SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-08-364277
COSTS SUBMISSIONS: February 21, 2012 and in writing
COSTS ENDORSEMENT RELEASED: April 23, 2012

RE: HAIDER HUMZA INC., MISSISSAUGA AUTO CLINIC INC and MECCA WHOLESALE MEATS & CATERING INC. v. MOHAMMED RAFIQ aka MOHAMMED RAFIQ aka MUHAMMAD RAFIQ, SAIDA BANU RAFIQ, ZUBAID-UR-RAHMAN NAWAID HASHMI, ZARCO EXCHANGE CANADA INC., MULTIMEDIA MARKETING GROUP LTD., AJAZ KHAN, ZIA ISLAM carrying on business as PRO-TECH AUTOMOTIVE, CANADIANS CENTRAL AUTO LTD., AUTO SPECIALIST INC., SAM SANTINO carrying on business as SANTINO HAULAGE and A AND B AUTO LEASING & CAR RENTAL INC.

BEFORE: Master R. Dash

COUNSEL:
Murray Teitel, for the plaintiffs

Aswani Datt, for the defendant Mohammed Rafiq

Maria Diaz, for Aswani Datt, lawyer for Mohammed Rafiq

Mohamed Doli, for the non-party Muhammad Chaudhry

COSTS ENDORSEMENT

[ 1 ] This endorsement concerns costs of the plaintiffs’ motion heard on February 10 and 21, 2012 to compel three rule 39.03 examinations in aid of a contempt motion and the examination for discovery of one of the defendants. The most contentious examination requested was that of Mr. Datt, the lawyer for one of those defendants, to be conducted without objection on the ground of solicitor-client privilege. The motion also sought a timetable for responding affidavits on the contempt motion. Mr. Datt retained counsel to argue the relief sought against him.

BACKGROUND

[ 2 ] At its essence this action involves a dispute among family members as to ownership of A and B Auto Leasing & Car Rental Inc. (“A&B” or “Company”), which owns an auto plaza. On July 20, 2011 Whitaker J. appointed an interim manager of the Company, Harvey Bisgould. One term of that order was that the defendants Mohammed Rafiq (“Mohammed”) and Saida Rafiq (“Saida”) were not to “cause [A&B] to borrow money” pending further order of the court.

[ 3 ] Three costs orders had been made in this and a related action. On June 20, 2011 in this action Hoy J. ordered Mohammed to pay costs to the plaintiff Haider Humza Inc. (“Haider”) in the sum of $20,000. On September 23, 2011 Whitaker J. ordered Mohammed, Saida and Muhammad Chaudhry (“Chaudhry”), a non-party to this action but a party to a related action, to jointly and severally pay costs to Haider in the sum of $7,500. On November 14, 2011 Master Graham ordered Mohammed and Saida to pay costs respectively of $3,000 and $1,000 to Haider.

[ 4 ] On Nov. 1, 2011 Chaudhry paid the $7,500 cost order of Whitaker J. and on Nov. 10, 2011 Aswani Datt, Mohammed’s lawyer, wrote a cheque to pay the $20,000 costs order of Hoy J. ($20,158 with additional interest). On Dec. 2, 2011 the plaintiffs discovered that Mohammed and Saida signed a mortgage on behalf of A&B in favour of Xpert Credit Control Solutions Inc. (“Xpert”) for $50,000 registered on November 9, 2011 and that a financing statement had been registered under the PPSA against A&B’s property. The plaintiffs took the position that Mohammed and Saida had caused A&B to borrow money in violation of the order of Whitaker J. They also opined that Mohammed had used the money borrowed “by A&B” to pay the personal costs orders against him. In particular they believed (as it turns out correctly) that the $20,000 costs owing by Mohammed and paid by Datt on November 10 came from the borrowed funds because of the timing of the payment. They also believed (as it turns out incorrectly) that Mohammed may have repaid Chaudhry for some of the costs paid by Chaudhry on November 1 (eight days before the mortgage) because of a remark made by Mohammed that he had paid that costs award.

[ 5 ] There was a flurry of correspondence in December to and from Mr. Teitel, the lawyer for the plaintiffs. Mr. Doli, the lawyer for Chaudhry, told Teitel that Chaudhry paid the $7,500 but refused to say where Chaudhry got the money based on privilege. Datt said he was not counsel on the mortgage, that the $20,000 was received from a lawyer David Purdon (who acted on the mortgage to Xpert) but would not answer questions about any additional money nor would he tell Teitel what he personally knew about the source of the monies relying on privilege. Teitel threatened a contempt motion against Mohammed and Saida. During this time Mr. Datt was suggesting that all information about the mortgage and the source of the payment of costs could be obtained from Mohammed, yet Mr. Teitel was insisting that Mr. Datt himself be examined.

THE CONTEMPT MOTION AND THE EVIDENTIARY MOTION

[ 6 ] On January 12, 2012 Teitel served the contempt motion returnable before a judge on February 28, 2012. The relief sought included as against Mohammed and Saida a finding of contempt for causing A&B to borrow money in contravention of the order of Whittaker J. and various consequential relief including declarations that the $20,158 and $5,000 of the $7,500 were paid from proceeds of the mortgage, as against Chaudhry requiring disclosure of where he got the $7,500 to pay the costs, from Mr. Datt requiring him to disclose all documentation from his client Mohammed, to repay monies received from the mortgage, to disclose whether he had knowledge that Mohammed and Saida were planning to borrow or had borrowed on behalf of A&B, and from Xpert divulging its lawyer’s file and discharging the mortgage if made with knowledge of the prohibition.

[ 7 ] At the same time, prior to affording any opportunity to deliver a responding affidavit from Mohammed, Mr. Teitel served a summons to witness on Mr. Datt to attend for a rule 39.03 examination on January 19, 2012 and to bring all financial records and correspondence relating to the receipt and disposition of the $50,000 proceeds as well as any documents that “would establish when you first received knowledge” of the $50,000 loan and any intention on the part of his clients to cause A&B to borrow the money. He also served a summons to witness on Mr. Chaudhry and on Sam Joshi (the principal of Xpert). He required Mr Chaudhry to bring documents related to his payment of the $7,500 costs order and any contributions from Mohammed or Saida and documents as to his knowledge of the $50,000 loan or of Mohammed and Saida’s intent to cause A&B to borrow. He required Mr. Joshi to bring the unredacted file from Xpert’s lawyer, David Purdon, related to the loan and related to Mr. Joshi’s knowledge about the prohibition on borrowing ordered by Whitaker J. Similarly he served a notice to examine Mohammed for discovery on the same date. No-one showed up and certificates of non-attendance were obtained.

[ 8 ] Also on January 12 th , in response to Mr. Teitel’s demand that Mohammed serve his responding material within two weeks, Mr. Datt replied that the responding materials would be served “when [they] are ready”, but if the plaintiffs agreed with a February 17 th cross-examination date, they would be served on a “timely” basis beforehand.

[ 9 ] Shahzad Rafiq (“Shahzad”), Mohammed’s son and husband of the principal of the plaintiff Haider, in a subsequent affidavit explained his precipitous actions in serving summonses, rather than awaiting responding affidavits to the contempt motion and cross-examining thereon. Firstly he says that Mohammed and Chaudhry have a history of filing materials for a motion at the eleventh hour resulting in adjournments and delay and he anticipated they would do the same for the contempt motion. Secondly he suggests the affidavits would “have beaten around the bush” and there would have been refusals to answer questions resulting in a further motion, particularly with respect to Mr. Datt’s personal involvement and knowledge. Thirdly he says Mohammed’s litigation strategy is based on “shenanigans” which has evolved into fraud and a refusal to tell the truth. I fail to see how the second and third reasons support the serving of summonses rather than awaiting affidavits and cross-examining. While the first reason may have some foundation, it must be borne in mind that what is at stake is $50,000 taken by way of mortgage and that Mr. Teitel knew that if his suspicions were true he already had in his trust account over $27,500 of that money paid as costs. Therefore, even if it had to be repaid it had not disappeared. There was no urgency to the contempt motion that would have justified such an aggressive and costly response totally disproportionate to what was at stake.

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Master R. Dash

DATE: April 23, 2012

[1] See Hunt v. TD Securities Inc. , 2003 3649 (ON CA) , [2003] O.J. No. 3245 (C.A.) at para. 126 and my decision in Baksh v. Sun Media , 2003 64288 (ON SC) , 63 O.R. (3d) 51 confirming that such comments could lead to substantial indemnity costs.

[2] See Hunt v. TD Securities Inc. , supra, at para. 123

[3] Beneficial Investment (1990) Inc. v. Hongkong Bank of Canada , [2006] O.J. No. 1428 ; Noah v. Desjardins Financial Security , [2008] O.J. No. 437