the conduct of the trial, and had gone on disability pension. The respondent brought a motion for an order dismissing the appeal by striking the Notice of Appeal under rule 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 as an abuse of process, or, in the alternative, an order lifting the stay of execution, or in the further alternative, an order for security for costs.

Held, the motion for an order for security for costs was granted.

The appellant's conduct of the appeal, through his lawyer, was such as to delay the appeal and to attempt to put assets out of the respondent's reach while a stay was in place. If the appeal was not successful, it would be difficult or impossible for the respondent to collect the costs of the appeal or of the trial, never mind the amount of the judgment. Neither the appellant nor his counsel seemed to have any appreciation of the seriousness of their actions in countermanding the order for the transcript without a court order, and in a way which misled the respondent. These were circumstances where the court could strike out the appeal. However, given that striking the appeal was the most onerous relief, the more appropriate remedy at this stage was to impose a financial consequence which would force the appellant and his counsel to face the financial reality of proceeding with the appeal. An order for security for costs of the appeal in the amount of $6,000, and in the amount of $15,000 towards the costs of the trial, was granted with the amounts to be paid into court within two weeks. The transcript was ordered expedited.

MOTION for an order striking a Notice of Appeal, or for an order lifting a stay of execution, or for an order for security for costs.

Wilson v. Rossiter, [1938] O.W.N. 101 (C.A.), consd Cases referred to Oswell v. Oswell (1991), 1991 CanLII 7084 (ON CA), 2 O.R. (3d) 145, 46 O.A.C. 316, 76 D.L.R. (4th) 444, 47 C.P.C. (2d) 209, 31 R.F.L. (3d) 441 (C.A.); Valiquette v. Vandelac (1979), 9 C.P.C. 203 (Ont. Div. Ct.) Statutes referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 25.11, 56.01(1)(c), 61.06(1)(b), 63.01(5)

Cheryl R. Lean, for moving party. Ross C. Stewart, for responding party.

[1] FELDMAN J.A. [In Chambers]: -- The respondent moves for the following relief:

1. an order dismissing the appeal by striking the Notice of Appeal under rule 25.11 as an abuse of process;

2. in the alternative, an order lifting the stay of execution;

3. in the further alternative, an order for security for costs.

[2] The circumstances are somewhat extraordinary, although the case law suggests, surprisingly, that the conduct complained of is not novel.

Facts

[3] After trial by a judge and jury in the spring of 2000, the respondent was awarded damages of approximately $400,000, including interest and costs of approximately $95,000. The damages were awarded for assault, unlawful confinement, intentional infliction of mental suffering, past and future loss of earnings as well as punitive damages. Some of the claims of the respondent were ruled to be statute barred. She has been dealing with the appellant and with this matter for several years.

[4] The appellant filed a Notice of Appeal to this court, thereby staying enforcement of the judgment by the respondent. After ordering the transcript and filing the required certificate with this court dated August 2, 2000, the appellant's solicitor told the court reporter on October 19, 2000 to stop transcribing, but without first obtaining an order of a judge of this court in compliance with the Practice Direction dated May 1, 1993 (which continued the Practice Direction dated December 21, 1984) which provides in part:

The court reporters have been instructed that after a transcript has been ordered for a civil appeal, the completion of the transcript is not to be suspended without an order of a judge of the Court of Appeal.

[5] The appellant's solicitor also delayed approving the form of judgment from the date first requested by letter of September 26, 2000 until October 16 or 17, 2000, three days before he stopped the transcription of the evidence on October 19 and two days before service of a Notice of Sale under Mortgage of the appellant's home, enforcing a third mortgage placed on the property by that solicitor during the trial. The respondent's solicitor received a copy of that Notice of Sale, as the respondent is an execution creditor in respect of $3,350 for costs plus interest, ordered in an earlier proceeding in this action, which amount remains unpaid. Otherwise, the respondent may not have been aware of the Power of Sale proceeding.

[6] The respondent has now commenced fraudulent conveyance proceedings and obtained a certificate of pending litigation against the appellant's property in respect of both the third mortgage as well as a second mortgage on the appellant's home made in favour of another solicitor.

[7] The respondent sought to examine the appellant in aid of execution in respect of the unpaid costs amount on October 24, 2000, but the examination was delayed at the request of [the] appellant's solicitor until November 6, 2000. Then at that examination, the appellant's solicitor failed to disclose that he had instructed the court reporter to cease transcribing the trial transcript and instead led the respondent and her counsel to believe that the transcript was in the process of completion. That impression was perpetuated by letters from the appellant's solicitor dated November 30, 2000 and December 18, 2000. On the latter date, the court reporter advised the respondent's solicitor that she had been instructed by the appellant's solicitor to stop transcribing until further notice. On December 21, 2000, the appellant's solicitor instructed the reporter to continue. However, the reporter has indicated that the transcripts will now be ready only by May 1, 2001.

[8] Appellant's counsel chose to attend and argue this motion himself. In light of the allegations regarding his conduct disclosed in the record, this put counsel and the court in a most difficult position. Counsel advised that he wished to assure the court that he intended no impropriety and that his conduct was the result of wanting to ensure that the court reporter got paid for her work, as counsel was only receiving $1,000 per month toward the transcript and trial disbursements. Counsel believed he had not received a $1,000 instalment and so put a hold on the production of the transcript until he was in funds. Unfortunately, this does not explain the letters which made no reference to any suspension of production of the transcript.

[9] It is apparent that the appellant's ability to fund this litigation, including the appeal, is at the source of the steps taken. According to the appellant's response affidavit, he owes his counsel some $60,000 for the conduct of the trial. He has gone on disability pension which is 75 per cent of his salary which is between $65,000 and $68,000 per year. His only asset is the house, which has been sold with the proceeds in equity of approximately $95,000 protected pending determination of the fraudulent conveyance action. I understand that if the impugned mortgages are valid, then there will be nothing left from which the respondent may satisfy her judgment out of that asset.

[10] Besides the issue of legal fees, counsel acknowledges that if the appeal is dismissed, the appellant will have great difficulty in paying the judgment although he has moved in with family which saves the expense of a home.

The Relief Claimed

(1) An order striking out the appeal

[11] This is not a motion to quash the appeal, which must be brought before a panel of the court. It is brought under rule 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, on the basis that the Notice of Appeal has been used as an abuse of the process of the court by the appellant and his lawyer for the purpose of facilitating paying the lawyer and not the respondent.

[12] The leading case is a 1938 decision of Middleton J.A. in Wilson v. Rossiter, [1938] O.W.N. 101 (C.A.). In that case, immediately upon filing the notice of appeal and ordering the transcript, the appellant's lawyer instructed the court reporter not to proceed with the transcription until further notice, as he was not sure whether he desired to proceed with the appeal. The effect was to achieve a stay of execution and an effective extension of time for the lodging of the appeal. Middleton J.A. noted that the practice had become common at the time. He characterized it as a vicious practice which must be stamped out. To that end, he dismissed the appeal with costs. The judge made the further observation that "the tactics of the appellant's solicitor reminded him of the conduct of the witches in Macbeth". I refer to this in order to demonstrate the seriousness with which the conduct was viewed by the court.

[13] A similar situation arose in 1978 in the Divisional Court decision in Valiquette v. Vandelac (1979), 9 C.P.C. 203 (Ont. Div. Ct.). Again the appeal was dismissed with costs as a remedy for deceptively countermanding the order for the transcript without advising the opposite party.

[14] In this case, the appellant has said in his affidavit that he was not aware of his lawyer's instruction to the court reporter not to proceed with the transcript. However, counsel for the respondent points out that so far, the appellant has not produced a letter of October 4, 2000 from his lawyer to himself which apparently gave him some options. It was following that letter that the Power of Sale proceedings were commenced and the transcript was put on hold until further notice.

[15] The solicitor accepts the responsibility for what transpired but assures the court that there was no devious intent against the respondent, but only an attempt to deal with the appellant's financial situation in terms of his obligations to the court reporter, his lawyers and other expenses. The appellant in his affidavit swears that he intends to proceed with the appeal.

(2) Lifting the stay pending appeal

[16] Under rule 63.01(5), the court may lift the automatic stay of a judgment "on such terms as are just". In Oswell v. Oswell (1991), 1991 CanLII 7084 (ON CA), 2 O.R. (3d) 145, 76 D.L.R. (4th) 444 (C.A.), Osborne J.A. held that in considering this relief, the court looks at the grounds of appeal, the parties' positions at trial, what has happened since the trial, the general circumstances of the case including the judge's reasons and the probable delay pending appeal not caused by the parties.

[17] Here we have a jury trial and no transcript yet of any of it including the judge's rulings or charge to the jury. However, we do have his reasons where he fixed costs including solicitor and client costs for a portion of the action because the appellant rejected an offer to settle in the amount of $75,000 together with costs. The appellant's conduct of the appeal, through his solicitor, has been such as to delay the appeal and to attempt to put assets out of the respondent's reach while a stay is in place. In a letter written to the court after argument on the motion, counsel indicates that the appeal will now not be perfected until July, 2001, given the delay in the preparation of the transcript.

(3) Security for costs

[18] The grounds of appeal challenge evidentiary rulings by the trial judge on similar fact evidence and on evidence for events later ruled statute barred. I am not in a position to assess the potential merit of these arguments in order to assess whether the appeal on its merits is frivolous and vexatious. However, the combination of rules 61.06(1)(b) and 56.01(1)(c) are applicable in this case: the respondent has an order for costs in this proceeding that remains unpaid.

[19] Clearly this is a case where it appears that if the appeal is not successful, it will be difficult or impossible for the respondent to collect the costs of the appeal or of the trial, never mind the amount of the judgment. The appellant has not seen fit to pay a costs order of approximately $3,000, but instead elected to undergo a lengthy cross-examination in aid of execution.

Conclusion

[20] As the completion of the transcript was suspended without an order of a judge of the Court of Appeal, these are circumstances where the court could strike out the appeal in accordance with Wilson v. Rossiter, supra. Neither counsel nor his client seem to have any real appreciation of the seriousness of their actions in countermanding the order for the transcript in contravention of the Practice Direction and in a way which misled the respondent.

[21] Given that striking the appeal is the most onerous relief, in my view the more appropriate remedy at this stage is to impose a financial consequence which will force the appellant and his counsel to face the financial reality of proceeding with the appeal.

[22] To lift the stay may be of some value to the respondent. However she would have to take expensive enforcement proceedings. Rather, there will be an order for security for costs of the appeal in the amount of $6,000, as requested by counsel for the respondent, and in the amount of $15,000 toward the costs of the trial. These amounts are to be paid into court within two weeks of this order. The transcript is ordered expedited. The fee shall be paid to the court reporter forthwith or as she requires, whether in whole or in part, in order to prepare the transcript on an expedited basis so that it will be ready as soon as possible in order to make up for the time lost.

[23] The costs of this motion are to the respondent fixed at $1,200 and payable forthwith, within two weeks of the release of this endorsement.

[24] If any of these amounts is not paid as ordered, the respondent may move to strike the appeal.

Order accordingly.