Klurfeld et al. v. Nova Quest Logistics Inc. et al.

[Indexed as: Klurfeld v. Nova Quest Logistics Inc.]

Ontario Reports

Court of Appeal for Ontario,

MacPherson, van Rensburg and B.W. Miller JJ.A.

May 9, 2016

132 O.R. (3d) 66 | 2016 ONCA 348

Case Summary

Judgments and orders — Amendment — Plaintiffs obtaining default judgment against GD after discontinuing action against W — Plaintiffs subsequently discovering that GD was not legal entity — Plaintiffs moving unsuccessfully to amend judgment to add W as judgment debtor on basis that GD was W's alias — Appeal dismissed but discontinuance set aside — Motion judge not erring in finding that there was insufficient evidence that GD and W were same entity — Plaintiffs alleging that W induced discontinuance through misleading statement about its relationship with GD — Setting aside of discontinuance being just under s. 134(1)(c) of Courts of Justice Act — Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(1)(c).

The plaintiffs commenced an action against GD and W. After W's in-house counsel allegedly told the plaintiffs that W was not affiliated with "that entity [GD]", the plaintiffs discontinued the action against W. They obtained default judgment against GD, but then discovered that GD was not a legal entity. They brought a motion to amend the judgment to add W as a judgment debtor on the basis that GD was W's alias. The motion was dismissed. The plaintiffs appealed.

Held, the appeal should be dismissed.

Although the motion judge's reasons ought to have demonstrated a greater engagement with the evidence, he did not err in determining that there was insufficient evidence to support a finding that GD and W were the same entity.

There was some uncertainty about the circumstances surrounding the plaintiffs' discontinuance against W. In the circumstances, it was just under s. 134(1)(c) of the Courts of Justice Act to set aside the discontinuance. It would be unfair to add W as a judgment debtor without giving it the opportunity to contest the action on its merits.

Statutes referred to

Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(1) (c)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 59 [page67 ]

APPEAL from the order of M. Gibson J. of the Superior Court of Ontario dated July 27, 2015 dismissing a motion to amend a default judgment.

Sergio Grillone, for appellants.

David Stamp and Raphael Eghan, for respondent.

The judgment of the court was delivered by

B.W. MILLER J.A.: —

Overview

[1] Can the appellants, having obtained a default judgment against a party that appears not to be a legal entity, have the judgment amended to add the respondent Wakefern Food Corporation ("Wakefern") as a judgment debtor despite having previously discontinued the action against it? The appellants argue that they can, because Grocery Dayton is simply another name for Wakefern, and that the action was only discontinued against Wakefern as a result of Wakefern's deceit.

[2] In 2007, the appellant Mr. Klurfeld was seriously injured in an accident at a warehouse at 60 Tower Road in New Jersey while unloading goods that he had transported under contract from Oakville. The invoice identified the consignee as Grocery Dayton and the buyer as Wakefern. The appellants commenced an action against Grocery Dayton, Wakefern and several other parties in 2007. That action was subsequently discontinued against all parties other than Grocery Dayton. The appellants noted Grocery Dayton in default and, after an undefended trial as to damages, were granted judgment in the amount of $980,200.

[3] The circumstances surrounding the discontinuance against Wakefern are disputed. The appellants allege that they were induced to discontinue by a statement from Wakefern's in-house counsel, Marlena Schulz, that "Wakefern is not affiliated with that entity [Grocery Dayton]". Wakefern argues that the appellants discontinued because of multiple infirmities in their claim against Wakefern.

[4] In the course of an unsuccessful attempt to enforce their judgment against Grocery Dayton, the appellants concluded that Grocery Dayton is not an entity independent of Wakefern, and that Grocery Dayton is merely an alias used to refer to Wakefern.

[5] On the theory that a judgment against Grocery Dayton is a judgment against Wakefern, the appellants brought a motion [page68 ]under Rule 59 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to amend their judgment to add Wakefern as a judgment debtor.

[6] The motion judge dismissed the appellants' motion for three reasons: (1) there was insufficient evidence before the court to make a finding that Wakefern and Grocery Dayton are the same entity; (2) the appellants' failure to set aside the discontinuance of their action against Wakefern is a complete bar to the relief sought; and (3) it would be fundamentally unfair to add Wakefern as a judgment debtor where it had had no opportunity to defend the action on the merits.

[7] The appellants appealed, arguing that the motion judge made a palpable and overriding error by disregarding the evidence of the appellants as to the identity of Grocery Dayton, and made errors of law in concluding that the discontinuance against Wakefern was a bar to the relief sought.

[8] For the reasons set out below, the appeal cannot succeed. Although the motion judge erred in failing to provide sufficient reasons and perhaps in disregarding some of the evidence of the appellants, the error was not an overriding one. There remained insufficient evidence before the court to allow the court to conclude that Grocery Dayton and Wakefern are two names for the same entity, and to provide the remedy sought by the appellants.

First issue: Did the motion judge err by disregarding the appellant's evidence?

[9] The appellants argue that the motion judge erred by disregarding their evidence, having relied solely on the facts set out in the respondent's factum, which pre-dated the appellants' supplementary affidavits. These affidavits adduce evidence that the appellants believe contradicts Wakefern's categorical denial that it is not in any way affiliated with "the entity Grocery Dayton". The appellants argue that the motion judge would have reached a different conclusion but for his failure to address these supplementary affidavits.

[10] The motion judge addressed the evidence in the following paragraph:

One is naturally sympathetic to the Plaintiffs in their circumstances. However, I must concur with the arguments advanced by Wakefern in their factum. While there is some circumstantial evidence that there is confusion surrounding the exact legal nature of the entity known as "Grocery Dayton," on the evidence before the Court it would be an overreach to make a finding of fact that Grocery Dayton and Wakefern are the same entity. Wakefern vehemently denies that this is so. There is not nearly enough evidence before the Court to make a finding that this is so. [page69 ]

[11] The motion judge gives no explanation for why he preferred the evidence of Wakefern -- which amounts to no more than a categorical denial -- to the evidence of the appellants. There is no engagement with the appellants' evidence, beyond characterizing it as "circumstantial".

[12] That said, and although it would have been preferable for the motion judge to have provided more complete reasons, on my review of the evidence in the paragraphs below I cannot conclude that the motion judge made an overriding error.

The appellants' evidence

[13] The appellants' evidence as to the identity of Grocery Dayton consists primarily of (1) the commercial invoice of the goods delivered by Mr. Klurfeld; (2) Wakefern's use of the warehouse at 60 Tower Road and ownership of the assets at that location; and (3) transportation and logistics webpages that connect Grocery Dayton to Wakefern.

[14] The commercial invoice for the goods that Mr. Klurfeld delivered listed Grocery Dayton as the consignee of the shipment and Wakefern as the buyer.

[15] The appellants also supplied evidence that Wakefern uses the warehouse at 60 Tower Road, Dayton, New Jersey to which Mr. Klurfeld made his delivery, and that Wakefern owns equipment that is located at the 60 Tower Road warehouse. Wakefern does not deny these facts.

[16] In argument, counsel for the appellants submitted that the best evidence that Grocery Dayton is an alias for Wakefern, is Wakefern's use of the name "Grocery Dayton" in information and logistics systems to identify its operations at the 60 Tower Road warehouse for suppliers. The appellants refer to the Wakefern Warehouse Address List, posted on Wakefern's Electronic Data Interchange ("EDI") supplier portal, and Wakefern's Warehouse Data Universal Numbering System ("DUNS") List. Both of these lists are publically available on the Internet. Both identify the warehouse at 60 Tower Road as Grocery Dayton.

[17] The exact nature of the DUNS List is unclear on the evidence. During oral argument, counsel for the appellant suggested that the court could take judicial notice that the DUNS List is a proprietary numbering system developed by Dun and Bradstreet ("D&B"), assigning a unique number identifier to a single business entity. A unique DUNS number is assigned by D&B on application by a business entity to each business location included in the D&B database. From a review of webpages taken from Wakefern's Electronic Data Interchange supplier portal, it appears that Wakefern's business locations share Wakefern's [page70 ]unique ten digit prefix, 0069772418, with a four character suffix that is specific to each of Wakefern's shipping locations. Wakefern's supplier portal provides a DUNS number for Grocery Dayton which uses Wakefern's unique prefix.

[18] The motion judge did not refer to any of this evidence.

Wakefern's evidence

[19] Wakefern brought a motion in 2010 to strike the appellants' claim. The evidence in support of that motion consisted primarily of an affidavit from David Stamp, Wakefern's Toronto counsel. In that affidavit, Mr. Stamp relayed a statement from Ms. Schulz, Wakefern's New Jersey corporate counsel, that Wakefern "is not affiliated with that entity [Grocery Dayton]".

[20] In response to the appellants' 2015 motion, Wakefern produced a second affidavit, sworn by Wakefern's vice-president, Thomas Roy. In this affidavit, Roy states: "Wakefern does not use the name aeGrocery Dayton', is not affiliated with any entity called aeGrocery Dayton', and aeGrocery Dayton' is not used as short-hand for any part of Wakefern's operations."

[21] Roy swore a second affidavit in response to the affidavit of Kelly Millard. The Millard affidavit, sworn on behalf of the appellants, set out evidence relating to Wakefern's apparent use of the name Grocery Dayton in relation to the 60 Tower Road warehouse. In his reply affidavit, Roy states:

The Millard Supplementary Affidavit asserts that the warehouse facility at 60 Tower Road is referred to in some instances as "Grocery Dayton". As deposed in my first affidavit, I am not aware of the warehouse being referred to by that name. In any event, even if there were instances of the 60 Tower Road warehouse being referred to as "Grocery Dayton", this would not alter the fact that Wakefern does not own or operate the warehouse, nor the fact that Wakefern has no affiliation with any entity called "Grocery Dayton", as deposed in my first affidavit.

[22] The second Roy affidavit does not provide an explanation for Wakefern's apparent connection with the Grocery Dayton name in Wakefern's EDI portal.

Analysis

[23] On his review of the evidence, the motion judge concluded that "there is confusion surrounding the exact legal nature of the entity known as aeGrocery Dayton'". Notwithstanding the confusion, however, one thing is abundantly clear: Wakefern knows far more about Grocery Dayton than it has chosen to tell the court.

[24] One would expect that Wakefern could have easily explained why and how its EDI and DUNS numbers were [page71 ]connected to Grocery Dayton. Instead, Wakefern simply proffered Roy's equivocal statement: "Wakefern has no affiliation with any entity called aeGrocery Dayton'" (emphasis added). The truth of the statement appears to rest on "Grocery Dayton" not being a legal entity. It leaves hanging the question of what "Grocery Dayton" is, and why and how the name is associated with Wakefern.

[25] It is telling that in his reply affidavit, Roy does not repeat his earlier statement that "aeGrocery Dayton' is not used as short-hand for any part of Wakefern's operations." That statement appears to be contradicted by Wakefern's EDI and DUNS lists. Wakefern chose not to respond with an explanation of the references to Grocery Dayton in these lists.

[26] Nevertheless, it remains unclear what "Grocery Dayton" is: a short-hand reference to part of Wakefern's operations, a short-hand reference to a third party facility used by Wakefern, or something else. The evidence proffered by the appellants equating Wakefern and Grocery Dayton is capable of multiple interpretations. Additionally, there is a lack of evidence as to what a DUNS number is and how it is generated.

[27] Although the motion judge's reasons ought to have demonstrated a greater engagement with the evidence, he made no error in determining that there was insufficient evidence to support a finding that Grocery Dayton and Wakefern are the same entity.

[28] This factual finding resolves the appellant's argument for adding Wakefern to the judgment against Grocery Dayton. However, it is necessary to comment briefly on the two other findings raised by the appellants.

Second issue: The discontinuance

[29] The motion judge found that, even if there was sufficient evidence to allow a finding that Grocery Dayton and Wakefern are the same entity, the discontinuance of the action against Wakefern was a bar to adding Wakefern to the judgment.

[30] On appeal, the appellants argued that the discontinuance would not need to be set aside because a judgment against Grocery Dayton is, in reality, a judgment against Wakefern. The appellants' argument cannot succeed given my conclusion that the motion judge did not err in finding that there was insufficient evidence to conclude that Grocery Dayton and Wakefern are the same entity. Therefore, it is unnecessary for me to decide the question of whether a party against whom an action has been discontinued can later be added as a judgment debtor without first setting aside a discontinuance of that action. [page72 ]

[31] The appellants allege that Wakefern induced the discontinuance through a statement from Ms. Schulz, Wakefern's New Jersey corporate counsel (relayed in an affidavit sworn by Wakefern's Toronto counsel) that was, as I set out above, economical with the truth about Grocery Dayton.

[32] The appellants indicated at the hearing of the appeal that, if necessary, they would bring a motion in the Superior Court to set aside the discontinuance. Counsel for Wakefern indicated that such a motion would likely be resisted.

[33] There is nothing to be gained by sending this matter back to the Superior Court on a motion to set aside the discontinuance. On the record before me, which includes the affidavits filed by Wakefern on its unargued motion to strike the appellants' pleadings, I am satisfied that it is just under s. 134(1)(c) of the Courts of Justice Act, R.S.O. 1990, c. C.43 to set aside the discontinuance.

Third issue: Fairness in granting the relief sought

[34] The motion judge accepted Wakefern's argument that it would be unfair to add Wakefern as a judgment debtor as proposed by the appellants because Wakefern had no opportunity to defend itself. Notably, Wakefern had advanced a defence in a 2010 motion that it abandoned when the appellants discontinued against Wakefern.

[35] Wakefern knew that the appellants had obtained a default judgment against Grocery Dayton. It likely knew that although Grocery Dayton is a name that is connected to some aspect of Wakefern's operations, it is not a legal entity. Did it mislead the appellants about the relationship between Wakefern and Grocery Dayton? Its apparent litigation strategy does not attract sympathy.

[36] That said, there is some uncertainty about the circumstances surrounding the appellants' discontinuance against Wakefern. Wakefern brought a motion in 2010, alleging deficiencies in the appellants' pleadings. In support of that motion, a solicitor's affidavit was sworn which contained Schulz's statement that Wakefern and Grocery Dayton were not affiliated. The appellants argue that they relied on this statement to conclude that Wakefern and Grocery Dayton were separate entities and that this was the reason for their discontinuance against Wakefern.

[37] Wakefern, however, maintains that the action was properly discontinued against it regardless of the appellants' beliefs. It maintains that it would have been successful in having the appellant's claims against Wakefern struck in any event. [page73 ]

[38] Discontinuance may or may not have been a function of the Schulz representation. Given this controversy, I agree with the motion judge that it would be unfair to add Wakefern as a judgment debtor without giving it the opportunity to contest the action on its merits.

Disposition

[39] I would dismiss the appeal. I would set aside the discontinuance against Wakefern. I would make no award as to costs.

Appeal dismissed.

End of Document