Court File and Parties

Citation: 2016 ONSC 3263 Court File No.: C-6337-01 Date: 2016-06-03 Ontario Superior Court of Justice

Between: George Armstrong Investments Inc. and 1239122 Ontario Inc. and William George Armstrong, Estate Trustee for the Estate of George Armstrong, deceased Plaintiffs – and – Transport Development Inc. Defendant – and – Vale Canada Limited Garnishee

Counsel: Anthony J. O’Brien, for the Plaintiffs No one appearing for the Defendant Rose Muscolino, for the Garnishee Leighton T. Roslyn, for the Interested Parties 1447311 Ontario Limited & 1499545 Ontario Limited

Heard: May 13, 2016

Decision on Motion

DEL FRATE, J.

[1] At the beginning of this hearing, and on consent, the parties agreed to the following amendments:

a. The notice of motion should reflect that it is the plaintiffs and not the defendant that will make a motion to the court.

b. Mr. Leighton T. Roslyn acts for the interested parties 1447311 Ontario Limited & 1499545 Ontario Limited.

[2] The plaintiffs seek the following:

a. an order directing that Vale Canada Limited answer questions 19 and 20 and a re-attendance if necessary to answers arising out of the undertakings and taken under advisement;

b. an order directing Vale Canada Limited, 1499545 Ontario Limited and 1447311 Ontario Limited to produce all contracts and assignment documents with 1447311 Ontario Limited and 1499545 Ontario Limited and production of those documents including alleged assignment documents, purchase orders, invoices and history of payments under the contracts with Vale Canada Limited in order to quantify and determine the amounts at stake at the garnishment hearing.

Background

[3] The defendant Transport Development Inc. (“TDI”) had been providing services to the garnishee Vale Canada Limited “Vale” or “Inco” as it was then known. The plaintiffs were shareholders of TDI.

[4] On November 8, 2001, the plaintiffs obtained a judgment against TDI for the total sum of $570,749.92 with interest at the rate of 6% yearly.

[5] In a separate action, Sudbury Truck & Trailer Centre Inc. obtained judgment against TDI for the sum of $53,950.08 and bearing interest at the rate of 12% yearly. This particular plaintiff is not reflected in this style of cause.

[6] On November 16, 2001, the plaintiffs served Vale with a notice of garnishment.

[7] On December 6, 2001, Vale replied to the notice of garnishment indicating that TDI was no longer on Vale’s vendor file.

[8] On September 21, 2012, a notice of renewal of garnishment was served on Vale by Doyle Salewsky, being the trustees in the bankruptcy proceedings, advising that its company had been named receiver of TDI.

[9] The notice of renewal of garnishment was dated July 17, 2012.

[10] Vale replied to the notice on October 3, 2012, and indicated that the last payment processed to TDI was in 2001 and that there had been no further activity since then and that there did not appear to be any outstanding contracts or invoices between Vale and TDI.

[11] On June 21, 2013, the plaintiff William Armstrong served a notice of examination requiring Vale to attend a garnishment hearing before a judge on July 9, 2013, at 2:00 p.m.

[12] The hearing was before me and it appeared that the documentation had not been served properly on Vale. Accordingly, the matter was adjourned to a date to be set.

[13] On January 6, 2014, the matter was rescheduled before me. Since the materials had not been served on Vale the matter was adjourned to the trial co-ordinator and an order of costs against Mr. Armstrong was made in the sum of $1,000.

[14] On March 20, 2014, the plaintiff William Armstrong served Vale for a hearing to be scheduled on March 28, 2014. Since I was not available, the matter was adjourned to June 27, 2014, at which time I ordered that Vale attend for examinations on July 16, 17 and 18, 2014. those examinations did not take place and the order was set aside on August 22, 2014.

[15] On November 26, 2015, the examination of Elizabeth Basso, a representative of Vale took place. At that examination there were certain refusals and answers taken under advisement thus prompting this motion. Of note are several transactions which require referencing.

[16] Commencing in May of 2000, the plaintiff William Armstrong, as a principal of TDI and Vale, had numerous discussions regarding a contract for the supply of transportation needs to Vale. These discussions culminated in the signing of an agreement dated January 25, 2001, between Vale and TDI.

[17] This agreement was then assigned to 1447311 Ontario Limited on January 29, 2001. The directors of that company are Glen Fuller and Randy Russell.

[18] Since the agreement included purchase order #A41278 it also was assigned from TDI to 1447311 Ontario Limited on January 29, 2001.

[19] On August 30, 2001, a new purchase order number 27008 was issued to 1447311 Ontario Limited o/a Transport Development to replace purchase order A41278. It now appears that this purchase order has been assigned to another company.

[20] The plaintiffs now wish details of when and to whom this assignment was made as well as the dealings that took place over the years between Vale and that particular company.

Position of the Parties

[21] The plaintiffs contend that particulars of the subsequent assignment are necessary to determine whether company 1447311 Ontario Limited undertook the assignment for the purpose of avoiding the effect of the garnishment proceedings. If that were the case, then the assignment would include the rights that had previously belonged to TDI. Those particulars are necessary to determine not only the extent of liability that the numbered companies may have, but also the quantum of work performed.

[22] Further, this information is necessary since the officers and directors of both numbered companies are Glen Fuller and Randy Russell, individuals with whom the plaintiff William Armstrong conducted business. Although the plaintiffs have particulars of the first assignment, they do not have any particulars of the subsequent assignment.

Position of the Interested Parties

[23] The interested parties submit that this motion is ill founded since pursuant to Rule 60.08(16) garnishment hearings deal with “debts” and not a “contract” which is what the original assignment dealt with.

[24] Second, they contend that the plaintiffs have failed to establish that TDI performed work for which Vale would have been indebted after the date of the judgment.

[25] Third, it would be inequitable to permit such relief in view of the length of time that has transpired, the costs of procuring such information and an abuse of process considering that the plaintiffs owe costs to the numbered companies.

[26] Fourth, disclosure of this information violates the companies’ privacy and would be prejudicial to them in their future dealings with Vale and its competitors.

Position of the Garnishee Vale

[27] Vale submits that it has provided whatever information has been requested that is permissible under the rules. Any further information will be provided if ordered by the court.

Discussion

[28] Rule 60.08(16) of the Rules of Civil Procedure states:

On motion by a creditor, debtor, garnishee, co-owner of the debt or any other interested person, the court may,

(a) where it is alleged that the debt of the garnishee to the debtor has been assigned or encumbered, order that assignee or encumbrancer to appear and state the nature and particulars of his or her claim;

(b) determine the rights and liabilities of the garnishee, the debtor, co-owner of the debt and any assignee or encumbrancer;

(c) vary or suspend periodic payments under a notice of garnishment; or

(d) determine any other matter in relation to a notice of garnishment, and the court may proceed in a summary manner, but where the motion is made to a master and raises a genuine issue of fact or of law, it shall be adjourned to be heard by a judge.

[29] This rule permits the type of relief that is being sought by the plaintiffs.

[30] I agree with the submission of the interested party that Rule 60.08(16) (a) mentions “debt” and makes no reference to the “contract” that was assigned.

[31] However, pursuant to subsection rule 60.08(16) (d) the court has jurisdiction to “determine any other matter in relation to a notice of garnishment”. The interpretation advanced by the interested parties is too restrictive. Contracts contain numerous factors such as consideration, performance. In my view, “any other matter” would include any “debt” that might have been assigned.

[32] The second assignment therefore is relevant to the determination of the “rights and liabilities of the garnishee, the debtor, co-owner of the debt, any assignee or encumbrancer”.

[33] Recently, the Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71 recognized that parties “generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily” and further ruled that parties must comply with a duty of “honest performance, which requires parties to be honest with each other in relation to the performance of their contractual obligations”, as stated in para. 33:

In my view, it is time to take two incremental steps in order to make the common law less unsettled and piecemeal, more coherent and more just. The first step is to acknowledge that good faith contractual performance is a general organizing principle of the common law of contract which underpins and informs the various rules in which the common law, in various situations and types of relationships, recognizes obligations of good faith contractual performance. The second is to recognize, as a further manifestation of this organizing principle of good faith, that there is a common law duty which applies to all contracts to act honestly in the performance of contractual obligations.

[34] Para. 3 of the assignment dated January 29, 2001, states:

Each party hereto shall execute and deliver such further instruments, contracts, forms and other documents, and shall perform such further acts, as may be necessary or desirable, to carry out, complete and perform all terms, covenants and obligations herein contained and each agrees to bargain in good faith towards the entering into of any such further instruments, contracts, forms or other documents.

[35] This in my view is a clear expectation that there would be future dealings between the parties “in good faith”. Accordingly, the subsequent assignment falls into this category and particulars of that assignment are quite relevant to the parties.

[36] Even though the assignment of the contract and of the purchase order was performed in January of 2001, it is abundantly clear that Vale had reason to believe that William Armstrong had continued involvement in the purchase order and contract since it copied William Armstrong and TDI in the following correspondence: February 10, 2001, June 13, 2001, September 24, 2001, September 25, 2001, and also the letter from Mr. Armstrong to 1311913 Ontario Inc. dated April 2, 2001. This is another indication of the involvement of the plaintiff William Armstrong in the numbered companies as contemplated in para. 3 of the assignment.

[37] I agree that the disclosure of the information may have a detrimental impact if it becomes public. Such disclosure however, will be subject to a sealing order and with the proviso that these documents are to be relied upon for these proceedings and not for anything else.

[38] But prior to my making that order, the input of counsel is necessary and if counsel cannot agree then a re-attendance will be necessary.

[39] Depending on what these documents disclose the court may, on a properly focused disclosure request, grant the right to further disclosure.

[40] At this stage, I am reserving the issue of costs.

[41] Order to issue as per reasons.

The Honourable Mr. Robert G.S. Del Frate

Released: June 3, 2016