Court File and Parties
COURT FILE NO.: CV-08-357570-0000 DATE: 20160511 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
SWEDA FARMS LTD., BEST CHOICE EGGS LTD. and TILIA TRANSPORT INC. Plaintiffs (Appellants) – and – EGGS FARMS OF ONTARIO, HARRY PELISSERO, BURNBRAE FARMS LIMITED, BURNBRAE HOLDINGS INC., MAPLE LYNN FOODS LIMITED, L.H. GRAY & SONS LIMITED, WILLIAM HARDING GRAY, JOHN KLEI and THE ESTATE OF JOHANNES KLEI Defendants (Respondents)
Counsel: Varoujan Arman for the Plaintiffs (Appellants) Chloe Snider, for the Defendants (Respondents)
HEARD: May 9, 2016
Endorsement
1In 2014, the defendants Burnbrae Farms Limited, Burnbrae Holdings Inc. and Maple Lynn Foods Limited (collectively “the Burnbrae defendants”) brought a successful motion for summary judgment before Justice Corbett dismissing the plaintiffs’ claims against them, together with a costs award payable by the plaintiffs in the amount of $460,000.00 plus interest.
2Justice Corbett’s decision was upheld by the Court of Appeal for Ontario, and the Burnbrae defendants were awarded their costs of the appeal payable by the plaintiffs in the amount of $85,000.00 plus interest.
3In attempting to enforce the two said costs awards, the Burnbrae defendants conducted an examination in aid of execution of Svante Lind on behalf of the plaintiffs. Numerous questions were refused or taken under advisement. As a result, the Burnbrae defendants brought a motion returnable on March 2, 2016 seeking an order compelling the plaintiffs to answer those questions refused or taken under advisement.
4By endorsement released on March 21, 2016, Master Abrams granted the Burnbrae defendants’ motion and ordered the plaintiffs to answer those questions refused or taken under advisement at Lind’s examination.
5The plaintiffs now appeal Master Abrams’ order, and essentially raise two grounds of appeal:
a) Master Abrams erred in fact and in law by ordering the plaintiffs to answer questions relating to the property and business affairs of non-parties to this proceeding in the absence of evidence to support a connection between the plaintiffs and the property and business affairs of those non-parties; and
b) Master Abrams erred in law by failing to provide adequate reasons sufficient to enable the plaintiffs to know why the Burnbrae defendants’ motion was decided against them.
6A Master’s decision is entitled to a high degree of deference. As held in Zeitoun v. Economical Insurance Group, [2008] O.J. No. 1771 (Div. Ct.), for issues of fact or mixed fact and law, the standard of review is whether there is a palpable and overriding error.
7The purpose of Lind’s examination in aid of execution was to inform the Burnbrae defendants of the property or means that the plaintiffs have or may have to satisfy the outstanding cost orders. Pursuant to Rule 60.18(2) of the Rules of Civil Procedure, as creditors, the Burnbrae defendants may examine Lind in relation to the following:
a) the reason for non-payment or non-performance of the order;
b) the debtor’s income property;
c) the debts owed to and by the debtor;
d) the disposal the debtor made of any property either before or after the making of the order;
e) the debtor’s present, past and future means to satisfy the order;
f) whether the debtor intends to obey the order or has any reason for not doing so; and
g) any other matter pertinent to the enforcement of the order.
8The questions ordered answered by Master Abrams were grouped into four categories broadly described as follows:
- questions relating to income, disposal of property and other financial information of the plaintiffs;
- questions relating to the non-party Marhaban Trust;
- questions relating to the reason for non-payment by the plaintiffs; and
- questions relating to the time period and disclosure and production of documents.
9The thrust of the plaintiffs’ appeal related to questions relating to (i) the Marhaban Trust and (ii) an accounting of sale proceeds from the plaintiffs’ sale of quota (being over $14,000,000.00) as this sale took place during the life of this proceeding.
10The plaintiffs argued that there was insufficient evidence before Master Abrams to permit her to find the necessary link between the plaintiffs and the non-parties which include not only the Marhaban Trust but three other companies known as Tilia Holdings Inc (“THI”)., Verified Eggs Canada Inc. (“Verified”) and Canadian Egg & Poultry Enterprises Inc. (“Canadian Egg”).
11As held by Master Short in EnerWorks Inc. v. Glenbarra Energy Solutions Inc., 2012 ONSC 748, in assessing the presence of a connection between a debtor and a non-party’s property, the judgment creditor may satisfy that test by establishing such an interest through a documented, contractual or other right to an interest in the property. Put simply, on an examination in aid of execution, any proper question relating to the property of a non-party must be founded upon some connection between the judgment debtor and the subject property.
12In my view, there was sufficient evidence in the record before Master Abrams to come to her conclusion that the required connection was made. Master Abrams found a link between the financial circumstances of the plaintiffs and those of the Marhaban Trust.
13In support of their motion, the Burnbrae defendants tendered, inter alia, the unaudited financial statements of the plaintiff Sweda Farms Ltd. (“Sweda”) which listed the sum of $4,704,484.00 owing to “related parties”. At Lind’s examination in aid of execution, he gave sworn evidence that the “related parties” referred to the Marhaban Trust.
14Any such “related parties” notation in Sweda’s financial statements would not have been made by its accountants in the absence of evidence of either common ownership or a shareholding interest. Indeed, in Sweda’s income tax returns, Canadian Egg is listed as a subsidiary of Sweda while THI and Verified are listed as “associated companies”.
15The plaintiffs point to a financing commitment agreement dated December 15, 2010 between the Marhaban Trust as lender and Sweda and Canadian Egg as borrowers. Lind signed that agreement on behalf of all three companies, i.e. both sides of the same transaction. The plaintiffs argue that this document was evidence of a debtor/creditor relationship only. However, given the representations made by Sweda to Canada Revenue Agency in its income tax return and financial statements, I do not find Master Abrams to have made any palpable or overriding error in concluding the presence of the necessary link as required by the jurisprudence.
16With respect to the questions relating to the proceeds from Sweda’s sale of quota, Rule 60.18(d) and (e) permit the Burnbrae defendants to ask questions related to the disposition of Sweda’s property “either before or after” the making of the outstanding cost orders. Master Abrams was entitled to come to this decision and thus made no palpable and overriding error in this regard.
17Regarding the plaintiffs’ position that Master Abrams’ reasons were inadequate, insufficient or otherwise failed to enable appropriate appellate review, I do not agree. Master Abrams specifically stated, inter alia, “the reasons that the questions on which I heard argument are, in my view, proper and should be answered are the reasons set out by the Creditors in their chart.” Master Abrams relied upon and adopted the arguments put forward by the Burnbrae defendants, and she was entitled to do so in the exercise of her discretion. In any event, I find Master Abrams’ reasons to be sufficient as they respond to the substance of the matters in issue before her and provide insight into how she arrived at her conclusions.
18There is one minor matter to address. Even though I have dismissed the plaintiffs’ appeal for the reasons set out above, upon closer inspection of the specific questions ordered to be answered by Master Abrams, I find the scope of one question to be overly broad. Question 114 is to be slightly amended to delete the words “or any other company”, as the scope of that inquiry ought to be limited to relationships between the various companies identified in Master Abrams’ endorsement.
Costs
19At the conclusion of the hearing, counsel for the parties agreed that the successful party ought to be awarded its costs in the all-inclusive amount of $5,000.00. In accordance with that agreement, I hereby order the plaintiffs to pay the Burnbrae defendants their costs of this appeal in the all-inclusive amount of $5,000.00.
Diamond J.
Released: May 11, 2016