COURT OF APPEAL FOR ONTARIO

2016 ONCA 222

DATE: 20160323

DOCKET: C58073

Strathy, C.J.O., Lauwers and Benotto JJ.A.

BETWEEN

Turbo Logistics Canada Inc., 2163960 Ontario Inc., George Perlin, Alex Ber and 2192370 Ontario Limited

Plaintiffs (Appellants)

and

HSBC Bank Canada

Defendant (Respondent)

Jasdeep Singh Bal and Daniel Perlin, for the appellants

Matt Saunders and J. Brian Casey, for the respondent

Heard: March 14, 2016

On appeal from the judgment of Justice Ruth E. Mesbur of the Superior Court of Justice, dated November 18, 2013.

Strathy C.J.O.:

[1] The appellants were found liable at trial for damages in excess of $10 million for fraudulent misrepresentation, negligent misrepresentation, conversion and conspiracy in connection with loans made to their company by the respondent bank. The trial judge found that the appellants had fraudulently submitted false information to the respondent in order to obtain the loans.

[2] During oral submissions, counsel confirmed that the sole ground of appeal being advanced before us was that the trial judge erred in refusing an adjournment to enable the appellants to retain new counsel.

[3] The appellants acknowledge that the decision to grant or refuse an adjournment is discretionary and attracts deference from an appellate court. They say, however, that the trial judge failed to consider all the relevant circumstances, with the result that the decision is contrary to the interests of justice and the trial judgment should be set aside.

A. BACKGROUND: the adjournment request and the trial

[4] The events at issue in this proceeding occurred in 2007. The appellants commenced the action against the respondent in 2008, claiming declarations that they were not liable on their guarantees. The respondent counterclaimed, asserting it would not have advanced the funds to the debtor, or continued to finance it, but for the appellants’ fraudulent statements concerning its financial worth.

[5] The trial was scheduled more than a year in advance, to commence in September 2013. The date was set to accommodate the schedule of the appellants’ counsel.

[6] About three weeks before trial, the appellants served notices of intention to act in person. It is apparent from their own evidence that they were hoping to settle the case. When their offer of settlement was not accepted, their lawyer discussed the costs of proceeding to trial. They were unwilling to pay him to do so. He insisted on getting off the record and they each served a Notice of Intention to Act in Person. Their lawyer signed the form confirming that he had explained its purpose to the appellants.

[7] At or shortly before trial, the appellants stated that they would not be pursuing their claim and the trial was to proceed on the respondent’s counterclaim.

[8] A few days before trial, the appellants advised the respondent’s counsel that they would be seeking an adjournment and that they hoped to retain new counsel. They appeared at the opening of trial and requested an adjournment for that purpose. Mr. Perlin explained that “up to the last minute” they had hoped to settle the case. Mr. Ber produced a doctor’s letter stating that he was being treated for depression and could not participate in legal proceedings until his condition improved. It appears that his condition was long-standing and that he obtained the letter on the same day he filed the Notice of Intention to Act in Person. The respondents opposed the adjournment request.

B. the trial judge’s reasons

[9] After hearing the parties’ submissions and canvassing the respondent’s counsel and both appellants concerning the anticipated issues and evidence in the trial, the trial judge refused the adjournment. She reasoned as follows:

• the trial had been scheduled as a long trial about a year earlier;

• the appellants had commenced the lawsuit and it was their obligation to proceed expeditiously;

• if the trial was adjourned, it would probably be close to a year before it could be re-scheduled;

• it was impossible to predict what might occur in the interim and witnesses’ memories would fade;

• the appellants had signified their intention to act in person three weeks earlier and had not taken any steps to consult with counsel in the interim; and

• Mr. Perlin had been under a doctor’s care for a couple of years and the issue of his medical condition had not been raised until the adjournment was sought.

[10] The trial judge explained to the appellants the process that would be followed at the trial. She told them that they would be entitled to make an opening statement and to adduce evidence after the respondent concluded its case. Each stated that they would need about two hours to give their own evidence.

[11] After opening statements, the trial judge adjourned the proceedings to the following day to permit the appellants to prepare. She granted a further, unscheduled, two-day adjournment at the appellants’ request to permit them to observe a religious holiday. She also granted a one-day adjournment to allow additional preparation before final argument.

[12] The appellants actively participated in the trial. They cross-examined many of the bank’s witnesses, sometimes at considerable length. Their cross-examinations were thorough and were not curtailed in any way.

[13] At the end of the respondent’s case, the trial judge asked the appellants whether they wished to call evidence. She explained that if they failed to call evidence, she would be required to decide the case only on the bank’s evidence. The appellants elected not to call evidence. The trial judge repeated her caution the following day. Again, the appellants stated that they did not intend to call any evidence in their defence.

[14] Mr. Ber made a thorough closing argument on behalf of both appellants.

[15] The trial judge gave lengthy reasons for judgment, released some six weeks after the trial.

C. the parties’ submissions

[16] The appellants submit that the trial judge failed to exercise her discretion judicially. She failed to take into account that they were self-represented and failed to discharge her responsibility to protect their interests. Her decision deprived them of their right to retain and instruct counsel and left them unprepared for trial in a complex commercial dispute.

[17] The respondent submits that the trial judge properly took the measure of the case and concluded, having regard to the totality of the circumstances, that it would not be unfair to refuse the adjournment and to require the appellants to represent themselves. It was not a complex case, most of the evidence was documentary, and the appellants were capable of meeting the bank’s case through their own evidence. The trial judge exercised her discretion judicially. The appellants declined the opportunity to testify and they had a fair trial.

D. analysis

[18] The applicable principles are well understood. They were expressed by this court in Khimji v. Dhanani (2004), 2004 CanLII 12037 (ON CA), 69 O.R. (3d) 790, per Laskin J.A. dissenting, but not on this point, at para. 14:

A trial judge enjoys wide latitude in deciding whether to grant or refuse the adjournment of a scheduled civil trial. The decision is discretionary and the scope for appellate intervention is correspondingly limited. In exercising this discretion, however, the trial judge should balance the interests of the plaintiff, the interests of the defendant and the interests of the administration of justice in the orderly processing of civil trials on their merits. In any particular case several considerations may bear on these interests. A trial judge who fails to take account of relevant considerations may exercise his or her discretion unreasonably and if, as a result, the decision is contrary to the interests of justice, an appellate court is justified in intervening. In my opinion, that is the case here.

[19] Laskin J.A. observed that in refusing an adjournment, the trial judge should have taken into account the goal expressed in r. 2.01(1)(a), namely “to secure the just determination of the real matters in dispute” and the resolution of cases on their merits.

[20] Khimji was considered by this court in Toronto-Dominion Bank v. Hylton, 2010 ONCA 752, which adopted the above statement. This court observed, at para. 36, that “[t]he presiding judge has a well-placed and a well-established discretion to decide whether an adjournment request ought to be allowed or denied.” After setting out the above statement, the court added, at para. 37:

Laskin J.A.'s passage makes it clear that, in reviewing highly discretionary decisions such as whether to allow a request for an adjournment, the inquiry must focus on whether the court below took account of relevant considerations in balancing the competing interests and made a decision that was in keeping with the interests of justice.

[21] The court added that factors to be considered include the reason for the adjournment request, the history of the matter, the prejudice to the party resisting the adjournment and the consequences to the requesting party of refusing the request. The fact that a party is self-represented is a relevant factor as the court has an obligation to ensure that all litigants have a fair opportunity to advance their positions.

[22] In Ariston Realty Corp. v. Elcarim Inc., 2007 CanLII 13360 (ON SC), [2007] O.J. No. 1497 (S.C.), a case much relied on by the appellants, Perell J. helpfully set out at para. 34 a non-exclusive list of factors that may be weighed in the exercise of a court’s discretion with respect to an adjournment.

[23] That list includes not simply factors of immediate concern to the parties, but factors affecting the broader public interest, including the objective of determining the matter on its merits, the appearance of justice and the needs of the administration of justice in the orderly processing of trials.

[24] The list in Ariston also suggests that the court should consider whether the refusal of an adjournment would significantly compromise the ability of the party prosecuting or defending the litigation and the effect of the adjournment on substantive and procedural justice.

[25] The list also makes it clear that the court must consider “the competing interests of the parties in advancing or delaying the progress of the litigation”.

[26] Finally, Perell J. noted, the judge is entitled to consider “the particular circumstances of the request for an adjournment and the reasons and justification for the request”.

[27] The balancing of interests – the private interest of the parties and the public interest in the fair and efficient adjudication of disputes on their merits – is quintessentially the responsibility of the trial judge who has the parties in front of her and is best equipped to assess all the relevant circumstances. The trial judge identified some of the factors she considered. In my view, those factors – and others she did not mention – amply justified her decision.

[28] I turn to those factors.

The particular circumstances of the request

[29] The respondents had given notice of their intention to act in person. Their trial counsel would undoubtedly have explained the consequences to them. They had ample time within which to retain new counsel who, if necessary, could have appeared at trial, requested an adjournment and offered a timeline and terms, such as costs thrown away. They did not do that. They did not demonstrate any attempt to retain new counsel. They did not offer terms. It is reasonable to conclude that they had simply rolled the dice, hoped to settle and when that strategy did not work, decided to try another one – delay.

[30] While the appellants were self-represented, that was the result of their own decision to put off trial preparation in the hope of settlement and their own failure to come to grips with the cost of litigation until faced with the trial date.

The ability of the appellants to defend the litigation

[31] The trial judge was entitled to consider – and clearly did consider – the nature of the case, the matters in dispute, the appellants’ familiarity with the issues and their relative sophistication. The appellants were experienced and sophisticated businessmen. The dispute concerned their business, their records and their dealings with the bank. At their core, the issues were not complex and the defence was entirely within the appellants’ personal knowledge. The appellant Ber’s depression had not prevented him from participating in the proceedings, including discovery, prior to trial. The trial judge could reasonably conclude that the appellants would be capable of defending the claim without the assistance of counsel.

The competing interests of the parties in advancing or delaying litigation

[32] The trial judge took this factor into account. It would have been perfectly obvious to the trial judge that the appellants had nothing to lose and everything to gain by delaying the trial as long as possible. On the other hand, the respondent would obviously be prejudiced by further delay of a case that was already five years old.

[33] Moreover, delay usually favours a defendant, in this case the appellants, who were defendants in the counter-claim. Delay wears the plaintiff down. It gives the defendant the use of its own funds while the plaintiff waits and wonders whether there will be anything to collect when the judgment day arrives. It may induce the plaintiff to take the “bird in the hand” of a settlement as opposed to the cost, delay and uncertainty of a trial some time in the future.

The broader public interest

[34] There is a public interest in the efficient use of scarce judicial resources and in the timely, efficient and fair resolution of trials. These were factors the trial judge was entitled to take into account, alongside the fair accommodation of self-represented litigants.

[35] The trial judge was familiar with the Commercial List and with the Toronto long trial list. She was familiar with the system of fixed trial dates and the consequences of an adjournment. Last-minute adjournments waste judicial resources and public funds. They affect public confidence in the administration of justice. They leave parties and witnesses disillusioned. They cost money to litigants who have prepared for trial in the expectation that a fixed trial date means just that. Real prejudice is caused when a “stale” case gets even more stale. The trial judge properly took these factors into account.

Was the refusal of the adjournment contrary to the interests of justice?

[36] The appellants did not pursue their assertion that the conduct of the trial was unfair. There was no merit to that suggestion. The trial judge managed the trial firmly but fairly. As the trial unfolded, the appellants participated fully and conducted effective cross-examinations and argument. They decided not to testify or to call evidence after being clearly informed of the consequences. They do not challenge the underlying merits of the trial judge’s conclusions. In the circumstances of this case, it is impossible to say that the result of the refusal of the adjournment was not in keeping with the interests of justice.

Fresh evidence

[37] The appellants sought leave to introduce fresh evidence on the appeal to describe the evidence they would have adduced at trial had they been able to do so. That evidence manifestly fails to meet the Palmer test. The evidence was available at trial and the appellants were given the opportunity to adduce the evidence if they wished. They failed to take advantage of that opportunity. The motion for leave to introduce fresh evidence is dismissed.

E. order

[38] For these reasons, the appeal is dismissed, with costs to the respondent in the agreed amount of $13,000, inclusive of disbursements and all applicable taxes.

“G.R. Strathy C.J.O.”

“I agree P. Lauwers J.A.”

“I agree M.L. Benotto J.A.”

Released: March 23, 2016