Verma v. Nagra, 2015 ONSC 2774

CITATION: Verma v. Nagra, 2015 ONSC 2774

COURT FILE NO.: CV-11-1872-00

DATE: 20150428

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

SANJAY VERMA

Joel Levitt, for the Applicant

Applicant

• and -

SUKHWINDERJIT NAGRA and BALWINDER NAGRA

Amrita Mann, for the Respondents

Respondents

HEARD: December 16, 2014, at Brampton, Ontario

Price J.

Reasons For Order

NATURE OF MOTION

[1] Mr. Nagra seeks to prolong litigation that arose when his former partner, Mr. Verma, ended the partnership the two men had formed to acquire and develop two adjacent properties at the corner of Steeles Avenue and Mississauga Road in Brampton “the two properties”. Mr. Nagra’s pleadings in that proceeding were struck out by Barnes J. in September 2013, when Mr. Nagra failed to comply with orders the court had made earlier in the proceeding, with both parties’ consent. Mr. Verma’s application then proceeded on an unopposed basis before Daley J., who was not made aware that Mr. Nagra, in the meantime, had applied for leave to appeal from portions of Barnes J.’s order.

[2] On March 20, 2014, Daley J. granted the remedy that Mr. Verma sought, dissolving the partnership between Mr. Verma and Mr. Nagra, declaring that Mr. Nagra had no further interest in the Mississauga Road property, and requiring Mr. Nagra to pay $410,984 to Mr. Verma as his contribution to the Steeles Avenue property. Mr. Nagra complains that Mr. Verma should have informed Daley J. that Mr. Nagra had appealed from Barnes J.’s order, and argues that his failure to do so should result in Daley J.’s order being set aside.

[3] When Mr. Nagra’s application for leave to appeal from Barnes J.’s order was heard by Emery J., neither Mr. Nagra nor his counsel attended. Emery J. therefore dismissed the motion. Mr. Nagra now says that his failure to attend before Emery J. resulted from negligence by his then lawyer, Mr. Bhangu, whom Mr. Nagra has since reported to the Law Society. Mr. Nagra seeks to set aside Emery J.’s order, and to have his appeal from Barnes J.’s order transferred to the Court of Appeal to be heard, on the basis that it was a final order, which was appealable directly to the Court of Appeal, and did not require leave.

BACKGROUND FACTS

[4] Sanjay Verma (“Mr. Verma”) and Sukhwinderjit Singh Nagra (“Mr. Nagra”) entered into a partnership on July 10, 2009, to buy and develop the two properties. One property is on Steeles Avenue W. and the other property is on Mississauga Road, at the intersection of those two streets in the City of Brampton (“the Partnership Agreement”).

[5] As a result of issues that arose in connection with the purchase of the properties, the parties agreed that title to the Mississauga Road property would be transferred to Mr. Verma’s corporation, 2213281 Ontario Inc., and that Mr. Nagra’s corporation, 2227250 Ontario Inc. would buy the Steeles Avenue property. By the time Mr. Nagra bought the Steeles Avenue property, Mr. Verma had invested $1 million and labour costs that he valued at a further $400,000 into the Mississauga Road property.

[6] Mr. Verma found that he was unable to manage his joint enterprise with Mr. Nagra successfully. On May 5, 2011, he applied to dissolve their partnership and to split the two properties in accordance with the Partnership Agreement. He moved for a declaration that Mr. Nagra’s corporation owned the Steeles Avenue property and that Mr. Verma’s corporation owned the Mississauga Road property.

[7] The application came before Sproat J. on March 22, 2012, at which time Mr. Nagra asked to adjourn the motion on the ground that he and his wife, the co-respondent, had just retained new counsel, one week before the hearing date. Sproat J. adjourned the application on consent, with a strict timetable. Mr. and Ms. Nagra failed to deliver responding material in accordance with the timetable and changed counsel again in the late spring of 2012.

[8] Following Sproat J.’s adjournment of the hearing, Mr. and Ms. Nagra made a motion seeking the sale of the properties and to dispense with Mr. Verma’s participation in the sale. The parties signed interim minutes of settlement on November 15, 2012, which were incorporated into a consent order of Tzimas J. dated November 23, 2012, which settled most of the issues in dispute (the “settlement order”) The purpose of the settlement order was to allow the two properties to be sold before any third party lender took steps to enforce their security against the properties, after which the parties would try to come to an agreement on the division of the net proceeds of sale with the help of an independent accountant.

[9] The parties were unable to sell the properties and on March 12, 2013, Mr. Verma first learned that all of the mortgages registered against the Steeles Avenue property had gone into default and power of sale proceedings had been commenced in respect of the property. The Steeles Avenue property was sold under power of sale by the fourth mortgagee on October 16, 2013.

[10] At the time of the power of sale, there were four mortgages registered against title to the Steeles Avenue property, including a fourth mortgage registered on April 12, 2012. Mr. Verma had taken out the second and third mortgages, in the total principal amount of $500,000 without Mr. Verma’s knowledge or consent. To Mr. Verma’s knowledge, none of the funds from the mortgages were used toward the partnership’s development goals and Mr. Nagra never gave him an accounting for the funds drawn from the property under any of the second, third, or fourth mortgages.

[11] Mr. Nagra and his wife registered the fourth mortgage on the Steeles Avenue property, in the amount of $175,000, in violation of the consent order of Sproat J., which prohibited either party or their respective corporations from mortgaging the properties unless to refinance the Steeles Avenue property for the sole purpose of enabling Mr. Nagra to buy out Mr. Verma’s interest in the partnership. Mr. Nagra did not pay Mr. Verma any of the proceeds of the fourth mortgage, and had not made any agreement for the buy-out of Mr. Verma’s interest in the partnership, as required by Sproat J.’s order as prerequisites for any further mortgage on the property.

[12] The consent order of Tzimas J. dated November 23, 2012, in paragraph 19, required the parties’ lawyers or an independently appointed real estate lawyer to open a trust account into which all rental revenue collected by the parties in respect of the were to be paid. By paragraph 20 of Tzimas J.’s order, Mr. Verma was to receive $10,500 per month from the rentals on the Steeles Avenue property, which Mr. Verma could then use to pay the mortgage and taxes due on the Mississauga Road property. No account was ever opened and only two payments, totalling $31,500 were made to Mr. Verma.

[13] As a result of Mr. Nagra’s failure to pay Mr. Verma to rental money he owed, Mr. Verma was required to use his own money to make the payments of the mortgage and taxes due on the Mississauga Road property. Mr. Verma made a motion that was resolved by consent order of Edwards J. dated May 30, 2013. That order required Mr. and Ms. Nagra to secure the agreement of the Business Development Corporation (“BDC”), who held a first mortgage on the Mississauga Road property, to forebear on enforcement of their mortgage within 7 days, failing which Mr. and Ms. Nagra were to pay Mr. Verma $10,500 per month and either postpone or, at Mr. Verma’s discretion, discharge, a mortgage they had registered against the Mississauga Road property without payment of the amount due, on a without prejudice basis.

[14] Mr. and Ms. Nagra failed to secure the agreement of the BDC to forebear on their mortgage, did not make the monthly payments of $10,500 to Mr. Verma, and did not provide a discharge of their mortgage, with the result that Mr. Verma moved before Barnes J. on July 24, 2013, to compel them to do so or to sanction them for failing to do so.

[15] On July 24, 2013, Barnes J. made an order, on a without prejudice basis, requiring Mr. Nagra to discharge his mortgage on the Mississauga Road property without payment , so that the property could be sold, and requiring Mr. Nagra to pay Mr. Verma, by August 22, 2013, the costs outstanding from the previous orders, namely:

a) $69,000 costs ordered by Sproat J. on May 22, 2012, and

b) $63,000 costs ordered by Tzimas J. on November 23, 2012;

failing which Mr. Nagra’s pleadings would be struck, and Mr. Verma could proceed with his application unopposed.

[16] In November 2013, Mr. Nagra applied for leave to appeal to the Divisional Court from certain portions of Barnes J.’s order, including the term requiring him, on a without prejudice basis, to provide a discharge of his mortgage on the Mississauga Road property, which secured $190,000, without payment of the amount due. He argued that he required the proceeds of the mortgage to pay the $132,698.49 costs that he had been ordered to pay. Neither Mr. Nagra nor his lawyer appeared at the hearing at his motion for leave to appeal, and on June 4, 2014, Emery J. dismissed the motion.

[17] On March 20, 2014, Daley J. made an order dissolving the partnership between Mr. Verma and Mr. Nagra, appointing Mr. Verma as receiver of the partnership’s corporation, 227250 Ontario Inc. (“222”), pursuant to s. 101 of the Courts of Justice Act, declaring that Mr. Nagra had no interest in the Mississauga Road property, and requiring Mr. Nagra to pay $410,984 to Mr. Verma as compensation for his contribution to the Steeles Avenue property.

[18] Mr. Nagra now applies to set aside:

a) Daley J.’s order dated March 20, 2014, and

b) Emery J.’s order dated June 4, 2014.

[19] Mr. Nagra argues that Emery J.’s order should be set aside because Mr. Verma’s counsel failed to disclose to the court that on April 20, 2014, Mr. Nagra had filed a Notice of Appeal, seeking to transfer his motion for leave to appeal from Barnes J.’s final order to the Court of Appeal on the ground that it was a final order appealable directly to the Court of Appeal and did not require leave to appeal.

[20] When Mr. Nagra’s motion (to set aside, vary, or amend Emery J.’s order dismissing his application for leave to appeal from Barnes J.’s order striking his pleadings, and to set aside, vary, or amend Daley J.’s order dissolving the partnership and requiring Mr. Nagra to pay Mr. Verma the amount he claimed he was owed) first came before me on December 4, 2014, Mr. Nagra’s lawyer, Amrita Mann, requested an adjournment of the motion. She submitted that she had only just discovered, upon receiving Mr. Verma’s material, that the Mississauga Road property was being sold, with a closing date of December 15, 2014, and that she needed to cross-examine Mr. Verma about the sale.

[21] Mr. Verma’s lawyer, Joel Levitt, argued that there was no need for Ms. Mann to cross-examine Mr. Verma, as Mr. Verma could provide all of the documents regarding the sale by the end of the day on December 4, 2014. Based on these submissions, I said that:

a) I would adjourn Mr. Nagra’s motion to December 16, 2014, the day following the scheduled closing of the sale of the Mississauga Road property, in the hope that the outcome of the sale might enable the parties to settle their dispute, and

b) I would order Mr. Verma to disclose the documents regarding the sale before the return date of the motion.

[22] In response to the court’s stated intention to require Mr. Verma to provide disclosure to Mr. Nagra, Mr. Levitt insisted that Mr. Nagra be required to produce to Mr. Verma the records of the sale, in 2013, of the Steeles Avenue property by power of sale. I therefore adjourned Mr. Nagra’s motion to December 16, 2015, and ordered each of the parties to produce the records that the other requested (set out in a schedule to my endorsement), prior to the return of the motion.

[23] On December 8, 2014, Mr. Nagra’s counsel, Ms. Mann, sent an electronic mail (“e-mail”) to Mr. Verma’s lawyer, Mr. Singh, requesting the records of the sale of the Steeles Avenue property in 2013. She attached my endorsement requiring the records to be produced. Later the same day, Mr. Singh replied that he would need a day or two to provide the records, as the file was in storage. On the following day, Mr. Singh sent a further e-mail to Ms. Mann, asking Mr. Nagra, as an officer of 222, to sign an authorization for the company to produce the records to Mr. Nagra. This authorization should not have been necessary, as Mr. Verma had been appointed Receiver of 222 on March 20, 2014, pursuant to Daley J.’s order, and therefore had authority to direct 222 to produce the requested records without an authorization from Mr. Nagra.

[24] On December 10, 2014, Ms. Mann sent the requested authorization from Mr. Nagra by e-mail to Mr. Verma’s lawyer, Mr. Singh. On the following day, Mr. Singh sent a further e-mail to Ms. Mann, advising her that Mr. Verma had instructed him not to produce the records, notwithstanding the order of the court requiring him to do so.

[25] Mr. Nagra similarly failed to produce records relating to the Mississauga Road property. His explanation is that he has no documents to disclose, as the property is a vacant piece of land that never generated rental income. The only things that were on the property when Mr. Nagra took possession of it in August 2013 were tires and other truck parts, and equipment that had been left in a truck that was parked on the property. Mr. Nagra says that in September, 2013, he visited the property to retrieve the contents of the truck and was advised by Mr. Pavitar Singh, a security guard employed by Mr. Verma, that all Mr. Nagra’s belongings had been removed from the truck on Mr. Verma’s instructions.

[26] Mr. Nagra produced copies of 222’s bank records from January 2010 to March 2014, to his lawyer, Ms. Mann, who produced them to Mr. Verma, even though Mr. Verma has been a joint account holder for 222 since the account was opened in 2010, and has always had access to the records himself. Mr. Nagra states that 222 never filed any financial statements or corporate tax returns, and that its accountant would require 6 to 8 weeks to prepare unaudited financial statements for the company.

ISSUES

[27] The motion requires the court to determine the following issues:

1. Should the court decline to hear Mr. Nagra’s motion, or Mr. Verma’s response to it, on the ground that one or the other of them, or both, failed to disclose relevant documents to the other, as required by my order dated December 4, 2014?

2. Should Daley J.’s order dated March 20, 2014, be set aside on the ground that Mr. Verma failed to inform the court that Mr. Nagra had appealed, or sought leave to appeal, from portions of Barnes J.’s order dated September 9, 2013?

3. Was Barnes J.’s order dated September 9, 2013, from which Mr. Nagra sought leave to appeal, an interlocutory order, for which leave to appeal to the Divisional Court was required, or a final order, appealable directly to the Court of Appeal?

4. Should Emery J.’s order dated June 4, 2014, dismissing the motion for leave to appeal be set aside on the ground that:

(a) Mr. Nagra inadvertently failed to attend the hearing of the motion?

(b) Mr. Verma failed to disclose to the court that Mr. Nagra had served a notice of appeal to the court of appeal?

(c) The appeal was from a final order, appealable directly to the Court of Appeal?

PARTIES’ POSITIONS

1. Should the court decline to hear Mr. Nagra’s motion, or Mr. Verma’s response to it, on the ground that one or the other of them, or both, failed to disclose relevant documents to the other, as required by my order dated December 4, 2014?

[28] Mr. Verma does not dispute that he failed to produce the records of the sale of the Steeles Avenue property in 2013, as required by my order dated December 4, 2014. Mr. Nagra argues that, as a result of Mr. Verma’s failure to comply with my order, I should strike his material and permit Mr. Nagra’s motion to proceed unopposed.

[29] Mr. Verma’s counsel, Joel Levitt, argues that Mr. Verma’s failure to produce the documents should not affect the result, for the following reasons:

a) The sale of the Mississauga Road property did not close on December 15, 2014, owing to Mr. Nagra’s refusal to cooperate; and

b) The records that have been produced demonstrate that the amount that Mr. Nagra owes Mr. Verma in relation to the partnership properties far exceeds any claim that Mr. Nagra may have against Mr. Verma.

[30] Mr. Verma asserts that he did not know that, as Receiver of 222 and co-signor of its bank accounts in relation to the Mississauga Road property, he could obtain the records of the sale of the property directly, and that his demand that Mr. Nagra produce them to him was therefore unnecessary.

2. Should Daley J.’s order dated March 20, 2014, be set aside on the ground that Mr. Verma failed to inform the court that Mr. Nagra had appealed, or sought leave to appeal, from portions of Barnes J.’s order dated September 9, 2013?

[31] A friend of Mr. Nagra’s appeared in court on behalf of Mr. Nagra in March, 2013, with the intention of having Mr. Nagra’s motion for leave to appeal adjourned to June. By the time the friend attended again on June 4, 2013, Mr. Nagra had served Mr. Verma with a Notice of Appeal to the Court of Appeal from Barnes J.’s order dated September 9, 2013, in respect of which Mr. Nagra had first sought leave to appeal to the Divisional Court.

[32] Mr. Nagra submits that had Daley J. known that Mr. Nagra was appealing a portion of Barnes J.’s order, he would not have made his order dated March 20, 2014. He would have questioned the urgency of an order for receivership. Further, if he had known that Mr. Nagra had appealed from that part of Barnes J.’s order that required him to discharge the vendor take-back mortgage on the Mississauga Road property without payment of the money owing on the mortgage, he would not have appointed Mr. Verma as receiver for the property. He also would not have ordered that Mr. Nagra had no further interest in the Mississauga Road property, the sale of which was to close December 15, 2014.

[33] Mr. Nagra submits that Mr. Verma’s application was “ex parte,” since Mr. Nagra’s responding material had been struck out pursuant to Barnes J.’s order, and the hearing before Daley J. took place without notice to Mr. Nagra. He further argues that the rule requiring full and frank disclosure of all material facts, which applies to an ex parte motion, as set out in rule 39.01(6) of The Rules of Civil Procedure, applies equally to any motion or application in respect of which the opposing litigant has not been given notice of the hearing. “Material facts”, in this context, are all facts that may have affected the judge’s decision.

[34] Mr. Verma states that he had no duty to disclose that Mr. Nagra had appealed from Barnes J.’s order, since Mr. Nagra had not appealed from the portions of the order that struck out Mr. Nagra’s responding material for non-compliance with earlier orders, and that allowed Mr. Verma’s application to proceed unopposed. Mr. Verma further argues that he initially gave Mr. Nagra notice of his application, and that the reason the application was unopposed when it was before Daley J. was that Barnes J. had made an order striking Mr. Nagra’s responding material based on his breaches of earlier court orders.

[35] Mr. Nagra says that it is a matter of common sense that Mr. Verma had a duty to disclose to Daley J. that Mr. Nagra had appealed from Barnes J.’s order, even if he had not appealed from those portions of the order that struck out Mr. Nagra’s responding material, as the material facts favouring each party must be before the court in order to preserve the appearance of justice.

3. Was Barnes J.’s order striking Mr. Nagra’s material responding to Mr. Verma’s application (on the ground that Mr. Nagra had failed to comply with previous court orders) and permitting Mr. Verma to proceed unopposed, an interlocutory order, for which leave to appeal to the Divisional Court is required, or a final order appealable to the Court of Appeal?

[36] Mr. Nagra submits that certain parts of Barnes J.’s order were final. That is, Barnes J. struck out Mr. Nagra’s statement of claim in action no. CV-12-2386000 and dismissed the action with costs, which he says he had no jurisdiction to do, since that action was not before him, notwithstanding that it was referred to in the evidence on the motion. That is, Mr. Nagra argues that Barnes J.’s order in action CV-12-2386 was a final order, because it dismissed his action, even if his order in relation to the proceeding CV-11-1872-00, which was before him, commenced by application, was not final, as it struck out his responding material but did not finally dispose of the proceeding. Therefore, he reasons, his appeal was properly made directly to the Court of Appeal.

[37] Mr. Verma submits that Mr. Nagra did not appeal from Barnes J.’s order in a timely manner. He did not appeal to the Court of Appeal, as he should have done, and he did not deliver a notice of application for leave to appeal to the Divisional Court until April 21, 2014.

5. Should Emery J.’s order dated June 4, 2014, dismissing the motion for leave to appeal be set aside on the ground that:

(a) Mr. Nagra inadvertently failed to attend the hearing of the motion?

(b) The appeal was from a final order, appealable directly to the Court of Appeal?

(c) Mr. Verma failed to disclose to the court that Mr. Nagra had served a notice of appeal to the court of appeal?

[38] Barnes J. made a first order dated July 23, 2013, directing that if Mr. Nagra did not comply with the earlier orders by a specified date, his responding material would be struck. Mr. Nagra did not appeal from that order, and did not comply with it. Barnes J. then made a second order, dated September 9, 2013, striking Mr. Nagra’s responding material in the proceeding which Mr. Verma commenced by application, which then proceeded unopposed before Daley J. on March 20, 2014.

[39] Mr. Nagra initially served a motion for leave to appeal to the Divisional Court from Barnes J.’s order on Mr. Verna, returnable on November 7, 2013. At the request of Mr. Nagra’s counsel, Amrit Kaur Bhangu, the court adjourned the hearing, first to November 22, 2013, then to the long motion date of June 4, 2014, and finally to July 23, 2014.

[40] By the time Emery J. heard Mr. Nagra’s motion on July 23, 2014, Mr. Nagra had delivered a Notice of Appeal to the Court of Appeal from Barnes J.’s order. Neither Mr. Nagra nor his counsel appeared before Emery J. for his motion for leave to appeal to the Divisional Court, and Emery J. therefore dismissed the motion.

[41] Mr. Nagra blames his lawyer, Mr. Bhangu, for the fact that he did not appear before Emery J. He states that Law Pro has been put on notice of Mr. Bhangu’s conduct, which he says was negligent. Mr. Nagra argues that, notwithstanding his lawyer’s failure to attend, Mr. Verma’s counsel was under an obligation to inform Emery J. that Mr. Nagra had appealed from Barnes J.’s order. On this basis, he requests that Emery J.’s order be set aside, and that his appeal from Barnes J.’s order, as well as his appeal from Daley J.’s order, be traversed to the Court of Appeal for hearing.

ANALYSIS AND EVIDENCE

1. Should the court decline to hear Mr. Nagra’s motion, or Mr. Verma’s response to it, on the ground that one of the parties failed to disclose relevant documents to the other?

[42] At the time when the parties first appeared before me, Mr. Nagra’s lawyer had not been made aware of the sale of the Mississauga Road property that was scheduled to close on December 15, 2014. The agreement of purchase and sale was signed on November 7, 2014, a week and a half before November 18, 2014, when the parties first appeared before the Court of Appeal on Mr. Nagra’s appeal from Daley J.’s order, and Mr. Verma apparently did not disclose the fact of the sale to Mr. Nagra’s counsel at that time.

[43] When the pending sale of the Mississauga Road property was disclosed at the hearing before me on December 4, 2014, I adjourned the hearing to December 16, 2014, when the outcome of the sale would be known and could be disclosed to Mr. Nagra. The parties could then consider the outcome of the sale in their settlement discussions, and if they were unable to settle, the court could consider the significance of the sale in relation to the issues in dispute.

[44] Mr. Nagra substantially complied with my order for disclosure. Paragraph 3(a), (b), (c), and (d) of my order required him to disclose the documents pertaining to the Steeles Avenue property. Mr. Nagra produced the documents required by paragraph 3(d). He was not able to produce the documents required by paragraphs 3(a), (b), and (c), either because they do not exist or because he does not have access to them.

[45] Mr. Verma additionally claims entitlement to the rental income that Mr. Nagra earned from the Steeles Avenue property. My order dated December 4, 2014, required the rental income to be disclosed. Mr. Nagra stated that he no longer has those records. Additionally, he stated that he never filed tax returns for the corporation, but that they could be prepared in 4 to 6 weeks if the hearing was further adjourned to a later date.

[46] Mr. Verma breached my order dated December 4, 2014, by failing to produce the records pertaining to the sale of the Mississauga Road property, as required. Mr. Nagra states that the lawyer for the 1st mortgagee of the Mississauga Road property was Mr. Koslub, who would have all the documents pertaining to it. Ms. Mann wrote to Mr. Koslub on December 8th and requested the documents. He replied an hour later, saying that he would provide the requested documents in a day or two.

[47] Mr. Verma’s lawyer, Mr. Singh wrote on December 9th to confirm that Ms. Mann acted for Mr. Nagra and his company, and Ms. Mann sent him Mr. Nagra’s authorization, as requested, for the release of the records. Mr. Singh later sent an e-mail to Ms. Mann stating that Mr. Verma had instructed him not to produce the records. Mr. Verma’s solicitor, Mr. Levitt, acknowledged that it was wrong for Mr. Verma to have withheld his instructions from Mr. Singh to produce the records. No satisfactory explanation was offered for his conduct.

[48] Mr. Verma was appointed as receiver of 222, the owner of the Mississauga Road property, on March 20, 2014, pursuant to Daley J.’s order. He was therefore able to obtain the records pertaining to the property directly since that date. Having found that Mr. Verma breached my order requiring disclosure, I must consider the significance of the breach, whether the court should draw an adverse inference from it, and whether the non-disclosure is likely to affect the outcome of the motion. For the reasons that follow, I find that Mr. Verma’s breach of my disclosure order should not preclude my receiving his evidence, although the breach may become relevant in my determination of costs.

[49] As noted above, Mr. Verma’s counsel argues that Mr. Verma’s failure to produce the documents should not affect the result, because:

a) The sale of the Mississauga Road property did not close on December 15, 2014, as scheduled, owing to Mr. Nagra’s refusal to cooperate; and

b) The documents that were produced demonstrate that the amount Mr. Nagra owes Mr. Verma in relation to the partnership properties far exceeds any claim that Mr. Nagra may have against Mr. Verma.

[50] I agree with Mr. Verma’s submission for the following reasons:

a) The sale of the Mississauga Road property did not close on December 15, 2014, as it had been expected to do, with the result that the documents regarding the sale would have little relevance to the dispute or the present motion. Mr. Verma’s counsel invited Mr. Nagra’s counsel and her client to attend to discuss the scheduled sale of the Mississauga Road property. The sale could not take place without Mr. Nagra’s cooperation, and the result of his refusal was that it did not close. The vendor terminated the Agreement of Purchase and Sale of the Mississauga Road property for breach. The purchaser breached by failing to close the transaction on December 15th. There are outstanding issues regarding the encumbrance of the title (a tenancy, and failure to deliver vacant possession). There is a dispute as to whether vacant possession was required, and whether the encumbrance of the property entitled the purchaser to rescind the agreement.

b) Mr. Verma has produced sufficient information to permit a rough determination as to whether Mr. Nagra has a claim against Mr. Verma that would be prejudiced by the orders of Barnes J. from which Mr. Nagra sought to appeal, as follows:

i) After payment of the mortgages, the sale of the Steeles Avenue property, had it proceeded, would have produced net proceeds of $700,000.

ii) Schedule “A” to my Order of December 4, 2014, para. 3(a), required Mr. Nagra to produce the reporting letter regarding the 4th mortgage registered on the property, which mortgage is now discharged.

iii) The 3rd and 4th mortgages were registered after March 12, 2012, when Sproat J. ordered that no further mortgages were to be placed on the property unless for the purpose of buying out Mr. Verma’s interest. The 3rd and 4th mortgages were registered on April 4, 2012, as appears from the abstract of title attached to Mr. Verma’s Responding Record, Tab F for the motion returnable Dec. 4, 2014.

iv) It is Mr. Verma’s uncontradicted evidence that he did not consent to 2nd, 3rd or 4th mortgage, registered on April 4th.

v) The bank statements in relation to the Steeles Avenue property were produced. Page 9 of those records discloses that when the 2nd mortgage for $300,000 was granted on September 13, 2010, there was no money deposited to 222’s mortgage account. Page 10 discloses that no money was deposited the next month, either. Pages 16 and 17 of the bank records relate to the 3rd mortgage dated April 27, 2011, in the amount of $250,000. The bank records disclose that the $250,000 was not deposited to the corporation’s bank account.

vi) The final mortgage dated April 12, 2012, for $175,000, was also registered in violation of Sproat J.’s Order dated March 22, 2012. Pages 28 and 29 of the bank records disclose that no money was deposited to the corporation’s bank account in connection with that mortgage, either.

vii) Mr. Verma says that when he took over the Mississauga Road property, he was receiving $25,000 from the property. Tzimas J.’s Order required $10,500 to be paid to Mr. Verma from the rent, and Sproat J.’s order required that all expenses be paid. Mr. Verma says that he received only 3 payments.

viii) Page 11 of the bank records disclose that payments of rent stopped being deposited to the corporation’s account in August 2011. The records disclose cheques at that time to the BDC (Business Development Corporation), which was the 1st mortgagee on the property. No rent was deposited to the corporation’s account after that time.

[51] Mr. Verma took over the partnership in September 2013. From August 2011 to September 2013, no rental income was deposited to 222’s account on account of the Mississauga Road property. This represents a loss of 25 payments at $25,000 each, for a total of $500,000. As noted above, paragraph 20 of the settlement order of Tzimas J. dated November 23, 2012, required Mr. Nagra to pay $10,500 per month to Mr. Verma, which Mr. Nagra failed to do.

[52] It can be inferred from the evidence produced to this point that Mr. Nagra received over $1.2 million from the Steeles Avenue property, consisting of the following:

a) The proceeds of the 2nd mortgage dated September 13, 2010, in the amount of $300,000, of the 3rd mortgage dated April 27, 2011, in the amount of $250,000, and of the 4th mortgage dated April 12, 2012, in the amount of $175,000, for a total of $725,000;

b) 25 rental payments, at $25,000 per payment, for a total of $500,000.

[53] Of the foregoing amount of $1.2 million, Mr. Nagra is required to account to Mr. Verma for half, or approximately $600,000.

[54] Pursuant to the order of Tzimas dated November 23, 2012, the parties jointly retained an accountant, Anil Sharma, who produced a report confirming that Mr. Verma made contributions to the partnership totalling 1,178,821.33, consisting of $284,004.76 to the Steeles Avenue property and $894,816.57 to the Mississauga Road property. Additionally, Mr. Verma has produced evidence showing that he incurred out of pocket expenses of $100,515.93, and interest expenses of $239,054.06 to the date of the hearing before Daley J., with the result that he was out of pocket a total of $1,518,391.32 as of that date (March 20, 2014). With the addition of the costs of $69,698.49 which Sproat J.’s order dated March 22, 2012, required Mr. Nagra to pay, and the costs of $63,000 which Tzimas J.’s order dated November 23, 2012, required him to pay, the amount totals $1,651,089.81.

[55] Mr. Verma calculates that if the Mississauga Road property is transferred to him, and its value is deducted from the $1,651,089.81 that Mr. Nagra owes him based on Mr. Sharma’s calculations, Mr. Nagra would owe him a net amount of $534,683.00. Although this amount is subject to adjustment based on the actual outcome of the eventual sale of the Mississauga Road property, the order of Daley J., which required Mr. Nagra, without payment of the secured amount to him, to give Mr. Verma a discharge of his mortgage on the Mississauga Road property to facilitate its sale, was without prejudice to such an adjustment.

[56] Daley J.’s order dated March 20, 2014, requires Mr. Nagra to pay $411,000 to Mr. Verma, but does not take into account the amount Mr. Verma would owe to Mr. Nagra from the net proceeds of sale of the Mississauga Road property. If the sale generates 1.7 million, he would owe $190,000 to Mr. Nagra, which would reduce the $411,000 that Mr. Nagra owes Mr. Verma to $221,000, substantially less than the $534,683.00 that Mr. Verma calculates he is owed based on Mr. Sharma’s calculation, with the adjustments set out above.

[57] The orders the court has made appear to have benefited Mr. Nagra. The information that he sought from Mr. Verma was required to determine whether Mr. Verma had invested money in the partnership, but this would not improve the outcome for Mr. Nagra, based solely on the amount by which Mr. Verma asserts that Mr. Nagra depleted the value of the Mississauga Road property, and his duty to account to Mr. Verma for those funds.

[58] Even if the evidence that Mr. Verma failed to disclose could affect the outcome of the present motion, I would exercise the court’s residual discretion to receive Mr. Verma’s evidence anyway, and not to set aside Daley J.’s order on that basis. Harvison Young J. described the nature of this discretion in Two-Tyme Recycling Inc. v. Woods. In that case, Justice Harvison Young dismissed an application, based on non-disclosure, to set aside a Mareva Injunction and Certificate of Pending Litigation in a case involving the misappropriation by the operators of a family operated business of customers’ money by diverting $600,000 received from customers away from the company’s bank account, not recording the receipts in the company’s books, and concealing the receipts by falsified bank accounts.

[59] While Justice Harvison Young found that there had been non-disclosure of relevant evidence, consisting of the use by other shareholders of a trade business exchange account to receive personal benefits, she was not satisfied that the injunction and certificate of pending litigation would not have been granted had the evidence been disclosed. She based her conclusion of the fact that the “big issue” concerning the exchange program was not merely the fact that the defendants were benefiting personally from it, but the extent of the abuse. Additionally, she found that the major fraud was the money that was being deposited to the business’ bank accounts and withdrawn for personal use without showing up on the business’ books.

[60] Harvison Young J. based her decision on both her finding that the non-disclosure was not material and, in the alternative, on the court’s residual discretion to refuse to set aside an order notwithstanding non-disclosure. She stated:

In Sherwood Dash Inc. v. Woodview Products Inc., Justice Perell reviewed the law on this issue and observed that interpreting the rules against non-disclosure too strictly might encourage unscrupulous defendants to allege material non-disclosure when they have a hopeless case on the merits. The purpose of the rule is to deprive the plaintiff of an advantage improperly obtained and to remind litigants of the duty to be frank and candid at ex parte applications. Where those principles do not apply, the rule is not as strictly enforced.[^1]

[61] In the present case, Mr. Verma’s non-disclosure, besides not involving an ex parte application, did not secure for him “an advantage improperly obtained”. Viewed as a whole, the evidence satisfies me that the magnitude of Mr. Nagra’s depletions of the value of the Mississauga Road property by unauthorized encumbrances, not properly accounted for, and failure to account for rent that was received or should have been received, far exceeds the magnitude of Mr. Verma’s indebtedness to Mr. Nagra, which was the basis for the relevance of the records he was to have disclosed to Mr. Nagra. In Two-Tyme Recycling Inc. v. Ronald Woods et al, Harvison Young J. cited Sharpe J., as he then was, in America v. Fiedland, in describing the effect the courts gives to non-disclosure as follows:

The duty of full and frank disclosure is, however, not to be imposed in a formal or mechanical manner. Ex parte applications are almost by definition brought quickly and with little time for preparation of material. A plaintiff should not be deprived of a remedy because there are mere imperfections in the affidavit or because inconsequential facts have not been disclosed. There must be some latitude and the defects complained of must be relevant and material to the discretion to be exercised by the Court.[^2] .

[62] Lord Slade noted, in Brink’s Mat Ltd. v. Elcombe and Others, that complaints of material non-disclosure frequently arise where they constitute the only hope of obtaining the discharge of injunctions in cases where there is little hope of doing so on the substantial merits of the case or on the balance of convenience. He called this strategy a tabula in naufragio (a “plank in a shipwreck”); the last, desperate hope of a defendant who wishes to save their assets before an inevitable judgment is rendered against them at trial.[^3]

[63] In the present case, although not excused by the urgency of an ex parte application, Mr. Verma’s non-disclosure was relatively inconsequential, and must be considered in the light of the fact that the sale of the Mississauga Road property had arisen recently, did not close, and was late-breaking news on the basis of which Mr. Nagra sought to avoid the sanction finally imposed on him as a consequence of his repeated breaches of court orders. It also paled in significance to the magnitude of his own unauthorized encumbrances of, and failing to account for, revenues generated by the Mississauga Road property.

[64] It would be an injustice to reward Mr. Nagra for extracting all of the equity from the Steeles Avenue property without accounting to Mr. Verma for the proceeds of the mortgages, and then repeatedly breaching the orders of the court that he had consented to for the orderly winding up of the partnership.

[65] Based on the foregoing, I find that disclosure of the remaining documents required by my order dated December 4, 2014, would not be material to the determinations I must make in this motion, and I exercise my discretion to hear the motion, notwithstanding the non-disclosure.

2. Should Daley J.’s order dated March 20, 2014, be set aside on the ground that Mr. Verma failed to inform the court that Mr. Nagra had appealed, or sought leave to appeal, from portions of Barnes J.’s order dated September 9, 2013?

[66] Daley J. made his order dated March 20, 2014, based on Mr. Verma’s unopposed application. The application was unopposed by reason of Barnes J.’s order dated September 9, 2013, striking Mr. Nagra’s responding material as a sanction for his breach of earlier orders. Mr. Nagra did not appeal or seek leave to appeal from that aspect of Barnes J.’s order.

[67] Had Mr. Verma’s application before Daley J. been, in fact, an ex parte motion, Mr. Verma would have had a greater duty to disclose. However, that application was initially on notice. It later became unopposed because Barnes J., pursuant to rule 60.12 of the Rules of Civil Procedure, struck out Mr. Nagra’s responding material and precluded him from further opposing the application. Rule 60.12 provides:

60.12 Where a party fails to comply with an interlocutory order, the court may, in addition to any other sanction provided by these rules,

(a) stay the party’s proceeding;

(b) dismiss the party’s proceeding or strike out the party’s defence; or

(c) make such other order as is just.[^4] [Emphasis added]

[68] Mr. Nagra requested the adjournment of the motion before Barnes J. on July 24, 2013. It was the second request he had made to adjourn the motion, and he made it on that date on the ground that he was retaining new counsel to represent him. He and Mr. Verma consented to the terms that Barnes J. imposed when acceding to Mr. Nagra’s request and adjourning the motion. Mr. Nagra later failed to comply with those terms, even after Barnes J. gave him additional time, from August to September 5, 2013, to do so.

[69] Mr. Verma’s lawyer sent a letter to Mr. Nagra’s lawyer, Mr. Bhangu, in February 2014. He invited him to obtain a stay of Barnes J.’s order, adding that if he did not apply for a stay, Mr. Verma intended to move the case forward. Mr. Verma then returned the motion, and obtained the final order from Barnes J. on September 5, 2014, striking Mr. Nagra’s pleadings and directing that Mr. Verma’s application could proceed unopposed.

[70] Daley J., in his order dated March 20, 2014, was enforcing an earlier order made by Edwards J. on May 30, 2013. Paragraph 6 of Edwards J.’s order stated that, in the event Mr. Nagra and his wife did not secure the commitment of the BDC to re-mortgage the Mississauga Road property, Mr. Nagra would agree to postpone or, if a new lender required, discharge, his mortgage against the Mississauga Road property, registered October 30, 2009, without payment, on a without prejudice basis. Daley J., in his order dated March 20, 2014, ordered Mr. Nagra to discharge his mortgage without payment, on a without prejudice basis. In making these orders, the court was assisting the parties to sell the Mississauga Road property before further losses were sustained.

[71] Mr. Nagra argues that in a case like this, where the pleadings of one litigant have been struck out, and the application continues unopposed, the remaining litigant, in its affidavits, must expressly set out the facts relevant to the opposing party’s position.[^5] He points out that there were three affidavits before Daley J., the last of which, a supplementary affidavit, was sworn after Mr. Verma learned that Mr. Nagra had applied for leave to appeal from Barnes J.’s order. In these circumstances, he says, Mr. Verma had a duty to the court to disclose the fact that Mr. Nagra had appealed from Barnes J.’s order.

[72] Mr. Nagra was unable to offer any authority for the proposition that the same principle of full and frank disclosure applies that applies to an ex parte motion applies where an application is unopposed. While he acknowledges that the court’s decision in L’Unita Development Corp. v. 505369 Ltd., upon which he relies, concerns ex parte motions, the duty of full and frank disclosure applies equally in the present case, where the pleadings of the opposing party had been struck out and the application proceeds unopposed. He argues that the duty applies wherever the opposing party will be affected by the outcome. The duty, he submits, is not owed to the other litigant, but to the court, as an inability of the court to consider the potential impact of its order on the other party would tend to bring the administration of justice into disrepute. The duty, he argues, is required to mitigate the obvious risk of injustice inherent in any situation where a judge is asked to make an order without hearing from a party who will be affected.[^6] He submits that on this basis alone, the decision of Daley J. should be set aside. I disagree.

[73] The requirement of full and frank disclosure, as it applies to ex parte motions, does not apply to cases in which the pleadings of one litigant have been struck out by reason of his non-compliance with the rules of court. In the case of an ex parte motion, the court must protect the rights of a party who, through no fault of his own, has not been accorded the fundamental right to notice of a proceeding whose outcome will affect him, and the opportunity to be heard. In the case of a proceeding that is no longer opposed because the pleadings of the opposing litigant have been struck out for non-compliance, that litigant has been given notice of the application but has, by his own misconduct, forfeited his right to be heard. The two situations are not analogous.

[74] It would impose a heavy and undeserved burden on a litigant who has complied with the rules, but whose opponent has not, to be required to protect the interests of the opponent whose pleadings have been struck. It would also reward the non-compliant litigant by giving him a procedural advantage of having his rights protected without having been required to comply with the procedural requirements of doing so.

[75] Even if Mr. Verma had owed a duty to disclose to the court material facts beneficial to Mr. Nagra, he was not under a duty to disclose the fact that Mr. Nagra had appealed, or sought leave to appeal, from certain paragraphs of Barnes J.’s order. That fact was neither material, nor even relevant, to the application before Daley J. It could not reasonably have affected the outcome of the application.

[76] The test for setting aside an order based on non-disclosure of material facts is found in rules 39.01(6). That rule provides:

39.01 (6) Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application. [Emphasis added]

[77] Mr. Nagra argues that Daley J.’s Order would have been different if he had known that Mr. Nagra had appealed from the order of Barnes J. I disagree. In Mr. Nagra’s notice of motion for leave to appeal, he challenged paragraphs 1 and 9 of Justice Barnes’ order dated July 24, 2013. Paragraph 9 of Barnes J.’s order provided that if Mr. Nagra did not pay the costs he owed pursuant to the orders of Sproat J. and Tzimas J., his statement of claim in court file no. CV-12-2386-00 would be struck out and the action dismissed without costs. That proceeding was different than the present one, begun by application in court file no. CV-11-1872-00, which was the subject of Daley J.’s order dated March 20, 2014.

[78] Mr. Nagra, in his motion for leave to appeal, did not challenge paragraph 5 of Barnes J.’s order, which directed that, if Mr. Nagra did not pay the costs he owed pursuant to the orders of Tzimas J. and Sproat J., the “responding material shall be struck and the applicant shall be free to proceed with the Application without further notice to the Plaintiffs.” This not only entitled Mr. Verma to proceed to a hearing without notice to Mr. Nagra; it also permitted the court to deal with the Mississauga Road property, which Daley J.’s order did. Barnes J.’s order provided that Mr. Verma would be entitled to sign the standard OREA release of the deposit that the purchaser, Mr. Dhanoia, had provided in relation to the aborted sale of the property by 2227250.

[79] Mr. Nagra’s motion for leave to appeal challenged paragraphs 1 through 9 of Barnes J’s order. He argues that Barnes J. should not have addressed the action in court file no. CV-12-2386-00, which was not before him. Even if this were so, which I was not called on to determine, that does not change the fact that, in the absence of an appeal from that portion of Barnes J.’s order, Mr. Nagra’s responding material in the present proceeding was struck and Mr. Verma was entitled to proceed with his application unopposed.

[80] The jurisprudence requiring full and frank disclosure deals with motions made without notice. Mr. Nagra’s application in the present case was unopposed, and he was not given notice of the hearing before Daley J., because of the sanctions which Barnes J. had imposed. The application had been defended up to then, and Barnes J. struck out Mr. Nagra’s responding material because had not complied with earlier orders. There is no support in the jurisprudence for an obligation of full and frank disclosure on the remaining litigant in those circumstances.

[81] Mr. Nagra could have applied for a stay of Barnes J.’s order, as Mr. Bhangu was invited to do on November 22, 2013, and again in February 2014. Mr. Verma’s defence in action no. CV-12-2386-00 was that there was no partnership, and he sought the money that he had invested in the Mississauga Road property. Mr. Nagra was saying all along that the profits from the Steeles Avenue property were his and the Mississauga Road property belonged to Mr. Verma.

[82] Mr. Nagra sought leave to appeal from Barnes J. in September. When Mr. Verma’s counsel contacted the court before the date scheduled for the hearing, he was told that Mr. Nagra had confirmed that the motion would be proceeding. Mr. Verma’s counsel appeared and Mr. Nagra’s did not. Mr. Nagra never advised Mr. Verma’s counsel that he intended to obtain an Order from The Court of Appeal, or from the Superior Court, traversing his appeal to the Court of Appeal. Emery J. awarded Mr. Verma his costs because he was put to expense by Mr. Nagra’s failure to inform him that he did not intend to proceed with his motion. Mr. Verma was simply responding to Mr. Nagra’s motion. He was not moving ex parte.

[83] Mr. Nagra never took the steps necessary to perfect his appeal. Additionally, he never appealed, nor sought leave to appeal, from Barnes J.’s Order striking Mr. Nagra’s response to the application that Mr. Verma made and that Daley J. disposed of on March 20, 2014.

[84] The relief that Mr. Verma sought in his application did not bear on the relief that Mr. Nagra sought in his motion for leave to appeal from Barnes J.’s order. None of the provisions that were struck by Barnes J. had any bearing on the application before Daley J.

[85] In any event, the Order of Daley J. required Mr. Verma to provide a discharge of his mortgage “without prejudice”. In Daley J.’s Order for the payment of $411,000, as soon as Verma’s land was sold, he will owe a portion of the proceeds to Mr. Nagra, in accordance with the parties’ settlement. The effect of the order was to reduce the amount of Mr. Nagra’s obligation to Mr. Verma.

[86] Mr. Verma does not challenge the above-mentioned provision of the settlement. Daley J’s order determined only the amount of money Mr. Nagra had taken out of his property. His order granted judgment to Mr. Verma on his investment in the Steeles Avenue property. Additionally, it gave Mr. Verma power to deal with the Mississauga property. It still left Mr. Verma with the obligation to account to Mr. Nagra in accordance with the order made earlier by Edwards J. That was why Mr. Nagra’s discharge of his mortgage was to be without prejudice.

[87] Mr. Verma’s non-disclosure of Mr. Nagra’s appeal from Barnes J.’s order would not have affected Daley J.’s decision. In these circumstances, I find that the fact of Mr. Nagra’s appeal from portions of Barnes J.’s order was not material to the hearing of Mr. Verma’s application, which was before Daley J., or to the hearing of Mr. Nagra’s motion, which was before Emery J.

[88] Mr. Nagra argues that it was for Daley J., and not this court, to decide whether the undisclosed fact would have made a difference to his decision. I disagree. It is the court that hears an application to set aside an order on the ground of non-disclosure that must exercise its discretion and that, in doing so, must consider whether the facts that were not disclosed could reasonably have affected the order that is sought to be set aside.

[89] Mr. Verma and his counsel also did not have a duty to inform Emery J. that Mr. Nagra had served a Notice of Appeal from the decision of Daley J. The information could not reasonably have affected Emery J.’s decision.

3. Was Barnes J.’s order striking Mr. Nagra’s material (for non-compliance with earlier court orders), and permitting Mr. Verma to proceed with his application unopposed, an interlocutory order, from which leave to appeal to Divisional Court is required, or a final order, appealable to the Court of Appeal?

[90] Mr. Nagra sought leave to appeal to the Divisional Court from Barnes J.’s order dated September 9, 2013. For the reasons that follow, I conclude that the order of Barnes J. was a final order, and an appeal from it should properly be made to the Court of Appeal.[^7]

[91] In Waldman v Thomson Reuters Canada Limited, in 2015, the Court of Appeal stated:

The question of whether an order is final or interlocutory is one that has vexed courts for years. Courts asked to consider this issue often begin with the observation of Middleton J.A. in Hendrickson v. Kallio, [1932] O.R. 675 (C.A.), at p. 678:

The interlocutory order from which there is no appeal is an order which does not determine the real matter in dispute between the parties – the very subject matter of the litigation, but only some matter collateral. It may be final in the sense that it determines the very question raised by the application, but it is interlocutory if the merits of the case remain to be determined.[^8]

[92] Under Section 6(1)(a) of the Courts of Justice Act, an appeal lies to the Court of Appeal from, (b): “a final order of a judge of the Superior Court of Justice, except an order referred to in clause 19 (1) (a) or an order from which an appeal lies to the Divisional Court under another Act.” Barnes J.’s order dated September 9, 2013, striking Mr. Nagra’s response to Mr. Verma’s application is a final order as referred to in Section 19(1)(a). The Ontario Court of Appeal, in Stoiantsis v Spirou, defined a final order in the following terms:

The question, then, is whether the order in issue deprives the defendants of a substantive right that could be determinative of the action.

An order will be final if it finally disposes of the rights of the parties to the litigation, or if it conclusively disposes of an issue raised as a defence and “thereby deprive[s] the defendant of a substantive right which could be determinative of the entire action” (Ball v. Donais (1993), 13 O.R. (3d) 322, 1993 8613 (C.A.) at p.324 (O.R.).[^9]

[93] An order is final if it finally disposes of the rights of the parties to the litigation, or conclusively disposes of an issue raised as a defence, and “thereby deprive[s] the defendant of a substantive right which could be determinative of the entire action”.[^10] The Ontario Court of Appeal, in Stoiantsis v Spirou, stated:

The question, then, is whether the order in issue deprives the defendants of a substantive right that could be determinative of the action.

[94] The Court of Appeal has stated that, “the content of the formal order is integral to determining what has been decided against a party in a fashion that is binding.”[^11] An order striking responding material is a final order, even in the absence of a term granting judgment or dismissing an action. Halsbury’s Laws of England, 5th ed.[^12] states:

Orders regarding pleadings: While orders relating to pleadings might at first glance appear to be interlocutory in nature, they also can in certain circumstances amount to a final disposition and therefore assume a final character. For instance, an order barring a plaintiff from amending a statement of claim so as to allege a new cause of action is a final order,[^13] as is an order dismissing a motion to add a new defence to a statement of defence.[^14] Orders striking out a defence,[^15] statement of claim[^16] or counterclaim[^17] are clearly final in nature. However, an order dismissing a motion to strike out a pleading, or a particular statement in it, is interlocutory.[^18] [Emphasis added]

[95] Based on the foregoing, I conclude that Barnes J.’s order, dated September 9, 2014, was a final order that was appealable directly to the Court of Appeal.

4. Should Emery J.’s order dated June 4, 2014, dismissing motion for leave to appeal be set aside on the ground that:

(a) Mr. Nagra inadvertently failed to attend the hearing of the motion?

(b) The appeal was from a final order, appealable directly to the Court of Appeal?

(c) Mr. Verma failed to disclose to the court that Mr. Nagra had served a notice of appeal to the court of appeal?

Failure to attend the hearing

[96] Neither Mr. Nagra nor his counsel attended the hearing before Emery J. The rules permit a litigant who has, by inadvertence, failed to attend a hearing, to apply to set aside the order made. Rule 38.11 provides:

38.11 A party or other person who is affected by a judgment on an application made without notice or who fails to appear at the hearing of an application through accident, mistake or insufficient notice may move to set aside or vary the judgment, by a notice of motion that is served forthwith after the judgment 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.

[97] In cases where a litigant who has inadvertently failed to attend a hearing, it is within the court’s discretion to set the order aside. In the present case, Mr. Nagra states, in a letter dated June 12, 2014, that he “instructed Mr. Bhangu not to file the motion confirmation form and not to appear on that date”, being June 4, 2015. His counsel did not attend the hearing before Emery J. on June 4. As for why Mr. Nagra instructed him not to attend, he states:

My counsel did not attend at the Leave to Appeal motion presumably, rightly or wrongly, believed that the leave to appeal and the appeal of Justice Daley’s final Order would be dealt with by the Court of Appeal at the same time.

Under these circumstances, it cannot be said that Mr. Nagra failed to attend through inadvertence.

[98] No one informed Mr. Verma or his counsel that Mr. Nagra would not be attending. On the contrary, Mr. Verma’s counsel was told that Mr. Nagra would be proceeding. Mr. Verma’s counsel tried to reach Mr. Nagra and was unsuccessful.

Appeal directly to the Court of Appeal

[99] As noted above, Barnes J.’s order dated September 9, 2013, was a final order, appealable directly to the Court of Appeal. It was within Emery J.’s discretion to traverse Mr. Nagra’s motion to the Court of Appeal for hearing. Had Mr. Nagra or his counsel attended for the hearing of the motion before him, he would likely have exercised his discretion not to traverse the motion.

[100] Emery J. did not dismiss Mr. Nagra’s motion on the ground that it sought leave to appeal to the Divisional Court when the appeal, being one from a final order, should have been made directly to the Court of Appeal.

[101] Section. 110(1) of the Courts of Justice Act gives the Divisional Court discretion to transfer an appeal to the Court of Appeal, if the appeal is properly within the jurisdiction of the Court of Appeal. The alternative is to dismiss the appeal for lack of jurisdiction.[^19] Factors to be considered in deciding whether to order a transfer are the following: does the appellant have a meritorious appeal (in the sense that it is arguable); will the respondent suffer undue prejudice because of further delay in having the appeal heard by the Court of Appeal; and did the appellant move expeditiously, once jurisdiction was disputed.[^20]

[102] Mr. Nagra does not meet the above mentioned criteria. Emery J. was correct in dismissing the motion, but not for the reasons he gave. The motion for leave to appeal should have been dismissed, not transferred.

Mr. Verma’s non-disclosure that Mr. Nagra had appealed to the Court of Appeal

[103] The motion that was before Emery J. was not an ex parte motion, meaning a motion made by Mr. Verma without notice to Mr. Nagra. Rather, it was a motion by Mr. Nagra, upon which he and his counsel failed to attend.

[104] The reasons set out above in relation to the exercise of the court’s discretion not to set aside the order of Daley J., on the ground of non-disclosure, apply equally to whether the order of Emery J. should be set aside on this ground.

CONCLUSION AND ORDER

[105] Based on the foregoing, it is ordered that:

1. The Respondents’ motion for an order setting aside the Order of Justice Daley dated March 20, 2014, is dismissed.

2. The Respondents’ motion for an order setting aside, amending, or varying the Order of Justice Emery dated June 4, 2014, is dismissed.

3. If the parties are unable to resolve the issue of costs, each of them shall submit written arguments, not exceeding three pages in length, plus a Costs Outline, by May 15, 2015.

Price J.

Released: April 28, 2015

CITATION: Verma v. Nagra, 2015 ONSC 2774

COURT FILE NO.: CV-11-1872-00

DATE: 20150428

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

SANJAY VERMA

Applicant

• and –

SUKHWINDERJIT NAGRA and BALWINDER NAGRA

Respondents

REASONS FOR ORDER

Price J.

Released: April 28, 2015

[^1]: Two-Tyme Recycling Inc. V. Ronald Woods et al, 2009 ON SC 64803, para. 44 [^2]: America v. Friedland, [1996] O.J. No. 4399 (Gen. Div.), para. 30-31 [^3]: Brink’s Mat Ltd. V. Elcombe and Others (1987), [1987] 3 All E.R. 1999 (Eng. C.A.), at 195 [^4]: Rules of Civil Procedure, RRO 1990, Reg. 194 [^5]: L’Unita Development Corp. v. 505369 Ontario Ltd. [2001] O.J. No. 3581, at para. 21. [^6]: tab 11: USA v Robert Friedland, at para. 27 [^7]: Ainsworth v. Bielberteth et al., 1947 122 (ON CA), [1947] O.R. 525 (Ont. C.A.) [^8]: Waldman v Thomson Reuters Canada Limited, 2015 ONCA 53 at para. 8 [^9]: Stoiantsis v Spirou, 2008 ONCA 553 at para 22 [^10]: Stoiantsis v Spirou, 2008 ONCA 553 at para 22; Ball v. Donais (1993), 13 O.R. (3d) 322, 1993 8613 (C.A.) at p.324 (O.R.) [^11]: Ashak v. Ontario (Director, Family Responsibility Office), 2013 ONCA 375, at para. 13. [^12]: Halsbury's Laws of England, 5th ed., vol. 11 (London: LexisNexis, 2008) Morden, John W., and Paul M. Perell, The Law of Civil Procedure in Ontario (Markham, Ont.: LexisNexis, 2010) [^13]: 424317 Ontario Ltd. v. Silber, 1989 4335 (ON SC), [1989] O.J. No. 1382, 70 O.R. (2d) 59 (Ont. H.C.J.); Denton v. Jones, 1976 624 (ON SC), [1976] O.J. No. 2221, 13 O.R. (2d) 419 (Ont. H.C.J.). [^14]: 385925 Ontario Ltd. v. American Life Insurance Co., 1985 2204 (ON SC), [1985] O.J. No. 2585, 51 O.R. (2d) 382 (Ont. H.C.J.). [^15]: Four Seasons Travel Ltd. v. Laker Airways Ltd., 1974 881 (ON SC), [1974] O.J. No. 2191, 6 O.R. (2d) 453 (Ont. Div. Ct.). [^16]: Ainsworth v. Bickersteth, 1947 122 (ON CA), [1947] O.J. No. 524, [1947] O.R. 525 (Ont. C.A.). [^17]: Delaney Boat Lines & Services Ltd. v. Barrie (City), 1976 709 (ON CA), [1976] O.J. No. 2405, 15 O.R. (2d) 675 (Ont. C.A.). [^18]: Four Embarcadero Center Venture v. Mr. Greenjeans Corp., (1988), 1988 4578 (ON CA), 65 O.R. (2d) 160, 27 C.P.C. (2d) 16 (Ont. C.A.). [^19]: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 110(1) [^20]: Dunnington v. 656956 Ontario Ltd. (1992), 9 O.R. (3d) 124, 1991 7107 (Div. Ct.)