Khan v. 1806700 Ontario Inc., 2021 ONSC 1679

CITATION: Khan v. 1806700 Ontario Inc., 2021 ONSC 1679

DIVISIONAL COURT FILE NO.: DC-19-009700ML

DATE: 20210308

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Muhammad aslam khan, Proposed Appellant / Moving Party

AND:

1806700 Ontario inc., Plaintiff / Respondent

AND:

SANDEEP JOHAL, Intervenor / Respondent

BEFORE: Heeney, Broad and Favreau JJ.

COUNSEL: Muhammad Aslam Khan, the Moving Party, representing himself

Joga S. Chagal, for the Respondent 1806700 Ontario Inc

Tim Gleason, for the Respondent Sandeep Johal

HEARD by videoconference: March 3, 2021

ENDORSEMENT

By the Court

Overview

[1] Muhammad Aslam Khan brought a motion before Petersen J., sitting as a single judge of the Divisional Court, to extend the time to appeal a November 3, 2017 order made by Bielby J. and to extend the time to bring motions for leave to appeal several orders made by Snowie J. and Richetti J. in 2016 and 2017. Petersen J. dismissed Mr. Khan’s motion in a decision dated October 9, 2019. She also awarded costs to the respondents on a substantial indemnity basis in an endorsement dated January 3, 2020.

[2] Mr. Khan brings a motion pursuant to section 21(5) of the Courts of Justice Act, R.S.O. 1990, c. C.43, to set aside Petersen J.’s order and for leave to appeal Petersen J.’s costs order. Two weeks before the hearing date, Mr. Khan also uploaded motion materials to CaseLines seeking a transfer of the proceedings to the court in Oshawa.

[3] At the beginning of the hearing, Mr. Khan raised what he described as three preliminary issues: 1) the request that the proceedings be transferred to Oshawa, 2) an argument that all the proceedings up to date have violated his constitutional rights and 3) a claim that all the decisions he seeks to challenge were irregular, and therefore invalid, because they proceeded in the wrong region.

[4] After raising these issues, Mr. Khan asked the panel for “rulings” on these preliminary matters. The panel declined to do so and asked Mr. Khan to proceed with his arguments on the motion to set aside Petersen J.’s order. Mr. Khan then asked for an adjournment, which the panel refused. Mr. Khan then asked that the panel recuse itself, which, after giving Mr. Khan an opportunity to make submissions, the panel refused. Ultimately, Mr. Khan declined to argue the merits of his motion to set side Petersen J.’s order, stating that he felt the Court had treated him unfairly.

[5] At the conclusion of the hearing, we dismissed the motion to set aside Petersen’s order with reasons to follow. These are the reasons. In addition to addressing the merits of the motion to set aside Petersen J.’s order, the reasons address the preliminary issues raised by Mr. Khan, the panel’s refusal to recuse itself and the panel’s refusal to grant an adjournment.

Background

[6] The procedural history of this matter is lengthy and complicated. Petersen J. covered this history in helpful detail in her decision of October 9, 2019. Given the issues raised by Mr. Khan at the hearing, it is nevertheless worth revisiting that history at a high level.

[7] The underlying proceeding in this matter arises from an action commenced in Brampton in 2012 by the plaintiff, 1806700 Ontario Inc., for possession of a residential property located in Markham owned by the defendants, Marian Dmuchowski and Leonila Fajardo. At the time the action was commenced, there were two mortgages on the property; the plaintiff held the second mortgage. The defendants did not defend the action, and the plaintiff obtained default judgment in February 2013. The plaintiff then took possession of the property and sold it under power of sale in July 2013.

[8] In January 2013, after the action was commenced but before the sale of the property, Mr. Farooq Mian registered a third mortgage on title. Mr. Khan, who is a lawyer, acted for both defendants on the transaction. In February 2014, the third mortgage was transferred from Mr. Mian to Bibi Khan, Mr. Khan’s wife, for a nominal sum. The third mortgage was then transferred to SWAT Emeraldine and Marketing Inc., a company controlled by Mr. Khan, before eventually being assigned to Mr. Khan personally.

[9] In September 2013, the defendants and Mr. Mian brought motions alleging an improvident sale and seeking to set aside the default judgment. These motions were resolved on consent before Donohue J. in July 2014, with the exception of costs. As part of the 2014 consent order, a Reference was ordered, pursuant to Rule 64 of the Rules of Civil Procedure, to give Mr. Mian an opportunity to prove his claim as a subsequent encumbrancer.

[10] The plaintiff then brought two motions: (i) a motion to set aside Donohue J.’s consent order on the basis that the third mortgage was fraudulent, and (ii) a motion for production of Mr. Khan’s records related to the third mortgage, pursuant to Rule 30.10 of the Rules of Civil Procedure.

[11] Snowie J. heard the Rule 30.10 motion in June 2016. In July 2016, she found that the third mortgage raised red flags for possible fraud and ordered production of documents relating to the third mortgage. She also awarded costs against Mr. Khan, in an amount to be determined after written submissions. Mr. Khan brought a motion for leave to appeal this order, which was subsequently abandoned. In April 2017, Snowie J. awarded costs against Mr. Khan of $14,672.58.

[12] The motion to set aside Donohue J.’s order was resolved on consent before Ricchetti J. in September 2016. The 2016 consent order set aside Donohue J.’s order, abandoned Mr. Khan’s motion for leave to appeal Snowie J.’s order, and confirmed that Ricchetti J. would hear the outstanding reference.

[13] The reference took place in December 2016. Richetti J. found that a surplus of $17,300.00 remained from the net proceeds of the sale of the property, after the payouts to the first and second mortgagees. Richetti J. also held that he would not determine the issue of the validity of the third mortgage until the issue of costs was decided.

[14] Written costs submissions were requested and received in January 2017. In his submissions, Mr. Khan sought personal costs against Mr. Johal, counsel for the plaintiff. Ricchetti J. gave Mr. Johal the opportunity to retain counsel and make submissions. In May 2017, Ricchetti J. awarded costs of the proceeding and the reference against Mr. Khan and the defendants in the amount of $20,000, and ordered that this amount be paid to the plaintiff out of the surplus remaining from the net proceeds of the sale of the property, plus interest. He also ordered Mr. Khan to pay costs of $4,500 to the plaintiff and $6,000 to Mr. Johal for the hearing on costs. Ricchetti J. then declined to determine the validity of the third mortgage, on the basis that there was no longer any surplus remaining from the sale of the property.

[15] Mr. Khan then moved to set aside Ricchetti J.’s Reference Report, stating that he opposed the confirmation of the Report, and in particular the costs awards. On November 3, 2017, Bielby J. dismissed Mr. Khan’s motion, holding that Mr. Khan had moved to oppose confirmation more than 15 days after the Report was issued on December 5, 2016. Bielby J. further held that, in any event, the findings made by Ricchetti J. were within scope of the Order directing the Reference and supported by the evidence. Ricchetti J. had “properly assessed the costs of the proceeding and ordered the costs of the proceeding to be added to the mortgage debt.” On December 12, 2017, Bielby J. awarded substantial indemnity costs against Mr. Khan in the amount of $8,555.18 to the plaintiff and $9,677.65 to Mr. Johal.

[16] Mr. Khan appealed Bielby J.’s order to the Court of Appeal. The Court of Appeal quashed the appeal for lack of jurisdiction in December 2018 and refused to transfer the matter to the Divisional Court.

[17] Mr. Khan also attempted to appeal the orders of Snowie and Ricchetti JJ. to the Court of Appeal, despite being notified of possible jurisdictional issues by a Senior Legal Officer of the Court of Appeal. In that context, Mr. Khan sought an extension of time to perfect this appeal, which was denied in September 2018.

[18] Mr. Khan then brought a motion before the Divisional Court to extend the time to (i) appeal Bielby J.’s order, (ii) seek leave to appeal Bielby J.’s costs order, and (iii) seek leave to appeal the orders of Snowie and Ricchetti JJ. It is this motion that was heard by Petersen J., and is the subject-matter of the present motion before this panel.

[19] Petersen J. dismissed Mr. Khan’s motion on October 23, 2019. With respect to the orders of Snowie and Richetti JJ, she found that Mr. Khan had no good explanation for his extensive delay and that it would not be in the interest of justice to grant the extension. She also agreed with the Court of Appeal’s view that the prospect of success was “weak”. With respect to Bielby J.’s order, she found that the cause of the delay was Mr. Khan’s failure to bring the appeal in the right court. She also found that the proposed appeal was “devoid of merit”, ultimately finding that it would not be in the interest of justice to allow the appeal to proceed.

[20] In an endorsement dated January 3, 2020, Petersen J. awarded substantial indemnity costs against Mr. Khan in the amount of $7,500 to the plaintiff and $3,250 to Mr. Johal. In making the order for substantial indemnity costs, she stated “Mr. Khan ought to have known, based on the Court of Appeal ruling, that his motion had virtually no chance of success and that it would attract substantial cost consequences if he was unsuccessful. To deny the respondents their costs in these circumstances would be grossly unfair and would encourage and reward Mr. Khan’s unreasonable conduct.”

[21] On October 28, 2019, Mr. Khan filed his notice of motion to set aside Justice Petersen’s orders and seek leave to appeal Petersen J.’s costs order.

No merit to the motion to set aside Petersen J.’s order

[22] A motion brought pursuant to section 21(5) of the Courts of Justice Act to review the order of a single judge of the Divisional Court is not a hearing de novo or an opportunity to argue the motion afresh. A three-judge panel of the Divisional Court will only interfere with the order if the motion judge made an error of law or an error of principle in exercising her discretion, or a palpable and overriding error of fact or mixed fact and law: Canadian National Railway Company v. Teamsters Canada Rail Conference, 2019 ONSC 3644, at para. 9.

[23] As indicated above, Mr. Khan declined the opportunity to make oral submissions on the issue of whether Petersen J. made any errors. His factum does not identify any errors, but rather attempts to argue the issues afresh.

[24] Petersen J.’s reasons are comprehensive and careful. She reviewed the lengthy history of this matter in detail, set out the correct test for granting an extension of time for an appeal and ultimately found that it would not be in the interests of justice to grant the requested extension. In doing so, she made findings of fact and exercised her discretion. We see no palpable and overriding errors of fact and no errors in her exercise of discretion. On the contrary, based on the history of this matter, we fully agree that it is not in the interests of justice to grant the extensions sought by Mr. Khan. Mr. Khan has consistently and unduly delayed appealing the decisions at issue or has proceeded in the Court of Appeal despite clear advice that he was in the wrong court. In addition, and most significantly, there appears to be no merit to the proposed appeal and motions for leave to appeal.

[25] With respect to Petersen J.’s costs order, this is not an appropriate case for granting leave. Leave to appeal costs orders will be granted only in the most obvious cases and very sparingly: Men at Work General Contractors Ltd. v. Macdonald, 2015 ONSC 383 (Div. Ct.) at para. 14. In this case, Petersen J. carefully explained her reason for rejecting Mr. Khan’s argument that no costs should be awarded against him and for awarding costs to the respondents on a substantial indemnity scale. She reviewed the plaintiff’s bill of costs and reduced the amount sought because she found the time claimed was excessive. We see no basis for granting leave to appeal her order.

[26] Accordingly, we dismiss Mr. Khan’s motion to set aside Petersen J.’s order and his motion for leave to appeal her costs order.

Request to transfer the proceedings to the Central East Region

[27] Mr. Khan’s request to transfer the proceedings to Oshawa in the Central East Region seems to be based on the fact that two related actions have now been transferred to that Region and that Rule 13.03.01(3) requires that proceedings to enforce a mortgage be commenced in the Region where the property is located. However, in this case, it is not clear whether Mr. Khan seeks to have the Divisional Court proceedings transferred to the Central East Region or the underlying Superior Court proceedings.

[28] In either case, the request to transfer this matter is misguided.

[29] If he is seeking the transfer of the Divisional Court proceedings, there is no basis for such a request. Section 20(1) of the Courts of Justice Act provides that appeals to the Divisional Court are to be brought in the region where the matter was originally heard and section 20(2) provides that all other proceedings can be brought in any region. In this case, Petersen J. heard the motion in Brampton and Mr. Khan brought a motion to review her decision to the Divisional Court in Brampton. No other party is seeking the transfer and there is no basis for such as transfer. In any event, there would be no utility in transferring the matter to the Central East Region and doing so would be a waste of scarce court and judicial resources.

[30] If Mr. Khan is seeking the transfer of the underlying proceedings to Oshawa, there are no proceedings to transfer. Richetti J.’s orders put an end to these proceedings. Since then, Mr. Khan has unsuccessfully tried to challenge his order through several avenues. But in the absence of a live proceeding before the Superior Court, there is no proceeding to transfer. In any event, such a motion would have to be brought in the Superior Court and not in the Divisional Court in the context of a motion to set aside Petersen J.’s order.

Constitutional issue

[31] The constitutional issue raised by Mr. Khan at the hearing before us was unspecified. Essentially, he seemed to be arguing that all proceedings in this matter have been unfair to him and have failed to consider his interest in the third mortgage, and we should therefore find that they are unconstitutional.

[32] Mr. Khan did not raise any constitutional issues before Petersen J. He did not serve a notice of constitutional question, as required by section 109 of the Courts of Justice Act, in the proceedings before us. While his factum questions whether the court proceedings to date have been fair and in conformity with his rights guaranteed under the Charter of Rights and Freedoms to equality before and under the law, he seeks no remedy under the Charter as one of the “Orders Sought”. In the circumstances, it would not be appropriate for us to rule on the issue.

[33] In any event, there does not appear to be any merit to the issue raised by Mr. Khan. The case involves a private dispute between litigants over a mortgage surplus. The Charter does not apply to such disputes. In addition, while Mr. Khan may feel aggrieved by the outcome of these court proceedings, including the costs orders made against him, it is evident from the review of the proceedings above that he has had many opportunities to raise the issues he feels should have been adjudicated in his favour. He has not succeeded in those efforts but that does not mean that he has been treated unfairly.

Irregularity in the proceedings

[34] Mr. Khan seems to suggest that all orders made by the Superior Court after Donohue J.’s order were improper and should therefore be vacated. His argument is based on Rule 13.03.01(3) of the Rules of Civil Procedure, referred to above, which provides that all mortgage enforcement proceedings must be brought in the region where the property is located.

[35] This is a new issue and was not properly raised before us. In any event, it has no merit and cannot serve to invalidate the orders made by Snowie, Richetti and Bielby JJ. At the time the action was initiated in Brampton, Rule 13.03.01(3) was not in effect. The Rule does not require that actions already commenced in another Region be transferred. None of the parties requested a transfer. Even if a mortgage enforcement action was brought in the wrong region, nothing in the Rules supports a finding that all orders and judgments granted in that region are invalid.

Recusal

[36] The issue of recusal arose immediately after the panel advised Mr. Khan that we would not make a ruling on the three preliminary issues he raised. When the panel asked Mr. Khan to make submissions on his allegation of bias, Mr. Khan advised that he needed an adjournment for the purpose of preparing an affidavit and obtaining legal advice. We denied the request for an adjournment and asked him again for his submissions on his allegation of bias. He declined to provide them. We then gave the respondents an opportunity to make submissions on the issue of bias, which they declined, and then ruled that the panel would not recuse itself.

[37] The test for establishing a reasonable apprehension of bias is, as set out in Committee for Justice and Liberty et al. v. National Energy Board et al., 1976 2 (SCC), [1978] 1 S.C.R. 369 at p. 394:

[T]he apprehension of bias must be a reasonable one held by reasonable and right minded persons, applying themselves to the question and obtaining thereon the required information.… [T]hat test is "what would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude. Would he think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly."

[38] There is a presumption that judges will act impartially. A party raising a reasonable apprehension of bias has the onus of providing compelling evidence that the judge has conducted him or herself in such a way as to raise a real or perceived apprehension of bias: Rogerson v. Havergal, 2020 ONSC 2164, at para. 33.

[39] In this case, Mr. Khan raised the issue of bias after the panel advised that we would not “rule” on his preliminary motions. Disagreement with a court’s decision or choice of procedure is not sufficient to give rise to a reasonable apprehension of bias.

[40] The court is entitled to control its own process. Mr. Khan raised several issues not properly raised before the court. The court can decide whether to address those issues at the time they are raised or in its reasons for decision. Mr. Khan cannot dictate to the court how the hearing will proceed.

[41] In this case, the motion before the court was to review Petersen J.’s order. We gave Mr. Khan numerous opportunities to address that issue, and he chose not to do so. A reasonable and right-minded person would not find that the conduct of the hearing gave rise to a reasonable apprehension of bias.

Adjournment requests

[42] As referred to above, during the hearing, Mr. Khan made two requests for an adjournment. The first request was made after the panel declined Mr. Khan’s request that we provide rulings on his preliminary issues and the second request was made when we asked Mr. Khan for his submissions on why the panel should recuse itself.

[43] The Divisional Court, as all other courts in Ontario, has limited resources and hearing time. These limitations are exacerbated by the current pandemic. This matter had been scheduled for a long time and Mr. Khan chose to raise issues not raised before Petersen J. or even in his notice of motion or factum before this Court at the eleventh hour.

[44] Mr. Khan is not an unsophisticated self-represented litigant. He is a lawyer. He has been involved in these proceedings for a long time. Granting an adjournment would have further drawn out proceedings that should have come to a close a long time ago and would not be fair to the respondents or to other litigants awaiting hearing dates.

Costs

[45] Mr. Khan argued that the respondents should not be awarded any costs. His arguments were largely based on his view that the proceedings below were unfair and that the costs orders he faces are disproportionate to the amount at issue in these proceedings. Alternatively, he asked that costs be “in the cause” as the issue “is not completed”. In our view, no “cause” remains to be dealt with by the court.

[46] We agree with Petersen J. that, by this point, Mr. Khan bears responsibility for any disproportion between the amount at issue and the costs he owes.

[47] As the successful parties, the respondents are entitled to their costs. The plaintiff seeks $7,644.78 on a substantial indemnity basis. Given the history of this matter and the manner in which Mr. Khan has conducted himself on this motion, we find that an award of costs on a substantial indemnity basis is appropriate. The amount claimed by the plaintiff in the circumstances is reasonable.

[48] Mr. Johal seeks $4,065.55 on a partial indemnity basis. This amount is reasonable, given the extensive volume of materials (well over 3,000 pages) filed by Mr. Khan and the issues raised on the motion.

Conclusion

[49] For the reasons above, Mr Khan’s motion is dismissed. The respondents are entitled to costs in the amount of $7,644.78 to the plaintiff and $4,065.55 to Mr. Johal, payable within 30 days.

Heeney J.

Broad J.

Favreau J.

Date: March 8, 2021