Court of Appeal for Ontario

Citation: Esfahani v. Samimi, 2016 ONCA 418 Date: 20160530 Docket: C60293

Judges: Cronk, Blair and Pardu JJ.A.

Between:

Djalaleddin Esfahani Plaintiff (Respondent)

and

Kamran Samimi, Marina Samimi, Danny Aria Samimi, Layla Sabet, Shariar Moshtael and Klaus Hartmann Defendants (Appellants)

Counsel: Lawrence Thacker, for the appellants Raymond Colautti, for the respondent

Heard and released orally: May 26, 2016

On appeal from the judgment dated March 11, 2015 and the costs order dated April 13, 2015 of Justice Sean F. Dunphy of the Superior Court of Justice.

ENDORSEMENT

[1] The appellants seek, on several grounds, to set aside the trial judge’s ruling on the mini-trial conducted on consent in this case. They argue, principally, that the trial judge erred by failing to rule, prior to conducting the mini-trial, on the contested issue whether the respondent’s action against Kamran Samimi was stayed under s. 69(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”), no order lifting the s. 69(1) automatic stay having been obtained. This error, the appellants say, prejudiced their interests in several ways, including by necessitating the conduct of a four-day mini-trial that ultimately became unnecessary and moot.

[2] We reject this argument.

[3] The automatic stay under the BIA applied only to the respondent’s action against Kamran Samimi, the bankrupt. It would not operate to stay what the respondent asserts are his stand-alone claims against the appellants. Those claims were detailed in the respondent’s statement of claim, which was available many months before the scheduled date of the mini-trial. In this sense, the mini-trial was rendered neither moot nor unnecessary by the trial judge’s subsequent decision on the issue of the BIA stay relating to Kamran Samimi.

[4] Moreover, the material facts pleaded against the appellants could arguably support more than one cause of action, including claims regarding fraudulent conveyances, fraud or deceit, and civil conspiracy. The question to be determined at the mini-trial, as agreed by the parties, was fact-driven. The answer to the question posed, and the trial judge’s factual findings supporting that answer, could also arguably ground more than one cause of action against the appellants, as well as Kamran Samimi.

[5] The appellants were well aware of the question posed for determination at the mini-trial and of the contents of the respondent’s pleading. It was clearly foreseeable that the factual findings to be made by the trial judge in determining the agreed question at the mini-trial could lay the foundation for stand-alone claims asserted by the respondent against the appellants.

[6] In these circumstances, the conduct of the mini-trial cannot be said to have taken the appellants by surprise, notwithstanding the late-breaking BIA issue in relation to the action against Kamran Samimi, or to have occasioned any procedural unfairness. We note that the trial judge made no determination whether the BIA considerations affected the respondent’s ability, at law, to seek redress against the appellants, nor did he decide whether the claims advanced against the appellants would succeed. His decision was expressly limited to factual findings responsive to the question that the parties had agreed upon. In our view, his findings were open to him on the record.

[7] It is also noteworthy that there is no evidence that, after the trial judge released his ruling indicating that he intended to reserve his decision on the issue of the BIA stay of the action against Kamran Samimi and to proceed with the mini-trial, the appellants sought an adjournment of the proceeding to permit an appeal of his ruling, to reconsider their position regarding the mini-trial, to revisit the evidence to be called at the mini-trial, or to consider other potential remedies in light of the ruling. This, too, undercuts any suggestion of procedural unfairness or prejudice to the appellants arising from the manner in which events proceeded before the trial judge.

[8] At the end of the day, the trial judge conducted a mini-trial on the very issue framed by the parties, as he was directed to do by the consent order of Moore J. of the Superior Court of Justice dated September 18, 2012, in accordance with the procedural agreement reached by the parties. At no point after learning of Kamran Samimi’s bankruptcy did any of the appellants seek to vary the consent order or the procedural agreement based on changed circumstances or to halt the conduct of the mini-trial.

[9] For these reasons, the appellants’ challenge to paras. 2 to 8 of the trial judge’s judgment on the mini-trial fails.

[10] The appellants also challenge the trial judge’s costs award, again on several grounds. We grant leave to appeal the costs award and allow the costs appeal in the following respect.

[11] In fashioning his costs award, the trial judge failed to account for the appellants’ success before him in defeating the respondent’s motion to continue his action against Kamran Samimi notwithstanding Kamran Samimi’s discharge from bankruptcy. This was an error in principle. The appellants were entitled to the costs of the continuance motion, which should have been set off against or reduced the adverse costs award against them in relation to the mini-trial.

[12] The continuance motion consumed one hearing day, while the mini-trial proceeded over four days. The motion was brought at the last moment, with the result that most of counsels’ preparation time and prehearing efforts were focused on the pending mini-trial. In the circumstances, we would reduce the quantum of the costs award against the appellants ($141,205, including disbursements and H.S.T.) by $7,500, resulting in the net aggregate amount of $133,705.

[13] In light of the parties’ positions on costs before the trial judge, we see no basis to interfere with any other aspect of the trial judge’s discretionary costs award. In our view, it is neither plainly wrong nor tainted by any error in principle. Appellate interference with the balance of his award is therefore precluded.

[14] For the reasons given, the main appeal is dismissed. Leave to appeal costs is granted and the costs appeal is allowed in part in accordance with these reasons. The respondent is entitled to his costs of this appeal, fixed in the amount of $20,000, inclusive of disbursements and all applicable taxes.

“E.A. Cronk J.A.”

“R.A. Blair J.A.”

“G. Pardu J.A.”