COURT FILE NO.: C-565-07
DATE: 2013-12-17
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Gabriele Wolf, Plaintiff
AND:
Peter Anstett and Patrice Butts, Defendants
BEFORE: G. E. Taylor
COUNSEL:
J. Greg Murdoch, Counsel for the Plaintiff
G. Edward Oldfield, Counsel for the Defendants
HEARD: December 10, 2013
ENDORSEMENT
Introduction
[1] The plaintiff obtained judgment in January 2011 against Peter Anstett for in excess of $400,000. In an effort to collect the Judgment, the plaintiff garnished any amounts owing by Don’s Produce Inc. to Peter Anstett, for whom Peter Anstett worked as an independent sales agent. Don’s Produce responded to the Notice of Garnishment by indicating that it paid a numbered company for the services provided by Peter Anstett. The numbered company was 1841918 Ontario Inc. which was incorporated by Peter Anstett and his spouse, Patrice Butts, on May 20, 2011.
[2] The plaintiff brought a motion in the garnishment proceedings seeking relief pursuant to Rule 60.08 of the Rules of Civil Procedure. The Garnishment Motion was argued before me on April 30, 2012 and my Endorsement was released on May 31, 2012. The plaintiff now brings the present motion seeking a reconsideration of my earlier ruling and a variation to the order that I made.
[3] After receiving written submissions on the issue of costs from the plaintiff only, on September 12, 2012, I issued a cost ruling in relation to the Garnishment Motion awarding costs in favour of the plaintiff against both Peter Anstett and Patrice Butts. Patrice Butts has brought a motion in which she asks that I reconsider my costs order and relieve her from the obligation of having to pay costs to the plaintiff in relation to the Garnishment Motion.
Facts
[4] The plaintiff’s Garnishment Motion pursuant to Rule 60.18 sought a finding of contempt against Peter Anstett, a declaration that the incorporation of 1841918 by Peter Anstett was intended to defeat or defraud the plaintiff in her attempts to satisfy the judgment and an order that Don’s Produce forward any monies owing to Peter Anstett, 1841918 Ontario Inc. or any other entity controlled by Peter Anstett to the Sheriff pursuant to the Notice of Garnishment.
[5] Subsequently, the plaintiff delivered an Amended Notice of Motion seeking the relief set out below (with the amendments underlined):
a declaration that the incorporation of 1841918 Ontario Inc. by the Defendant, Peter Anstett and Patrice Butts, on May 20, 2011 was intended to defeat or defraud his creditor, the Plaintiff, and to thwart the enforcement of the Judgment of the Honourable Justice Reilly dated January 27, 2011;
An Order directing Don’s Produce Inc. to forward any monies it owes for services provided by Peter Anstett, whether those monies are owing to Peter Anstett, 1841918 Ontario Inc., or any other company or entity set up to receive monies for services provided by Peter Anstett, to the Sheriff pursuant to the Plaintiff’s Notice of Garnishment;
an Order that 1841918 Ontario Inc. and or Patrice Butts, pay any monies received for services provided by Peter Anstett from Don’s Product [sic] Inc. to the Sheriff pursuant to the Plaintiff’s Notice of Garnishment.
[6] In my endorsement on the Garnishment Motion I stated at paragraph 21:
Without hesitation, I find that the incorporation of 1841918 and the direction to Don's Produce to pay Peter Anstett's remuneration to the corporation was for the purpose of defeating, hindering, delaying or prejudicing the plaintiff in her efforts to satisfy the judgment owing by Peter Anstett.
[7] Based on that finding, I proceeded to make an order that, from and after the date on which the motion was argued, “Don’s Produce … pay to the Sheriff, Region of Waterloo all amounts that are due and owing and become due and owing to Peter Anstett until such time as the Notice of Garnishment is withdrawn or set aside or the judgment in favour of the plaintiff is paid in full”.
[8] My Endorsement is silent with respect to the relief sought in paragraph 4 of the Amended Notice of Motion set out above.
[9] In paragraph 2 of my Endorsement on the Garnishment Motion I cite the relief being sought by the plaintiff as follows:
a) a declaration that the incorporation of 1841918 Ontario Inc. was intended to defeat or defraud the plaintiff and to thwart enforcement of the judgment;
b) an order directing Don’s Produce to forward any monies that are owing to 1841918 Ontario Inc. to the Sheriff Pursuant to the Notice of Garnishment; and,
c) a finding that Peter Anstett is in contempt of court.
This wording, although not identical to, is very similar to the wording in the original Notice of Motion.
The Law
[10] Rule 59.06 (1) of the Rules of Civil Procedure provides as follows:
An order that contains an error arising from an accidental slip or omission or requires amendment in any particular on which the court did not adjudicate may be amended on a motion in the preceding.
[11] In Montague v. Bank of Nova Scotia, 2004 27211 (ON CA), [2004] O.J. No. 13, the Ontario Court of Appeal held that until a judgment is formally entered in the court record, the judge has a very broad discretion to change it.
Positions of the Parties
[12] Mr. Murdoch, counsel for the plaintiff, submits that the claim to have 1841918 and Patrice Butts disgorge amounts paid by Don’s Produce prior to argument on the Garnishment Motion was part of the relief sought in the Amended Notice of Motion, was argued both orally and in the plaintiff’s Factum and was never abandoned. He submits that it must have been an accidental slip or omission on my part in failing to address this relief in my Endorsement. In any event, he says the claim for relief against 1841918 and Patrice Butts was never considered and rejected.
[13] Mr. Oldfield, counsel for the defendants on the present motions (he was not counsel when the Garnishment Motion was first argued) submits that the claim as against 1841918 and Patrice Butts was abandoned by Mr. Murdoch during the course of oral submissions. Mr. Oldfield points to the exchange between Mr. Murdoch and the court at pages 47 and 48 of the transcript of the argument on April 30, 2012. That exchange is as follows:
THE COURT: I am not suggesting that I am just looking for the easy way out…
MR. MURDOCH: Right.
THE COURT: ... but, if I accept your argument, and I appreciate I have not heard from Mr. Flannery, but, if I accept your argument, the simplest thing for me to do is simply, on a go-forward basis, direct Don’s to make any payments in respect of services provided by Mr. Anstett to the sheriff on account of the garnishment and I do not have to worry about throwing Mr. Anstett in jail or making an order against the numbered company…
MR. MURDOCH: Right.
THE COURT: … making a finding as to how much Ms Butts is owed, all that kind of thing.
MR. MURDOCH: That is the easiest - there is an efficiency…
THE COURT: And that accomplishes the goal that you seek to achieve.
MR. MURDOCH: Right. I think that is the most efficient because we would be here a year from now arguing about what money’s going into 184 and what’s - you know, that - there is an efficiency…
THE COURT: And what legitimate expenses there are of the numbered company et cetera.
MR. MURDOCH: Right. There might be an issue of - leading up to today should any monies being paid over from - from 184 is a separate question.
THE COURT: I see.
MR. MURDOCH: But I think going forward that would be the easiest and most logical approach.
Discussion
[14] I have come to the conclusion that it was as a result of an error on my part that I did not address the claims against 1841918 and Patrice Butts in my previous endorsement.
[15] At the outset of the argument on the motion, Mr. Murdoch drew my attention to the Amended Notice of Motion. At page 3 and 4 of the transcript he states:
And then there’s - were seeking remedies under the garnishment hearing rules that would order Don’s Produce, the company that Mr. Anstett has contracted with, that they honour the Notice of Garnishment paid monies that they would pay to Anstett to the - to the sheriff
And there’s a similar but alternative remedy there that the numbered company that Peter Anstett and Patrice Butts incorporation or Patrice Butts pay any monies that they receive from Don’s Produce for services provided by Mr. Anstett to - to the sheriff pursuant to the plaintiff’s Notice of Garnishment.
And at page 24 Mr. Murdoch says:
And, taking that further, you have a similar right with 184, as - as the assignee and the garnishee, receiving money from Don’s for services provided by Peter Anstett, to treat the entirety of that money is if it’s subject to the - the Notice of Garnishment that was served on them.
Again at page 35 Mr. Murdoch returns to the subject of the claim against 1841918 saying:
So the court - I say that that Rule says you can tell 184 you cannot siphon off your assignment of wages, which is what you’re doing because (a) it’s illegal under the Wages Act, (b) there’s judicial authority saying that you can’t - you can’t put your debt ahead of another - of a judgment creditor. That’s not a lawful reason to deduct a - a debt, which is what Patrice Butts is doing.
[16] The relief sought against 1841918 and Patrice Butts was clearly addressed in the plaintiff’s Factum on the original motion at page 10 under the heading Part III- The Issues and at page 17 under the heading Order Sought.
[17] I am unable to accept Mr. Oldfield’s submission that Mr. Murdoch abandoned any claim against 1841918 and Patrice Butts partly on the basis of the above references to other portions of the transcript and the portions of the plaintiff’s Factum also referred to above. In any event, in my view, a close reading of the exchange between myself and Mr. Murdoch which forms the basis of Mr. Oldfield’s submission does not support the conclusion that he urges. Firstly, the exchange occurred immediately after I drew to Mr. Murdoch’s attention that his allotted time for oral argument was about to expire or had expired. Secondly, the discussion was about any order to be made from and after the date of the hearing on the motion. I repeat here what Mr. Murdoch said at page 48 of the transcript: “There might be an issue of - of leading up to today should any monies being paid over from - from 184 as a separate question”. That response makes it clear to me that the discussion was about a remedy on a “go forward basis”.
[18] At paragraph 2 of the Endorsement dated May 31, 2012 I set out the relief sought by the plaintiff. That relief is what was sought in the original Notice of Motion. Nowhere in the Endorsement do I make mention of the additional relief sought in the Amended Notice of Motion. I therefore conclude that at the time of drafting my Endorsement I must have forgotten that there was an Amended Notice of Motion. In my view this would fall into the category of an error arising from an accidental slip requiring an amendment on matter on which the court did not adjudicate.
[19] In the Endorsement at paragraphs 16, 17, 21 and 22 it is clear that I concluded that the incorporation of 1841918 was part of a scheme to attempt to prevent the plaintiff from realizing on the judgment. It is also clear that I concluded that Patrice Butts was, at a minimum, a participant in that scheme, if not the driving force behind it. That conclusion also finds its way into the Cost Endorsement where I stated paragraph 2:
The substance of my ruling was that Peter Anstett collaborated with his spouse, Patricia Butts, to transfer his income earning capacity to 1841918 Ontario Inc. so as to preclude the plaintiff from garnishing Peter Anstett’s income from Don's Produce and, in effect, transferring that income to Patricia Butts. Without specifically so stating in my ruling, I concluded that the actions of both defendants was for the purpose of, and had the effect of, defeating the legitimate efforts of the plaintiff to satisfy her judgment. I find that the conduct of both defendants was akin to a fraud which was the basis of the original judgment.
[20] My intent at the time of the Endorsement on the Garnishment Hearing was that the plaintiff not suffer prejudice as result of what I found to be the improper actions of Peter Anstett and Patrice Butts in incorporating 1841918 and directing Don’s Produce pay any amounts that it owed to Peter Anstett for services rendered to 1841918. To my mind, if I were to allow Peter Anstett and Patrice Butts to circumvent the Notice of Garnishment served on Don’s Produce, from the date it was served until argument on the Garnishment Motion I would be rewarding contract that I found to be akin to a fraud.
[21] In my view, it is appropriate to exercise the very broad discretion which exists pursuant to Montague v. Bank of Nova Scotia to rectify the oversight on my part in not addressing the plaintiff’s claim for relief against 1841918 and Patrice Butts. I have therefore come to the conclusion that it is in the interest of justice that I amend my original Endorsement.
Costs of the Garnishment Motion
[22] During the course of submissions, Mr. Oldfield acknowledged that if I agreed with the plaintiff’s position that the original Endorsement should be amended, it would be appropriate to dismiss the motion to have the cost award set-aside as against Patrice Butts.
Conclusion
[23] For the foregoing reasons, my Endorsement dated May 31, 2012 will be amended to include an order that 1841918 and/or Patrice Butts pay any monies received from the date of service of the Notice of Garnishment on Don’s Produce up to and including May 31, 2012, for services provided by Peter Anstett to Don’s Produce, to the Sheriff, Region of Waterloo. 1841918 and/or Patrice Butts are further ordered to pay to the Sheriff, Region of Waterloo, interest calculated at the rate determined by the Courts of Justice Act on the amounts received from Don’s Produce from the date of receipt to the date of payment to the Sheriff.
Costs of the Present Motions
[24] My tentative view is that it would not be appropriate to make an award of costs with respect to the present motions against Peter Anstett, 1841918 and/or Patrice Butts. The present motions arose out of my mistake. It is understandable that the defendants would take the position that they did. Although I ultimately found in favour of the plaintiff, I do not think this is a case where the unsuccessful parties should be saddled with an award of costs.
[25] That said, there may be circumstances of which I am unaware which might impact on the issue of costs. Therefore, if counsel are unable to agree on the appropriate disposition for costs of the present motions they may make brief written submissions. Submissions on behalf of the plaintiff are to be delivered no later than January 10, 2014 with any responding submissions to be delivered no later than January 24, 2014.
G. E. Taylor J.
Date: December 17, 2013