DATE: 20040330
DOCKET: C40687
COURT OF APPEAL FOR ONTARIO
DOHERTY, LASKIN and GILLESE JJ.A.
B E T W E E N :
THE INTERNATIONAL UNION OF PAINTERS AND ALLIED TRADES, LOCAL 200
Ian H. Fraser for the appellant
Creditor (Respondent)
James G. Cameron
for the respondent
- and -
S & S GLASS AND ALUMINUM (1993) LTD., S & S GLASS AND RENOVATORS, PAUL SKOV, S. & S. GLASS (2000) INC.
Debtors
- and -
SEAWAY GLASS & ALUMINUM LTD.
Garnishee (Appellant)
Heard: February 13, 2004
On appeal from the order of Justice Paul F. Lalonde of the Superior Court of Justice dated September 22, 2003, reported at [2003] O.J. No. 3722.
GILLESE J.A.:
[1] The debtors in this action are, in reality, one small contractor, Paul Skov. Mr. Skov has carried on business under various names including S. & S. Glass and Aluminum (1993) Ltd., Paul Skov c.o.b. as S & S Glass & Renovators and S & S Glass (2000) Inc.
[2] The Ontario Labour Relations Board (“OLRB”) ordered S & S Glass and Aluminum (1993) Ltd. to pay damages to the International Union of Painters and Allied Trades, Local 200 (“Local 200”) because S & S Glass and Aluminum (1993) Ltd. used non-union workers on various job sites in Ottawa in contravention of their collective agreement.
[3] Local 200 served Seaway Glass and Aluminum Ltd., the garnishee, with two notices of garnishment in which the debtor was identified by some, but not all, of his various names. In the first notice, the debtor was named as Paul Skov c.o.b. as S. & S. Glass & Renovators. In the second, the debtors were named as S & S Glass and Aluminum (1993) Ltd., S & S Glass and Renovators, Paul Skov and S. & S. Glass (2000) Inc.
[4] Seaway took the position that it did not owe money to the debtors named on the notices of garnishment. After receiving the notices, it continued to make payments to persons that it knew were the debtors. However, the cheques were made payable to persons with different names than those stipulated as the debtors on the notices of garnishment.
[5] Lalonde J. ordered Seaway to pay to the Sheriff the amounts that it had paid to the debtors, up to the amount claimed in the second garnishment notice.
[6] Seaway appeals from that order.
[7] For the reasons that follow, I would dismiss the appeal.
Background
[8] The history of events in this case is best understood by means of the following timeline.
• 23 March 1999 – The OLRB orders S. & S. Glass and Aluminum (1993) Ltd. to pay the sum of $13,824 to Local 200 for damages flowing from its violations of the collective agreement.
• 8 April 1999 – Local 200 attempts to enforce the OLRB order by filing it with the court pursuant to ss. 48 and 133 of the Labour Relations Act, 1995.
• 5 May 1999 – Local 200 discovers that S. & S. Glass and Aluminum (1993) Ltd. has never been incorporated.
• 6 January 2000 – The OLRB grants Local 200’s common employer application and declares that S. & S. Glass and Aluminum (1993) Ltd. and Paul Skov carrying on business as S & S Glass & Renovators are associated or related businesses constituting a single employer. The OLRB defers an assessment of damages to March 22, 2000.
• 14 March 2000 – Russel Zinn, as solicitor for the debtors, requests the OLRB to reconsider its decision of January 6, 2000.
• 22 March 2000 – The OLRB declines to reconsider its decision of January 6th. Paul Skov and his counsel, Russel Zinn, walk out of the hearing and do not participate in that part of the hearing dealing with the assessment of damages. The OLRB issues a decision in which it orders Paul Skov carrying on business as S & S Glass and Renovators, to pay to Local 200, damages in the amount of $19,180.87 for violations of the collective agreement.
• 23 March 2000 – Paul Skov incorporates S & S Glass (2000) Inc.
• 27 March 2000 – Local 200 files the OLRB decision of March 22, 2000 with the court.
• 14 April 2000 – Seaway issues a cheque in the amount of $6,207.07 to S & S Glass & Renovators. This is the last payment that Seaway makes to S & S Glass & Renovators. Thereafter, it makes payments to S & S Glass (2000) Inc.
• 25 April 2000 – Local 200 serves Seaway with a notice of garnishment. The debtor is listed as Paul Skov c.o.b. as S. & S. Glass & Renovators. The notice directs Seaway to pay Local 200 any debts owing to the debtor up to the amount of $19,180.87. The debtor’s address, as set out on the notice, is listed as 73 Royal Field Crescent, Nepean, Ontario K2J 4C9. That same day, Seaway issues a cheque for $8,346 in favour of S & S Glass (2000) Inc. The corporate address for S & S Glass (2000) Inc. is c/o Paul Skov, 73 Royal Field Crescent, Nepean, Ontario K2J 4C9. The notice continued the following warning:
IF YOU FAIL TO OBEY THIS NOTICE, THE COURT MAY MAKE AND ENFORCE AN ORDER AGAINST YOU for payment of the amount set out above and the costs of the creditor.
IF YOU MAKE PAYMENT TO ANYONE OTHER THAN THE SHERIFF, YOU MAY BE LIABLE TO PAY AGAIN.
• 8 May 2000 – Russel Zinn, as counsel for Seaway, files a garnishee’s statement stating that it owes no money to the named debtor.
• 25 April 2002 – The OLRB declares that all three business names (Paul Skov c.o.b. as S & S Glass & Renovators, S & S Glass and Aluminum (1993) Ltd. and S & S Glass (2000) Inc.) are one employer for all purposes of the Labour Relations Act, 1995.
• 14 November 2002 – Local 200 files the OLRB decision of April 25, 2002 with the court. It gives Seaway written notice of the April 25, 2002 OLRB common employer declaration and the court order based thereon.
• 20 November 2002 – Russel Zinn, counsel for Seaway, sends a letter to counsel for Local 200 stating that Seaway owes nothing to any of the debtors.
• 17 December 2002 – Seaway makes a final payment to S & S Glass (2000) Inc. Including this final payment, Seaway issued forty‑three cheques in favour of S & S Glass (2000) Inc. for a total amount of $307,143.37 since its first payment to S & S Glass (2000) Inc. on April 25, 2000.
• 27 February 2003 – Local 200 serves Seaway with a second notice of garnishment listing S. & S. Glass and Aluminum (1993) Ltd., S & S Glass and Renovators, Paul Skov and S & S Glass (2000) Inc. as the debtors. The notice listed the address for service of the debtor as 73 Royal Field Crescent, Nepean, Ontario K2J 4C9. It contains the same warning as was on the first notice of garnishment.
• 5 March 2003 – Philip Bender, a member of the same law firm as Russell Zinn, acting on behalf of Seaway, files a garnishee’s statement stating that Seaway, as garnishee, “owes no money to any of the entities listed as debtor, nor does the garnishee anticipate owing any money to any of the debtors in the future”.
[9] Local 200 successfully moved for an order requiring Seaway to pay the amount claimed in the second notice of garnishment, plus costs.
The Decision Below
[10] After holding that the OLRB’s declaration of common employer is an order capable of being filed with the Superior Court of Justice and that such an order can be used for enforcement purposes, the motions judge noted that the purpose in declaring a common employer would be defeated if the finding could not be extended to other proceedings.
[11] He concluded that Seaway knew of the debtor’s debt to Local 200, stating in paragraph 25 of the endorsement:
I am imputing knowledge to Seaway, the garnishee, of the debtors’ debt to Local 200. Thus, I am deciding that the declaratory decision of the OLRB constitutes notice of garnishment. The only reason for Paul Skov to incorporate S & S Glass (2000) Inc. is to avoid paying its debts. Russel W. Zinn is a lawyer, and during the relevant times, he acted as counsel for Paul Skov and for the garnishee, Seaway. I impute to Paul Skov knowledge of OLRB decisions, even before such decisions were filed with the Superior Court of Justice.
[12] In finding that Seaway had knowledge of the debtors’ obligations to Local 200, he noted:
(1) The day after the OLRB refused to reconsider its decision declaring S & S Glass and Aluminum (1993) Ltd. and Paul Skov carrying on business as S & S Glass and Renovators to be associated, Paul Skov incorporated S & S Glass (2000) Inc. Paul Skov controlled the new company. The new company performed the same work as, and shared its business address with, S & S Glass & Aluminum (1993) Ltd. and Paul Skov, carrying on business as S & S Glass & Renovators. The motions judge found that the incorporation of S & S Glass (2002) Inc. was “not merely a coincidence, but a deliberate act of Paul Skov to avoid paying Local 200”.
(2) Seaway had some knowledge of Paul Skov’s business affairs because Seaway changed the name of the payee on its cheques to Paul Skov’s newly incorporated company.
(3) The debtor, Paul Skov, would stop at nothing to evade his creditor, Local 200.
[13] Finally, at para. 26 of the endorsement, the motions judge concluded:
I find that no matter how notice came to the garnishee of debts owing by the debtors to Local 200, the garnishee, not only continued to hire the debtors, but paid the debtors either by making payment to a different entity not mentioned in the notice of garnishment, or making sure there was no monies owing when the garnishment notice was received. In the last instances, in November 2002 and December 2002, payments were made despite the fact notice was given on time to the garnishee, a payee that had been properly identified in the notice of garnishment.
The Parties’ Positions on Appeal
[14] Seaway argues that it had no debt obligations to which the notices of garnishment could attach and, consequently, the motions judge was without jurisdiction to make an order under subrule 60.08(16) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Its position is founded on the names of the debtors set out in the notices of garnishment. The named debtor in the first notice of garnishment was Paul Skov c.o.b. as S & S Glass & Renovators. Seaway says that it owed no money to Paul Skov c.o.b. as S & S Glass & Renovators on April 25, 2000, the date of the first notice of garnishment, and that it made no payments to Paul Skov c.o.b. as S & S Glass & Renovators after April 25, 2000. Similarly, Seaway claims that on February 27, 2003, when the second notice of garnishment was served, it owed no money to S & S Glass and Aluminum (1993) Ltd., S & S Glass &Renovators, Paul Skov or S. & S. Glass (2000) Inc., the named debtors, and that it paid no money to any of the named debtors after February 27, 2003.
[15] Local 200 argues that Seaway has failed to establish any basis upon which this court can or should interfere with the motions judge’s exercise of discretion pursuant to subrule 60.08(16). It submits that considerable deference is owed to discretionary orders of lower courts and draws to our attention the motions judge’s thorough canvassing of the law and evidence, and his finding that Seaway knew, when it made payments, that it was paying the debtor to whom the garnishment applied.
Subrule 60.08(16) of the Rules of Civil Procedure
[16] For ease of reference, the relevant portion of subrule 60.08(16) is set out below.
60.08(16) On motion by a creditor, debtor, or garnishee, co‑owner of the debt or any other interested person, the court may,
(b) determine the rights and liabilities of the garnishee, the debtor, any co‑owner of the debt and any assignee or encumbrancer; [or]
(d) determine any other matter in relation to a notice of garnishment,
and the court may proceed in a summary manner, but where the motion is made to a master and raises a genuine issue of fact or of law, it shall be adjourned to be heard by a judge.
Analysis
[17] Seaway’s argument is narrowly focused. It does not deny that it knew that Paul Skov was the debtor, whatever name he might be using. Nor does Seaway deny that it was aware that Mr. Skov was indebted to Local 200 and that Local 200 was attempting to recover by means of the garnishment proceedings. In essence, Seaway takes the position that it was entitled to make payments to Mr. Skov in whatever name he gave Seaway, so long as that name was not listed as a debtor on the notices of garnishment.
[18] There are times when technical arguments, such as the one proffered by Seaway in this case, must carry the day. This is not one of those times.
[19] I begin by considering the language of subrule 60.08(16). There is nothing in its wording to support the restrictive approach advocated by Seaway. In fact, the language used in subrule 60.08(16) supports the contrary view. “Any … interested person” may bring a motion pursuant to the subrule; the court “may” determine the “rights and liabilities of the garnishee” or “any other matter” in relation to a notice of garnishment. It “may” proceed in a summary manner.
[20] The subrule was recently considered in 20 Toronto Street Holdings Limited v. Coffee, Tea or Me Bakeries Inc. (2001), 53 O.R. (3d) 360 (Sup. Ct.). Justice Nordheimer said this, at para. 5: “ as suggested by the use of the word ‘may’ in subrule 60.08(16) above, the court may therefore make whatever order it deems just in the particular circumstances of any given case.”
[21] In my view, on a plain reading of rule 60.08(16), the motions judge had the power, when determining Seaway’s “rights and liabilities”, to look at the realities of the relationship of the various Skov companies and the conduct of Skov toward Local 200, as those realities were know to Seaway, when it received the garnishee. Those realities fully justified the order.
[22] A consideration of the purpose of garnishment proceedings and of rule 1.04 of the Rules of Civil Procedure reinforces the conclusion that the motions judge was entitled to exercise his discretion in the manner that he did.
[23] The purpose of garnishment proceedings is to put the garnishee on notice that debts owing to the debtor are to be paid to the creditor. In the case at bar, there is an unassailable finding of fact by the motions judge that Seaway was on notice that debts owed to the debtor were to be paid to Local 200.
[24] Rule 1.04 provides that the rules are to be liberally construed to secure the “just, most expeditious and least expensive determination of every civil proceeding on its merits”. In light of Seaway’s conduct, the motions judge’s determination was clearly just. Seaway paid for the services of S & S Glass & Renovators from January 14, 2000 to April 14, 2000 and for the services of S & S Glass (2000) Inc. from April 25, 2000 to December 17, 2002. Despite the fact that the debtor, using various names, was controlled by the same person, performed the same work, and had the same business address, Seaway responded to both notices of garnishment with a garnishee’s statement to the effect that no funds were owed to the debtors listed in the notices. As the motions judge found, Seaway was aware when it made payments that it was making them to the debtor. It would be unjust to permit a garnishee, in such circumstances, to avoid its clear obligation to make the payments to the creditor.
[25] The discretion vested in the court by subrule 60.08(16) has been exercised in a variety of circumstances. In Cina v. Ultratech Tool & Gauge Inc. (2001), 56 O.R. (3d) 338 (Sup. Ct.), the court held that a notice of garnishment served on “TD Canada Trust” as garnishee was effective service on five legal entities carrying on business under the name, despite the fact that (1) the legal names of the garnishees were not included on the notice of garnishment and (2) TD Canada Trust was not a legal entity.
[26] The case at bar presents somewhat similar circumstances. The notice of garnishment of April 25, 2000, listed the debtor as “Paul Skov c.o.b. as S & S Glass & Renovators”. Seaway was aware that it was not to make payments to the debtor as of April 25, 2000; it could not simply issue cheques to another entity that it knew to be the debtor.
[27] Nothing in the subrule or in the case law decided on its application supports the proposition that the courts should take an unduly technical approach when satisfied that adequate notice has been given to the affected party. The subrule has been applied in an equitable manner: see Hongkong Bank of Canada v. Slesers (1992), 7 O.R. (3d) 117 at 120 (Ont. Ct. Gen. Div.); Toronto (Metropolitan) v. O’Brien, [1995] O.J. No. 4896 at para. 19 (Ont. Ct. Gen. Div.).
[28] Seaway is liable for the full amount of the debt because it failed to comply with the legal obligation created by the notices of garnishment, namely to pay to the Sheriff the monies which it owed to the debtor. The consequences of failing to obey the notices of garnishment were clearly laid out in both notices. It can come as no surprise to Seaway that it is obliged to pay the debt given that the notices of garnishment expressly stipulated that if payment were made to anyone other than the Sheriff, Seaway could be liable to pay again. Furthermore, if Seaway had any concerns about whether it was obliged to pay Local 200, it could have following the procedure set out in the notices of garnishment: “Any party may make a motion to the court to determine any matter to this notice of garnishment”.
[29] As this court recently said, in Bottan v. Vroom, [2002] O.J. No. 1383 at para. 13, when reviewing a discretionary decision:
Where a motions judge exercises discretion, an appellate court should intervene only where the discretion has been exercised on a wrong principle of law or a clear error has been made. It is not the role of an appellate court to replace the exercise of discretion by the motions judge. An appellate court should defer to the findings of fact made by a motions judge unless the motions judge disregarded or failed to appreciate relevant evidence.
[30] I see no basis upon which to interfere with the exercise of the motions judge’s discretion.
Disposition
[31] Accordingly, I would dismiss the appeal with costs to the respondent fixed at $10,000, inclusive of GST and disbursements.
RELEASED: March 30, 2004 (“DD”)
“E. E. Gillese J.A.”
“I agree Doherty J.A.”
“I agree John Laskin J.A.”