COURT OF APPEAL FOR ONTARIO

CITATION: Landmark Vehicle Leasing Corporation v. Mister Twister Inc., 2015 ONCA 545

DATE: 20150722

DOCKET: C58753

Doherty, Pepall and Huscroft JJ.A.

BETWEEN

Landmark Vehicle Leasing Corporation

Plaintiff (Respondent)

and

Mister Twister Inc., Amadeus Blazys a.k.a. Amadeus Amo Blazys a.k.a. Amadeus A. Blazys and Luisa M. Blazys a.k.a. Luisa Blazys

Defendants (Appellants)

Charles Wagman, for the appellants

David Winer, for the respondent

Heard: June 30, 2015

On appeal from the judgment of Justice C.J. Brown of the Superior Court of Justice, dated March 26, 2014.

By the Court:

I

[1] The appellants, Amadeus Blazys and Luisa Blazys, are husband and wife. Mister Twister Inc. is Mr. Blazys’ company. The respondent, Landmark Vehicle Leasing Corp. (“Landmark”), alleged that one or more of the appellants leased three vehicles from Ross Wemp Leasing Inc. (“Ross Wemp Leasing”) and that Ross Wemp Leasing subsequently assigned the leases to Landmark. Landmark successfully sued for arrears owing under each of the leases. The appellants appeal from that judgment.

[2] The appellants raise many grounds of appeal. However, in oral argument, the appellants focused on the submission that because the appellants did not receive written notice of the lease assignments, Landmark should have named Ross Wemp Leasing as a party in the action. According to the appellants, Landmark’s failure to name Ross Wemp Leasing as a party should have led to a dismissal of Landmark’s action.

[3] The other grounds of appeal involve alleged errors by the trial judge in assessing credibility, and allegations of procedural failings and pleading inadequacies that the appellants contend prejudiced their ability to present their case at trial.

[4] For the reasons that follow, we would dismiss the appeal.

II

[5] The leases related to three vehicles, a 1999 Mercedes-Benz, a Dodge Ram truck, and a GMC truck. The Mercedes-Benz vehicle was eventually returned and sold by Landmark to a wholesaler for $9,000. This was very close to the stipulated depreciated residual value agreed to in the lease. Landmark claimed the difference between the amount owing on the lease and the amount recovered on the sale. Landmark alleged, and the trial judge found, that the appellants did not return either the Dodge Ram or the GMC. Landmark successfully claimed for the full amounts owing under those leases.

[6] Mr. and Mrs. Blazys testified. Mrs. Blazys acknowledged that she drove the Mercedes-Benz for years, but testified that she knew nothing about the lease and was not a party to the lease. She said the signature on the lease was not hers.

[7] Mr. Blazys acknowledged entering into the three leases, but testified that he had returned all three vehicles. He also alleged that Landmark sold the Mercedes-Benz at a price well below a commercially reasonable price.

[8] Faced with irreconcilable versions of the important events, the trial judge had to assess credibility. The trial judge did not believe Mr. and Mrs. Blazys. She made the following findings of fact:

• Both Mr. and Mrs. Blazys leased the Mercedes-Benz;

• Mr. Blazys leased the Dodge Ram and the GMC;

• Mister Twister Inc. was on the GMC lease;

• The Mercedes-Benz was returned to Landmark and sold for $9,000, a reasonable wholesale price;

• Neither the Dodge Ram nor the GMC was returned;

• An employee at Ross Wemp Leasing spoke to Mr. Blazys in November 2007, the month after the assignment to Landmark, and advised him of the “changes, the merger and the new Landmark address”;

• Mr. Blazys returned the Mercedes-Benz to Landmark’s location on January 10, 2008;

• Landmark had correctly calculated the amounts owing under the leases;

• Various documents were sent to all the lessee customers of Ross Wemp Leasing advising them of the asset purchase by Landmark and of the consequential changes in vehicle ownership and insurance. There was no specific evidence that these documents were sent to or received by the appellants; and

• Mr. Blazys received notice of the lease assignments.

III

THE FAILURE TO GIVE WRITTEN NOTICE OF THE ASSIGNMENT

[9] The Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, applies to the lease assignments. Section 53(1) reads in part:

Any absolute assignment made on or after the 31st day of December, 1897, by writing under the hand of the assignor, … of any debt or other legal chose in action of which express notice in writing has been given to the debtor … is effectual in law, subject to all equities that would have been entitled to priority over the right of the assignee if this section had not been enacted, to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor. [Emphasis added.]

[10] Section 53(1) requires “express notice in writing” to the debtor. Although there is some ambiguity in her reasons, it would appear that the trial judge found that Mr. Blazys had express notice of the assignment, but not notice in writing. Ross Wemp Leasing therefore did not assign the leases to Landmark in law: see 80 Mornelle Properties Inc. v. Malla Properties Ltd., 2010 ONCA 850, 327 D.L.R. (4th) 361, at para. 22. Ross Wemp Leasing did, however, assign the leases to Landmark in equity. An equitable assignment does not require any notice, let alone written notice: Bercovitz Estate v. Avigdor, [1961] O.J. No. 20 (C.A.), at paras. 16, 25.

[11] The appellants, relying on DiGuilo v. Boland, 1958 CanLII 92 (ON CA), [1958] O.R. 384 (C.A.), aff’d, [1961] S.C.C.A. vii, argue that as the appellants did not have written notice of the assignment, Landmark could not sue on its own. Instead, Landmark had to join Ross Wemp Leasing in the action. The appellants argue that the failure to join Ross Wemp Leasing requires that the judgment below be set aside.

[12] DiGuilo does in fact require that the assignor of a chose in action be joined in the assignee’s claim against the debtor when the debtor has not received written notice of the assignment. The holding in DiGuilo tracks rule 5.03(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194:

In a proceeding by the assignee of a debt or other chose in action, the assignor shall be joined as a party unless,

(a) the assignment is absolute and not by way of charge only; and

(b) notice in writing has been given to the person liable in respect of the debt or chose in action that it has been assigned to the assignee. [Emphasis added.]

[13] Yet the assignee’s failure to join the assignor does not affect the validity of the assignment or necessarily vitiate a judgment obtained by the assignee against the debtor. Rule 5.03(6) reads:

The court may by order relieve against the requirement of joinder under this rule.

[14] The joinder requirement is intended to guard the debtor against a possible second action by the assignor and to permit the debtor to pursue any remedies it may have against the assignor without initiating another action: DiGuilo, at p. 395. Where the assignee’s failure to join the assignor does not prejudice the debtor, the court may grant the relief in rule 5.03(6): see Gentra Canada Investments Inc. v. Lipson, 2011 ONCA 331, 106 O.R. (3d) 261, at paras. 59-65, leave to appeal refused, [2011] S.C.C.A. No. 327.

[15] In this case, the trial judge found that Mr. Blazys, and effectively all of the appellants, gained actual notice of the lease assignments very shortly after the assignments were made and well before Landmark sued. Armed with actual, albeit not written, notice of the assignment, the appellants could fully protect themselves against any prejudice from Landmark’s failure to join Ross Wemp Leasing. Had the appellants seen any advantage in joining Ross Wemp Leasing, either to defend against Landmark’s claim or to advance a claim against Ross Wemp Leasing, the appellants could have moved for joinder under rule 5.03(4). The appellants’ failure to bring a motion to add Ross Wemp Leasing speaks loudly to the absence of any prejudice caused by Landmark’s failure to join the assignor.

[16] Ross Wemp Leasing perhaps should have been a party to the proceeding. Landmark’s failure to join Ross Wemp Leasing, however, did not prejudice the appellants and should have had no impact on the trial judgment. If requested, this court will make a nunc pro tunc order relieving Landmark from the requirement of joining Ross Wemp Leasing in the action.

IV

the other grounds of appeal

(i) The alleged violations of the collateral fact rule

[17] Landmark’s counsel asked Mr. Blazys if he had lied under oath at a prior proceeding. He said no. Counsel, over objection from Mr. Blazys’ counsel, proceeded to cross-examine Mr. Blazys on documents relating to that prior proceeding. Counsel suggested to Mr. Blazys that these documents demonstrated that he had lied under oath in the prior proceeding.

[18] On appeal, the appellants argue that the question put to Mr. Blazys on a prior lie under oath went only to his credibility. Therefore, the appellants say, the collateral fact rule precluded further cross-examination of Mr. Blazys on any alleged lie after he denied lying under oath.

[19] A party triggers the collateral fact rule when, after closing its own case, it seeks to call rebuttal evidence to contradict a witness’ testimony on a collateral matter: see R. v. Krause, 1986 CanLII 39 (SCC), [1986] 2 S.C.R. 466, at pp. 474-75. Cross-examination on a collateral matter does not trigger the rule.

[20] Counsel is entitled to challenge a witness’ credibility in cross-examination. The scope of that cross-examination is limited by the requirements of relevance and other rules applicable to cross-examination. For example, the cross-examination cannot be abusive or overly repetitive. The collateral fact rule has nothing to do with the scope of the cross-examination. Similarly, documents may be put to a witness during cross-examination for the purposes of impeachment. The admissibility of those documents is subject to various evidentiary rules, such as relevance, but the collateral fact rule is not one of them: see S.C. Hill, D.M. Tanovich & L.P. Strezos, McWilliams’ Canadian Criminal Evidence, loose-leaf, 5th ed. (Toronto: Thomson Reuters, 2015), at c. 6. The cross-examination of Mr. Blazys in respect of his alleged prior lies under oath did not offend the collateral fact rule.

[21] The appellants argue that the collateral fact rule also foreclosed cross-examination of Mr. Blazys to demonstrate that he had previously given conflicting evidence on the identity of Mister Twister Inc.’s directors. That argument reveals the same misunderstanding of the collateral fact rule. Furthermore, the cross-examination on the conflict played a potentially important role in establishing Mr. Blazys’ credibility. The trial judge did not err in finding that Mr. Blazys’ inability to explain the conflict undermined his credibility.

(ii) The alleged errors undermining the credibility findings

[22] Counsel submits that the trial judge took into account a negative credibility assessment of Mr. Blazys made by another tribunal in a prior proceeding. The appellant correctly submits that a credibility assessment by another tribunal in an unrelated matter based on entirely different evidence does not speak to Mr. Blazys’ credibility in this case. The trial judge’s reasons do not suggest that she considered the prior tribunal’s finding in assessing Mr. Blazys’ credibility. The trial judge gave many reasons for disbelieving Mr. Blazys. The prior tribunal’s credibility assessment was not one of them.

[23] Counsel submits that the trial judge erred in failing to draw negative inferences from Landmark’s failure to call certain witnesses and failure to produce certain documents, and that she further erred in the manner in which she assessed conflicting evidence. These arguments invite the court to retry the case. We cannot and do not do that.

(iii) The procedural irregularities

[24] The appellants next submit that Landmark’s late delivery of many relevant documents, its failure to fulfill at least one undertaking, and the various factual errors in its Statement of Claim combined to produce “a chaotic and unfair trial”.

[25] There is no merit to this submission. A review of the trial record reveals no chaos. The appellants show no prejudice from any of the alleged irregularities. For example, the appellants complain about Landmark’s failure to complete an undertaking to produce the “Black Book”, a book apparently containing vehicle valuations. In fact, Landmark did respond to the undertaking, indicating that it could not locate its copy of the “Black Book”. Moreover, the book is published and available to the public. The appellants could have obtained a “Black Book” of their own had they seen any value in doing so.

(iv) The finding that the Mercedes-Benz was sold at a commercially reasonable price

[26] The appellants also challenge the trial judge’s finding that there was no evidence Landmark sold the Mercedes-Benz at less than “a commercially reasonable price”. The only evidence suggesting the $9,000 sale price was less than a commercially reasonable price came from Mr. Blazys. He testified that he had placed an advertisement for the Mercedes-Benz in a magazine and received an offer of $15,000. According to Mr. Blazys, he referred the purchaser to Landmark and was later told by the purchaser that Landmark had refused to sell the vehicle for $15,000. Mr. Blazys could not recall the name of this third party or offer any information that might assist in identifying the third party. Nor could he offer any evidence to support his assertion that he had placed an advertisement for the Mercedes-Benz in a magazine. Not surprisingly, the trial judge found this part of Mr. Blazys’ evidence incapable of belief.

[27] Setting aside Mr. Blazys’ rejected evidence, there was no evidence that $9,000 was not a commercially reasonable price for the Mercedes-Benz. Landmark also points out that under the terms of the lease, it was entitled to sell the vehicle at a wholesale price. Landmark was not obligated to sell the vehicle at a retail price.

V

conclusion

[28] The appeal is dismissed. Costs of the appeal to Landmark in the amount of $10,000, inclusive of disbursements and all applicable taxes.

RELEASED: “DD” “JUL 22 2015”

“Doherty J.A.”

“Sarah Pepall J.A.”

“Grant Huscroft J.A.”