SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 90-CU408996

MOTION HEARD: October 2 and November 9, 2012

Parties

RE: Susan Diane Davidson as Executrix
and Trustee of the Estate of Brian Davidson

v.

Russell Martel, also known as Rolland
Russell Martel

BEFORE: Master Thomas Hawkins

COUNSEL:

Patricia McLean for moving defendant
Fax: (416) 595-5959

Vera Toppings for responding plaintiff
Fax: (416) 364-7813

REASONS FOR DECISION

[1] This is a motion by the defendant for an order setting aside part of the order of Master Graham made in this action on July 25, 2011. Master Graham’s order was made without notice to the defendant.

[2] In paragraph one of his order Master Graham amended the description of the defendant in the title of proceedings by adding the words “also known as Rolland Russell Martel”. The defendant is content that this provision of Master Graham’s order stand.

[3] In paragraph two of his order, Master Graham granted the plaintiff leave to issue and serve notices of garnishment respecting the defendant which were directed to four corporations. In paragraph three of his order, Master Graham gave the plaintiff leave to issue and file a further writ of seizure and sale against the defendant. The defendant seeks to have these provisions of Master Graham’s order set aside.

[4] The defendant moves under subrules 37.14(1) and (2) of the Rules of Civil Procedure. Those subrules provide as follows.

37.14 (1) A party or other person who,

(a) is affected by an order obtained on motion without notice;

(b) fails to appear on a motion through accident, mistake or insufficient notice; or

(c) is affected by an order of a registrar,

may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.

(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just.

[5] The defendant is, of course, a party affected by an order obtained on motion without notice within the meaning of clause 37.14(1) (a).

[6] The following is a chronology of the events leading to this motion.

Chronology

Date

Event

June 20, 1997

Brian Davidson obtains judgment against Russell Martel after trial for $75,900.44 based on a loan evidenced by a promissory note.

January 14, 1999

Brian Davidson has writ of seizure and sale issued and filed with sheriff in Waterloo Region.

January 27, 1999

Brian Davidson has notice of garnishment issued and served on Canadian Imperial Bank of Commerce in Kitchener.

April 8, 1999

Brian Davidson recovers $119.11 as a result of garnishment. This is the only money he ever recovered from Martel under his judgment.

March 13, 2002

Brian Davidson dies. His widow Susan Diane Davidson (“Susan Davidson”) is appointed executrix and trustee of his estate.

January/February 2011

Susan Davidson learns from her brother-in-law that Martel may be living in the Toronto area and from her brother-in-law and a friend that Martel serves on the board of directors of Trillium North Minerals Ltd., a Toronto-based corporation.

March 2011

Susan Davidson retains Fasken Martineau to assist her in enforcing the judgment against Martel.

April 2011

Heather Buchanan of Fasken Martineau conducts various searches to locate Martel. This reveals an address in Lexington, Virginia, U.S.A.

May 11, 2011

Susan Davidson obtains order to continue action against Martel.

July 25, 2011

Susan Davidson obtains order from Master Graham granting her leave to issue and file a further writ of seizure and sale and further notices of garnishment in respect of the judgment against Martel.

August 23, 2011

Heather Buchanan attempts to serve Martel by mail with the notices of garnishment and supporting affidavits. Mail is sent to the Virginia address for Martel.

September 10, 2011

Mail is returned marked “Not Deliverable”.

November 2011

Heather Buchanan speaks to Martel by phone to arrange a judgment debtor examination. Martel refers her to his Toronto lawyer, Patricia McLean.

March 23, 2012

Martel brings motion to set aside order of Master Graham.

Analysis

[7] Master Graham made the impugned provision of his July 25, 2011 order under the provisions of subrules 60.07(2) and 60.08(2). These provisions must be read bearing in mind that under subrule 1.03(1), the term “order” is defined so as to include a judgment.

[8] Subrule 60.07(2) provides as follows.

If six years or more have elapsed since the date of the order, or if its enforcement is subject to a condition, a writ of seizure and sale shall not be issued unless leave of the court is first obtained.

[9] Subrule 60.08(2) provides as follows.

If six years or more have elapsed since the date of the order, or if its enforcement is subject to a condition, a notice of garnishment shall not be issued unless leave of the court is first obtained.

[10] The moving plaintiff required the leave of the court under these two subrules because by the time Master Graham read the motion, the judgment in question was over 14 years old.

[11] The plaintiff’s motion to Master Graham was made as a motion in writing. As I have said, the motion was made without notice to the defendant.

[12] This lack of notice is the basis for the defendant’s first objection to Master Graham’s order. Defence counsel submits that the motion should have been brought on notice to the defendant. Defence counsel relies upon the decision of Master Dash in Royal Bank of Canada v. Correia, 2006 26976 (ON SC), [2006] O.J. 3206 at paragraph two.

[13] In the grounds for the motion before Master Graham the plaintiff stated that it was impractical to serve the notice of motion on the defendant because this would alert the defendant to her attempts to further enforce her judgment. By this I take the plaintiff to mean that if the defendant had prior notice of the motion read by Master Graham, the defendant would be able to re-arrange his financial and business affairs so as to frustrate her collection efforts.

[14] Under subrule 37.07(5), Master Graham had a discretion to dismiss the plaintiff’s motion because it was not served on the defendant, or to adjourn the motion and direct that it be served on the defendant. He did not do so.

[15] Subrule 37.07(5) provides as follows.

(5) Where it appears to the court that the notice of motion ought to have been served on a person who has not been served, the court may,

(a) dismiss the motion or dismiss it only against the person who was not served;

(b) adjourn the motion and direct that the notice of motion be served on the person; or

(c) direct that any order made on the motion be served on the person.

[16] Subrule 37.07(4) provides as follows.

(4) Unless the court orders or these rules provide otherwise, an order made without notice to a party or other person affected by the order shall be served on the party or other person, together with a copy of the notice of motion and all affidavits and other documents used at the hearing of the motion.

[17] In August 2011 Heather Buchanan, a law clerk at Fasken Martineau, the plaintiff’s lawyers, attempted to comply with subrule 37.07(4) by mailing a copy of the motion materials that were before Master Graham to the defendant at a Lexington, Virginia address she had found for the defendant. The envelope and motion materials were returned in September 2011. In argument before me defence counsel said that the defendant does live and has lived at the Lexington, Virginia address for some time. She submitted that the defendant was not hiding from the plaintiff. She did not offer (nor has the defendant offered) any explanation as to why the envelope which Ms. Buchanan sent to the defendant’s Lexington, Virginia address was returned marked “Not Deliverable”.

[18] As I have said, subrule 37.07(5) gave Master Graham the discretion to hear the plaintiff’s motion on a without notice basis, or to decline to do so and take one of the courses of action listed in the three clauses of this subrule. This subrule includes the word “may” rather than the word “shall”.

[19] While I accept, on the authority of Royal Bank of Canada v. Correia, supra, that motions like the one before Master Graham should normally be brought on notice, the wording of subrule 37.07(5) is discretionary and, in my view, in light of the plaintiff’s submission that if the defendant were given notice of her motion, the defendant could re-arrange his financial and business affairs as to frustrate the plaintiff’s collection efforts, Master Graham made no error in proceeding to hear the plaintiff’s motion on a without notice basis. After all, the plaintiff’s judgment has been outstanding for well over 10 years and the defendant has never voluntarily paid any of it. An honest debtor seeks out his or her creditor and pays the debt. The defendant does not suggest that he is unable to pay this judgment, or that doing so will work a hardship for him.

[20] Next, the defendant submits that the plaintiff has waived her rights under the judgment in question because she failed to take any steps to enforce that judgment for a period of about 10 years, that is from March 13, 2002 to March 2011 when she retained Fasken Martineau.

[21] Because the position of Susan Davidson as the plaintiff in this action is similar to the position of the plaintiff in Adelaide Capital Corporation v. 412259 Ontario Limited et al, 2006 34725 (ON SC), [2006] O.J. No. 4175 paragraphs 10 to 13 of Master Dash’s judgment in Adelaide Capital are relevant. There Master Dash expressed himself as follows.

[10] In Royal Bank of Canada v. Correia, 2006 26976 (ON SC), [2006] O.J. No. 3206 I set out the test for granting leave to issue a notice of garnishment under rule 60.08(2) more than six years after judgment. The section is almost identical to rule 60.07(2) and in fact Royal Bank of Canada v. Correia was based on a decision under rule 60.07(2): Ballentine v. Ballentine (1999), 1999 15088 (ON SC), 45 O.R. 706 (S.C.J.). In my view the test for the exercise of the court’s discretion is the same under rules 60.07(2) and 60.08(2) and is set out in paragraph 6 of Royal Bank of Canada v. Correia as follows:

Therefore, when a plaintiff seeks leave under rule 60.08(2) to issue a notice of garnishment more than six years after the date of judgment, he must adduce evidence explaining the delay such the court may conclude that the plaintiff has not waived its rights under the judgment or otherwise acquiesced in non-payment of the judgment. The defendant may raise other grounds to convince the court that it would be inequitable to enforce the claim. For example the defendant could demonstrate that he has relied to his detriment or changed his financial position I reliance on reasonably perceived acquiescence resulting from the delay. Of course the onus would be on the defendant to adduce evidence of such reliance and detriment.

[11] The plaintiff argues that the judgment itself remains valid and it should not be denied the fruits of its judgment by denying it an enforcement mechanism. The judgment, at the time it was granted, was subject to the former Limitations Act, R.S.O. 1990, c. L.15 section 45(1)(c) which provided a limitation period of twenty years for actions on a judgment. Under the new Limitations Act 2002, S.O. 2002, c. 24 Schedule B section 16(1)(b) there is no limitation period to enforce an order of the court. Pursuant to section 24(4) the new “no limitation” provision applies provided that the earlier limitation period had not expired as of the date that the new act came into force. On the other hand, it appears that sections 15(1) and (2) of the new Limitations Act applies and there is an ultimate limitation period of 15 years despite any other limitation period established by the new act. It is not necessary for me to decide whether the limitation period is 15 years or 20 years or if there is no limitation period since it has been less than 15 years since the judgment. The limitation period for action on this judgment has not expired. This means that even if the judgment cannot be enforced by obtaining and renewing writs of seizure and sale either without court order because more than six years have passed or alternatively by obtaining an order of the court under rule 60.07(2) because leave is refused, the plaintiff may still bring action on the judgment and obtain a fresh judgment thereon: Lax v. Lax (2004), 2004 15466 (ON CA), 70 O.R. (3d) 520 (C.A.) at paragraphs 23 to 25. If a new judgment were obtained the plaintiff could then cause the issuance of a writ of seizure and sale without court order.

[12] While the fact that the judgment remains in force is an important factor to consider, the court must still exercise its discretion in determining whether to grant an indulgence to the plaintiff by granting leave. As stated in Palmer-Virgo, supra, at paragraph 16:

While I am still of the view that it is incongruous that the plaintiff should be seriously jeopardized in his efforts to realize the fruit of his judgments, which are in force for 20 years, because of a failure to comply with procedural requirements for enforcement, the granting of relief from procedural requirements still remains a matter of discretion.

[13] The test in Royal Bank of Canada v. Correia sets a very low evidentiary threshold for a judgment creditor to obtain leave. The plaintiff need only explain the delay such that the court may conclude that the plaintiff has not “waived its rights under the judgment or otherwise acquiesced in non-payment of the judgment.” It would be a rare case when a plaintiff could not meet that test. If the plaintiff meets the test the onus is then on the judgment debtor to convince the court that “he has relied to his detriment or changed his financial position in reliance on reasonably perceived acquiescence resulting from the delay.”

[22] Here the judgment which Brian Davidson obtained against Mr. Martel on June 20, 1997 is also governed by subsection 45(1)(c) of the Limitations Act, R.S.O. 1990 c. L.15 and will remain in force (unless satisfied) until June 19, 2017. Like the plaintiff in Adelaide Capital, Susan Davidson as the plaintiff in this action must adduce evidence explaining her delay in enforcing her judgment, such that the court may conclude that she has not waived her rights under that judgment or otherwise acquiesced in non-payment of her judgment.

[23] The plaintiff’s material submitted to Master Graham did not proffer any explanation for the plaintiff’s delay in enforcing her judgment. The plaintiff’s material before me does include an explanation for her delay. Because under subrule 37.14(2), I have a discretion as to whether or not to set aside Master Graham’s orders. I see no point in setting aside Master Graham’s order on the sole ground that the plaintiff failed to provide Master Graham with any explanation for her delay, and requiring the plaintiff to bring a new motion for the same relief which Master Graham granted the plaintiff, all the while ignoring the explanation for delay which the plaintiff has provided to me. To do so would be to exalt form over substance and be inconsistent with subrule 1.04(1). That subrule provides as follows.

These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

[24] In my view, setting aside Master Graham’s order on the sole ground that the plaintiff failed to provide Master Graham with any explanation for her delay in enforcing her judgment, ignoring the explanation she now proffers, and requiring her to bring a second motion for the relief which Master Graham granted the plaintiff would not be the just, most expeditious and least expensive way of dealing with the issue of whether the plaintiff should have been or should be granted leave to issue a writ of seizure and sale and to issue notices of garnishment.

[25] I will now proceed to consider the adequacy of the plaintiff’s explanation for her delay in enforcing her judgment, bearing in mind that the plaintiff’s judgment against Mr. Martel is still in force and bearing in mind Master Dash’s statement in Adelaide Capital (supra, at paragraph 13) that judgment creditors like the plaintiff face a very low evidentiary burden when seeking leave to enforce that judgment.

[26] I begin this analysis by examining what Brian Davidson and Susan Davidson knew about Mr. Martel and his assets since Brian Davidson recovered his judgment on June 20, 1997.

[27] Susan Davidson was aware that in 1999, after her husband had obtained a judgment against Mr. Martel, Mr. Martel was examined as a judgment debtor. The examination evidently did not reveal any exigible assets of Mr. Martel except (probably) his Kitchener bank account with CIBC. This bank account was the subject of garnishment proceedings that recovered $119.11 in April 1999. It is a virtual certainty that someone like Mr. Martel, who resisted in paying the judgment, would thereupon close that bank account. Mr. Davidson had a writ of seizure and sale filed against Mr. Martel in Waterloo Region in 1999. We know from a motor vehicle license search which Heather Buchanan conducted, that at one point, Mr. Martel lived in New Hamburg Ontario in Waterloo Region. The fact that Mr. Davidson did not file any writs of execution elsewhere in Ontario in 1999 or later is some evidence that the 1999 examination of Mr. Martel in aid of execution did not reveal any assets of Mr. Martel outside of Waterloo Region that would justify filing other writs of execution against him.

[28] The fact that from 1999 until his death in 2002 Mr. Davidson did not take additional steps to enforce his judgment against Mr. Martel is some further evidence that he did not know of any further exigible assets of Mr. Martel.

[29] In summary, the evidence leads me to the conclusion that Brian Davidson seized Mr. Martel’s Kitchener bank account upon learning of that Martel asset, but took no further steps to enforce the 1997 judgment because he was unaware of any other Martel assets. After 2002 Susan Davidson was unaware of any Martel assets that could be seized and sold by enforcing that judgment.

[30] Susan Davidson says that her husband’s death in 2002 was sudden and unexpected. The ensuing period was a difficult time for her. She became focused on family matters.

[31] While this explains some of the delay in seeking to enforce the judgment against Mr. Martel, it does not explain all of the delay up to 2011.

[32] Susan Davidson did not renew the 1999 writ of seizure and sale which had been filed against Mr. Martel in Waterloo Region before that writ expired in 2005. In my view, there was no point in doing so unless there was some prospect of successfully levying execution against Mr. Martel’s assets in Waterloo Region. There is no evidence that renewing that writ of execution would have done Susan Davidson any good. As I have said, Susan Davidson was aware that Mr. Martel was examined as a judgment debtor in 1999 and that the only step which her husband took to seize Mr. Martel’s assets was the garnishment proceedings respecting Mr. Martel’s Kitchener bank account.

[33] Susan Davidson did not know where Mr. Martel was after her husband died. She spoke with a few people who knew Mr. Martel but they could not tell her where Mr. Martel was.

[34] In my view, the fact that Susan Davidson made inquiries of other respecting Mr. Martel’s whereabouts is evidence that she had not waived her rights under the June 20, 1997 judgment against Mr. Martel.

[35] Susan Davidson was aware that she could hire an investigator to attempt to find Mr. Martel, but felt that such a step was beyond her financial means.

[36] Such a step would make sense if Susan Davidson knew that hiring an investigator had a reasonable prospect of resulting in some net benefit to her. The fact that the acquaintances of Mr. Martel whom she spoke to did not know where he was is some evidence that he might not be easy to find. Further, Susan Davidson did not know after her husband’s death in 2002 anything about any assets of Mr. Martel. In these circumstances, I do not fault Susan Davidson for not hiring an investigator to locate Mr. Martel.

[37] In January and February 2011 Susan Davidson learned from her brother-in-law that Mr. Martel may be living in the Toronto area and from her brother-in-law and a friend that Mr. Martel was serving on the board of directors of Trillium North Minerals Ltd., (“Trillium”) a Toronto-based corporation. Armed with this information, she promptly retained Fasken Martineau to protect her interests with regard to Mr. Martel and the judgment against him.

[38] Having considered this evidence and these factors, I have come to the conclusion that Susan Davidson has explained the delay in enforcing that judgment and that she has not waived her rights under that judgment or otherwise acquiesced in Mr. Martel’s non-payment of that judgment.

[39] This does not end the matter. As Master Dash said in Adelaide Capital at paragraph 13, a person in the position of Mr. Martel now has the onus of convincing the court that he has relied to his detriment or changed his financial position in reliance upon reasonably perceived acquiescence resulting from Susan Davidson’s delay in enforcing the judgment against him.

[40] Mr. Martel says that he was aware that execution searches were done in 2008 and 2009 in connection with his position as an officer or director of a reporting issuer in Ontario and registrations with the Ontario Securities Commission and the Toronto Stock exchange that there were no writs of execution outstanding against him.

[41] Mr. Martel says that this information, together with the passage of time since June 20, 1997 when the judgment was obtained against him, lead him to form what he says is a reasonable belief that the judgment was not being pursued.

[42] However, Mr. Martel’s reliance alone is not enough. The reliance must be detrimental reliance. If he changed his position as a result of that reliance it must be a change to his detriment.

[43] In his affidavit Mr. Martel says he changed his position in two ways. First, through a holding company he entered into a consulting contract with Debuts Diamonds. Secondly, he became a director of Trillium. He says that Trillium does not compensate its directors but has a stock option plan granting incentives to its directors.

[44] I have several problems with this evidence. First of all, Mr. Martel does not disclose the terms of the consulting contract with Debuts Diamonds or the terms of Trillium’s stock option plan for its directors. On that state of the evidence, I am unable to find what benefit, if any, the contract and the plan confer upon Mr. Martel. Secondly, and more importantly, Mr. Martel does not say that he will suffer any loss if Master Graham’s order stands, or if Susan Davidson is permitted to enforce the 1997 judgment against him, despite the passage of time.

[45] It is true that in his affidavit, Mr. Martel says that the steps he took respecting Debuts Diamonds and Trillium were steps he took “amongst other things”. However, since Mr. Martel does not disclose what these other things were, I am unable to give any weight to this “other things” factor.

[46] In summary, on this state of the evidence, Mr. Martel has failed to persuade me first, that his reliance upon Susan Davidson’s perceived non-pursuit of the 1997 judgment was a detrimental reliance, and secondly, that the changes in his position he describes were changes to his detriment.

[47] For all these reasons, I have come to the conclusion that Master Graham’s order of July 25, 2011 should stand, and that I should not set that order aside.

[48] Towards the end of the argument of this motion plaintiff’s counsel submitted that I should make an order to address the fact that the writ of execution and the notices of garnishment which Master Graham gave the plaintiff leave to issue were in force for only one year from July 25, 2011, and by the time argument of this motion was concluded on November 9, 2012, that one year period had expired, with the result that the wit and the garnishment notices have expired.

[49] Plaintiff’s counsel is mistaken. Under subrule 60.07(6) respecting writs of seizure and sale and subrule 60.08(6.2) respecting notices of garnishment those means of enforcing judgments remain in force for six years from the date of the order granting the judgment creditor leave to have the writ and the notice of garnishment issued. In the present case, the writ and the notices which Master Graham gave Susan Davidson leave to issue by order dated July 25, 2011 remain in force until July 24, 2018. They have not expired. No remedial order extending the date they expire is necessary.

[50] The plaintiff Susan Davison has been successful on this motion and should have the costs of this motion. Mr. Martel may feel that in disposing of his motion in the way that I have, I have given Susan Davidson an indulgence with the result that he should get the costs of the motion. I disagree. The 1997 judgment is still in force and Mr. Martel has refused to pay it. That being so, I am of the view that Susan Davidson should receive the costs of this motion. I fix those costs at $6,000.00 and order Mr. Martel to pay such costs to Susan Davidson within 30 days.

(original signed)________

Master Thomas Hawkins

DATE: March 8, 2013