COURT OF APPEAL FOR ONTARIO

CITATION: Mio v. Romano, 2012 ONCA 451

DATE: 20120627

DOCKET: C54114/C54128

Cronk, Juriansz and Epstein JJ.A.

BETWEEN

Richard Mio

Plaintiff/Creditor (Respondent)

and

Frank Romano

Defendant/Debtor (Appellant)

and

Homelife Romano Realty Ltd.

Garnishee (Appellant)

B. Romano, for the garnishee/appellant

L. Marzinotto, for the defendant/debtor(appellant)

A. Riswick, for the plaintiff/creditor (respondent)

Heard: May 9, 2012

On appeal from the order of Justice Anne M. Mullins of the Superior Court of Justice dated June 30, 2011.

ENDORSEMENT

[1] These reasons relate to two appeals from the order of Mullins J. of the Superior Court of Justice dated June 30, 2011. The respondent Mio, as judgment creditor, had brought a motion for an order requiring the appellant Homelife, as garnishee, to pay the sum of $124,366.14 to the Sheriff pursuant to a notice of garnishment he had served on Homelife relating to the judgment debt of the other appellant, Romano.

A. Facts

[2] The facts are as follows. Mio and Romano were two of three partners in a numbered company. Romano held all the shares of the partners in trust. The company owned a property. When the property was sold, Romano, who received the funds, paid himself and the other partner, but failed to pay anything to Mio. Mio obtained summary judgment against Romano in the amount of $221,832.29 in 2005. On March 27, 2006, Mio issued a notice of garnishment on Homelife, the company that employed Romano and was owned by his father.

[3] Romano made an assignment in bankruptcy on September 13, 2006. On December 7, 2006, Registrar Nettie made an order that ss. 69 - 69.3 of the Bankruptcy and Insolvency Act,R.S.C. 1985, c. B.3 (“BIA”) no longer operated to stay Mio’s action against Romano but that no steps should be taken to enforce any judgment until the trustee in bankruptcy was discharged or further order of the court. Romano received a discharge from bankruptcy on June 14, 2007. Homelife received a written notice from the Trustee indicating that Romano had been discharged from bankruptcy and had been released from all debts except those referred to in s. 178(1) of the BIA. Homelife alleges that on July 5, 2007, the trustee advised it that it was not required to send any payments to Mio, the creditor. The trustee in bankruptcy was discharged on November 27, 2009. No monies were remitted to the Sheriff under the notice of garnishment.

[4] On an examination-in-aid-of-execution in March 2010, Romano acknowledged that Homelife had paid him approximately $75,000 in 2008 and $49,366.14 in 2009. Mio brought the motion for an order to have Homelife, as garnishee, pay these amounts to the Sheriff. Counsel advised that the amount now in issue is $50,000.

[5] The motion judge found that the judgment debt owed by Romano to Mio fell within s. 178(1) of the BIA and was not discharged by Mio's assignment in bankruptcy and his subsequent discharge. The motion judge also found that the enforcement of the judgment was not subject to a condition within the meaning of rule 60.08(2) of the Rules of Civil Procedure, so as to require leave for the issuance of a garnishment notice. In the event that such leave was necessary, she granted leave, nunc pro tunc. Finally, the motion judge also ordered a trial of issues as to whether in fact the trustee in bankruptcy had advised Homelife of any circumstances that would estop Mio from enforcing the garnishment notice as against Homelife and, if estoppel does not apply, to determine the quantum of the monies that Homelife is obliged to remit to the Sheriff.

B. Romano’s Appeal

[6] Romano appeals the entire order of the motion judge raising several procedural issues. He argues that the motion judge erred by refusing him an opportunity to make submissions on the motion, by granting relief not contained in the notice of motion, by refusing Romano an adjournment for the purpose of filing responding material, by considering material that was not before the summary judgment motion judge, and by finding that Mio’s judgment survived Romano’s bankruptcy under s. 178(1) of the BIA.

[7] Romano's procedural arguments are without merit. The motion was case managed. His counsel participated in the case management process. It was clear that his counsel did not intend to file material on the motion. The relief sought on the motion – that the garnishee remit money that it had improperly paid to Romano – necessarily required a determination that the debt survived the bankruptcy. This was sufficient to raise the question whether the debt had been released by Romano's discharge from bankruptcy. Moreover, para. 5 of Mio’s notice of motion explicitly addressed the issue whether the judgment was based on a misappropriation of funds and was not discharged.

[8] Accordingly, it cannot be said that the motion judge went beyond the relief contemplated by Mio’s notice of motion. The fact that a determination had to be made as to whether the debt fell within s. 178 was the foundation of the relief sought. We note that at no time prior to the motion did Romano take the position that the debt was not enforceable.

[9] We see no error on the part of the motion judge in limiting the submissions of Romano’s counsel and in refusing Romano’s request for an adjournment. Counsel had filed no material on the motion and had indicated at the outset that she did not intend to make any submissions. Her request for an adjournment was made late, toward the end of the hearing.

[10] Romano cites no authority or rationale for the proposition that it was improper for the motion judge to consider material that was not before the summary judgment motion judge or that the motion judge should not have proceeded to grant relief on the garnishment hearing without having all the material that was filed before the summary judgment motion judge.

[11] The material before the motion judge, which included the pleadings in the action and the reasons of the summary judgment motion judge, amply supported her conclusion that the judgment debt fell within the meaning of s. 178(1) of the BIA and, hence, survived Romano’s bankruptcy. The record before the motion judge established that Romano had received the monies in a fiduciary capacity, that he failed to remit to Mio the funds to which Mio was “plainly entitled” and that he further failed to provide any explanation for this failure. In these circumstances, his wrongful retention of Mio’s funds met s. 178(1) of the BIA.

C. Homelife’s Appeal

[12] Homelife first argues that the stay of Mio’s execution of the judgment debt against Romano continued in effect after the trustee was discharged. That proposition is at odds with s. 69.3(1.1) of the BIA, which provides that a stay of proceedings under s. 69.3(1) “ceases to apply … on the day on which the trustee is discharged.”

[13] Homelife next argues that the enforcement of Mio's judgment debt against Romano became subject to a condition within the meaning of rule 60.08(2), such that it could no longer be enforced without leave of the court. It submits that the condition stems from the intervening bankruptcy of the debtor which, it says, made the enforcement of the judgment subject to the condition that it first be found to survive Romano's discharge from bankruptcy. This, in turn, required that a new notice of garnishment be obtained, with leave of the court.

[14] We do not agree. In our view, rule 60.08(2) has no application to this case. The judgment obtained by Mio was unconditional when granted. Accordingly, Mio did not require leave of the court to issue the notice of garnishment on March 27, 2006. The notice, once issued, was stayed upon Romano's assignment into bankruptcy. But the stay ceased to apply when the trustee was discharged. When the stay ceased to apply, the notice of garnishment was revived and there was no impediment to enforcement by Mio of his judgment.

[15] We do not accept Romano’s submission that if leave to issue a new garnishment notice is not required, commercial uncertainty arises regarding the obligations of a garnishee. The notice of garnishment clearly and unambiguously sets out those obligations, including the risk of double payment. A garnishee may avoid that consequence by complying with the notice of garnishment.

D. Disposition

[16] The appeals are dismissed. As agreed by counsel, the respondent’s costs against Homelife are fixed in the amount of $5,000, and against Romano, in the amount of $6,500, both amounts including disbursements but not applicable taxes.

“E.A. Cronk J.A.”

“R.G. Juriansz J.A.”

“G.J. Epstein J.A.”