Court of Appeal for Ontario

Citation: Vista Bahia LP v. Cleaver Crawford LLP, 2015 ONCA 77

Date: 2015-02-05

Docket: C59297

Before: Feldman, Cronk and Hourigan JJ.A.

Between:

Vista Bahia LP Applicant (Respondent)

and

Cleaver Crawford LLP Respondent (Respondent)

and

Heritage Investments Capital, A Division of 2218713 Ontario Corp. Respondent (Appellant)

Counsel:

Arnold B. Schwisberg, for the appellant

Jeffrey Haylock, for the respondent, Vista Bahia LP

Lucas E. Lung, for the respondent, Cleaver Crawford LLP

Heard: January 23, 2015

On appeal from the judgment of Justice John Murray of the Superior Court of Justice, dated August 7, 2014.

Endorsement

[1] The appellant, Heritage Investments Capital, a division of 2218713 Ontario Corp. (“Heritage”), appeals from the judgment of Murray J. of the Superior Court of Justice, dated August 7, 2014, holding that the respondent, Vista Bahia LP (“Vista”), is entitled to the return of funds in the amount of US $250,000, currently held in the trust account of Vista’s previous solicitors, the respondent, Cleaver Crawford LLP (“CC LLP”).

[2] Heritage claims that, contrary to the application judge’s ruling, the funds at issue are impressed with a trust in its favour and that it, rather than Vista, is entitled to receipt of the funds from CC LLP. Heritage also submits that the application judge erred, and denied Heritage procedural fairness, when he declined to adjourn the application at Heritage’s request to permit Heritage to cross-examine the deponent of an affidavit filed by Vista in the proceedings before the application judge.

[3] In our view, neither ground of appeal is sustainable and the appeal must be dismissed.

The Trust Claim

[4] Before this court, Heritage clarified during oral argument that it now accepts that neither the Term Sheet nor the Commitment Letter between Vista and Heritage contemplate or require the establishment of a trust or escrow agreement or arrangement regarding payment of the standby deposit provided for under those documents. Heritage also acknowledges that no written escrow or trust agreement or arrangement was in fact entered into by the parties.

[5] Instead, Heritage submits that the parties agreed “to implement” the Term Sheet and the Commitment Letter by entering into an agreement or arrangement that the funds necessary to pay the standby deposit would be provided to CC LLP to be held in trust or escrow by that firm for Heritage’s benefit. This agreement or arrangement, Heritage says, is evidenced by a letter from Heritage to Vista dated June 20, 2013 and an undated response to that letter from CC LLP, on Vista’s behalf.

[6] We reject this submission.

[7] First, nothing in the correspondence relied on by Heritage refers to any trust or escrow arrangement or agreement in favour of Heritage in respect of funds provided or to be provided by Vista to CC LLP. And, as Heritage concedes, neither do the Term Sheet or the Commitment Letter.

[8] Second, the terms of the Commitment Letter are inconsistent, in several respects, with the notion of a trust or escrow arrangement or agreement relating to the funds necessary to pay the standby deposit.

[9] Third, in Heritage’s affidavit materials, Heritage’s own affiant in the proceedings before the application judge did not assert any trust or escrow agreement or arrangement between the parties based on the June 2013 correspondence between Heritage, Vista and CC LLP. To the contrary, the affiant alleges that Heritage’s letter of June 20, 2013 sought to confirm that funds were in trust with CC LLP and “were ready to be paid over to Heritage”. In fact, the June 20, 2013 letter from Heritage to Vista does not say this.

[10] Simply put, there is nothing on this record to substantiate Heritage’s claim, advanced for the first time in oral argument at the appeal hearing, that by reason of the June 2013 correspondence, the parties entered into an enforceable trust or escrow arrangement or agreement pertaining to the funds required to pay the standby deposit. Indeed, Heritage’s pleading in the underlying debt action between Heritage and Vista fails to assert this claim as now framed by Heritage.

[11] In these circumstances, we agree with the application judge that: “At best, [the] payment of US $250,000 by [Vista] to [CC LLP] was evidence of [Vista’s] ability to pay US $250,000” when and if required to do so.

[12] This ground of appeal fails.

The Adjournment Complaint

[13] We also do not accept Heritage’s argument that the application judge erred in law, or denied Heritage procedural fairness, by declining to adjourn the application before him to permit Heritage to cross-examine Vista’s representative on her affidavit.

[14] The record confirms that the date of the application – July 24, 2014 – was fixed at Heritage’s request to accommodate the schedule of Heritage’s counsel. The record also reveals that Heritage had indicated its intention to conduct cross-examinations as early as June 21, 2014, some four and one-half weeks before the agreed application hearing date. Yet, Heritage took no steps to cross-examine, even when it learned that CC LLP did not intend to file any affidavit materials on the application. Instead, Heritage simply elected to attend before the application judge on the return date of the application to request an adjournment.

[15] In these circumstances, Heritage cannot be heard to now complain of the consequences of its own tactical decision not to seek to cross-examine before the return date of the application. Heritage had ample opportunity to cross-examine and elected not to do so.

[16] Moreover, and in any event, we are not persuaded that cross-examination of Vista’s affiant would have made any substantive difference to the determination of the legal question whether the funds held by CC LLP were subject to a trust interest in favour of Heritage, when, as discussed above, Heritage’s own affiant did not make that assertion.

[17] We therefore see no basis for appellate interference with the application judge’s discretionary decision to deny Heritage’s adjournment request. This ground also fails.

Disposition

[18] For these reasons, the appeal is dismissed. Vista is entitled to its costs of the appeal, fixed in the amount of $7,000, inclusive of disbursements and H.S.T. CC LLP does not request costs and we make no costs award in its favour.

“K. Feldman J.A.”

“E.A. Cronk J.A.”

“C.W. Hourigan J.A.”