Court File and Parties

COURT FILE NO.: CV-15-2110-00 DATE: 2016 05 27 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: TRADE CAPITAL FINANCE CORP. Plaintiff

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PETER COOK also known as PETER WILLIAM COOK, MARC D’AOUST also known as JEAN MARC D’AOUST, THOMAS BARKER also known as THOMAS RICHARD BARKER (personally and carrying on business as LC EXCHANGE, GLOBAL MEDICAL and GREENLINK CANADA GROUP), ROCKY RACCA, BRUNO DIDIOMEDE also known as BRUNO DIAIOMEDE, ALAN KEERY also known as ALAN JOHN KEERY, CHRIS BENNETT JR. also known as CHRIS BENNETT also known as CHRISTOPHER BENNETT (personally and carrying on business as CJR CONSULTING), TODD CADENHEAD, DAYAWANSA WICKRAMASINGHE, BONNY LOKUGE also known as DON BONNY LOKUGE, VIRTUCALL INC., VIRTUCALL INTERNATIONAL LLC, DEBT RESOLVE-MORTGAGE FUNDING SOLUTIONS INC. carrying on business as DEBTRESOLVE INC., THE CASH HOUSE INC., 1160376 ONTARIO LIMITED operating as THE CASH HOUSE, 2242116 ONTARIO INC. carrying on business as SUPERIOR MEDICAL SERVICES INC. and SUPERIOR MEDICAL SERVICES, CARLO MR. DE MARIA also known as CARLO VINCE DE MARIA also known as CARLO VINCENT MR. DE MARIA also known as CARLO VINCENZO MR. DE MARIA, MATTEO PENNACCHIO, FRANK ZITO also known as FRANCESCO ZITO, SIMONE SLADKOWSKI, JOBEC TRADE FINANCE INC., 1461350 ONTARIO INC., 2299430 ONTARIO INC., WF CANADA LTD., JOBEC INVESTMENTS RT LTD., GREEN LINK CANADA INC., 2339989 ONTARIO INC., 2252364 ONTARIO INC., 2224754 ONTARIO LTD., 6980023 CANADA INC. operating as LIVING BENEFITS and MILLWALK ENTERPRISES INC.

Defendants

BEFORE: EMERY J.

COUNSEL: Peter W. G. Carey and Christopher R. Lee, for the Plaintiff Andrew Parley and Laura Robinson, for the Defendant, The Cash House Inc. (Cash House), and non-parties, Osman Khan (Khan), and 2454904 Ontario Inc. (245) Kris Borg-Olivier, for the Defendants De Maria and 1160376 Ontario Limited, and the non-party Red Quest Holdings Inc.

HEARD: May 20, 2016

Endorsement

[1] Two non-parties, 2454904 Ontario Inc. (“245”) and Red Quest Holdings Inc. (“Red Quest”) bring a motion to vary the interim order in the nature of a Mareva injunction made by this court on March 24, 2016 as it applies to them. 245 was a “Mareva Respondent” bound by that order; Red Quest was not.

[2] 245 and Red Quest bring this motion to vary for an order to allow the sale of the shares in The Cash House Inc. from 245 to Red Quest. Those parties have apparently agreed to this share sale for 245 to sell back the same shares that Red Quest sold to 245 in March 2015. The re-sale of shares by 245 to Red Quest cannot proceed unless the Mareva order is varied to the extent requested.

[3] Counsel for the plaintiff cross-examined Mr. De Maria on the affidavit he filed in support of the motion to vary. Mr. De Maria describes himself in the affidavit as a defendant in the action and also as a director and part owner of the defendant 1160376 Ontario Limited as well as “the former owner” of the defendant The Cash House Inc.

[4] Several undertakings and a number of refusals were given to questions asked at Mr. De Maria’s cross-examination. The plaintiff seeks an adjournment of the motion to vary in order to bring a motion on outstanding undertakings and refusals given at the cross-examination. The plaintiff states that the answers Mr. De Maria has yet to give are relevant to the motion to vary, as well as to the action itself.

[5] I heard argument on the request to adjourn the motion to vary on May 20, 2016 for over half of the one day set aside to hear the motion to vary. I reserved my decision on the request to adjourn, in part to consider the extensive submissions made by counsel, and in part so that any ruling I was asked to make did not interfere with a hearing scheduled before Justice MacKenzie on May 24, 2016 with respect to a contempt proceeding against various non-parties. Those non-parties, including Mr. Khan and 245, are bound by an earlier order in the nature of a Mareva injunction made by Justice Ricchetti in May 2015.

[6] For the following reasons, I grant the adjournment, on terms.

Principles

[7] The adjournment is granted upon my consideration of the principles set out in Khimji v. Dhanani, [2004] O.J. 320 (Ont.C.A.) and Ariston Realty Corp. v. Elcarim Inc., [2007] O.J. 1497 (SCJ). In Khimji, Justice Laskin wrote about the wide ranging discretion of the court, in that case of a trial judge, to decide whether the adjournment of a scheduled civil trial should be granted or refused. That discretion, however, should be exercised judiciously, and take into account relevant considerations when exercising the discretion to grant or refuse an adjournment. These considerations include the history of the action, and in that case included questions particular to the scheduling of that action for trial.

[8] Justice Laskin then set out other considerations of general application that the court should take into account:

1. The Overall Objective of Civil Proceedings: A Just Determination of the Real Matters in Dispute
2. Prejudice Caused by Refusing or Granting an Adjournment
3. A Party’s Ability to Pay Costs Previously Ordered
4. A Party’s Explanation for Not Being Ready for Trial
5. The Length of the Adjournment Requested and Disruption to the Court’s Trial Schedule.

[9] In Ariston Realty Corp., Justice Perell expanded on those considerations. Justice Perell recognized that the Court of Appeal had considered several cases where one of the grounds of appeal concerned whether the trial judge in a civil proceeding had erred in refusing to grant an adjournment. The Khimji decision was among those considered by Justice Perell.

[10] From a review of those cases, Justice Perell confirmed that the granting or the refusing of an adjournment is a discretionary decision. He then set out several relevant factors for a judge to consider when judiciously exercising the discretion to grant or refuse an adjournment. Those factors depend on the circumstances of each case, and include:

▪ the overall objective of a determination of the matter on its substantive merits; ▪ the principles of natural justice; ▪ that justice not only be done but appear to be done; ▪ the particular circumstances of the request for an adjournment and the reasons and justification for the request; ▪ the practical effect or consequences of an adjournment on both substantive and procedural justice; ▪ the competing interests of the parties in advancing or delaying the progress of the litigation; ▪ the prejudice not compensable in costs, if any, suffered by a party by the granting or the refusing of the adjournment; ▪ whether the ability of the party requesting the adjournment to fully and adequately prosecute or defend the proceeding would be significantly compromised if the adjournment were refused; ▪ the need of the administration of justice to orderly process civil proceedings; and ▪ the need of the administration of justice to effectively enforce court orders.

[11] Justice Perell summed up his view that, having regard to the principles of natural justice and the appearance that justice shall be done, “Courts should tend to be generous rather than overly strict in granting indulgences, particularly where the request would promote a decision on the merits.”

Application to the Case

[12] Mr. Parley, counsel for 245, wrote a letter to Mr. Carey, counsel for the plaintiff dated January 29, 2016 to give notice of the proposed transaction, and to ask if the plaintiff intended to oppose the sale of shares back to Red Quest. Mr. Carey later advised Mr. Parley that, just as he had noted in prior correspondence that the original purchase was highly suspicious, the “attempted reversal” of the share sale is also “highly suspicious”. Mr. Parley argues that Mr. Carey’s failure to articulate the nature of his objection to the proposed transaction is an impediment to oppose the motion to vary.

[13] Mr. De Maria served an affidavit in January 2016 in answer to the sanction hearing conducted by Justice Mackenzie on the plaintiff’s motion for contempt. I understand that the plaintiff cross-examined Mr. De Maria on that affidavit. I further understand that Mr. De Maria served the same affidavit in support of the motion to vary on April 29, 2016. It is this affidavit on which the plaintiff has again cross-examined him that gives rise to the undertakings and refusals at issue.

[14] In my view, although the same affidavit has been served before, the affidavit was served on a different motion, and for a different purpose. The plaintiff may be conducting its cross examination with a different focus. The plaintiff is therefore entitled to test the evidence having regard to the context in which it has been served again.

[15] Mr. Khan and 245 served a supplementary motion record, along with a factum on the motion to vary, on May 12, 2016. Therefore, the evidentiary record on which the plaintiff could exercise its right to cross-examine was not complete until that date. Owing to the schedules of counsel, it was not possible for Mr. Carey to cross-examine Mr. De Maria until May 17, 2016. That was the cross-examination that gave rise to the undertakings and refusals for which the plaintiff proposes to bring the motion to compel answers. It would be difficult to reach any conclusion under the circumstances other than that the plaintiff has exercised its right with reasonable diligence to cross-examine on the affidavit served in support of the motion to vary.

Overall Objective and the Pursuit of Justice

[16] The overall objective of the motion to vary is something I am to take in consideration on an adjournment request. The objective is to permit the sale of shares in The Cash House Inc. from 245 back to Red Quest. The Plaintiff has cast a suspicious eye on this proposed transaction. I do not agree that it is essential for Mr. Carey to articulate the grounds for objecting to the proposed transaction, or to oppose the motion to vary at this time. It may well be that he will not be in a position to form his precise objection to the proposed transaction as a basis for opposing the motion to vary until he has all of the information available to him through the evidence collecting process under Rule 39.02. The request for adjournment was not the argument of the motion to vary. Now is not the time to address the issues on that motion.

[17] Similarly, the request for adjournment was not the argument of the motion to compel answers to undertakings and refusals. The moving parties argue that none of the undertakings or the refusals relate to the plaintiffs grounds for opposing the motion to vary. They argue that the answers to the undertakings and refusals may be relevant to the action, but those questions are better left for examinations for discovery.

[18] The plaintiff states that it requires the information behind the undertakings and refusals to answer to the following questions:

1. who owns, or is the beneficial owner of the shares in Red Quest Holdings Ltd., and
2. what is the true value of the shares in The Cash House Inc.

[19] The moving parties have arguments to contest these questions and their relevance to the motion to vary. Those questions and their relevance are better addressed on the motion to obtain answers to undertakings and refusals.

[20] I do not know to what use the plaintiffs will put the answers they might obtain from any undertakings or refusals the court orders Mr. De Maria to answer. Now is not the time to require the plaintiffs to provide the basis of those questions or their relevance to the motion to vary. The motion for undertakings and refusals is the time to make that argument. I would prefer to take a generous approach to granting the adjournment consistent with the principles in Ariston Realty Corp. to reflect the principles of natural justice and to protect the important purpose that justice must not only be done, but should appear to be done.

Prejudice

[21] Counsel for the moving parties could not provide me with any real or apparent prejudice that either of the moving parties may suffer if this adjournment is granted. The incidents of prejudice that were given generally included a further delay that will be caused to each of the moving parties, and specifically the difficulties an adjournment might cause Mr. Khan in this litigation if he remains a shareholder of 245 as owner of the shares in The Cash House Inc.

[22] I do not consider either of those submissions to amount to prejudice that cannot be compensable in costs. The delay can be addressed in the ability of either party to the motion to vary to ask me as the judge appointed under Rule 37.15 to hear all motions in this action to schedule the motion for undertakings and refusals as soon as practically possible. Any party to the motion may also ask me to reschedule the hearing date for the motion to vary now, or on a date mutually convenient to counsel in the near future. Any sanction on Mr. Khan and 245 for contempt has already been ordered by Justice Mackenzie.

Interests of Justice

[23] The plaintiff requesting the adjournment has the right to require answers to undertakings and refusals given to questions asked of Mr. De Maria at his cross examination to adequately oppose the motion to vary. The ability of the plaintiff to argue the motion to vary would be significantly compromised if the adjournment was refused. The answers that Mr. De Maria might be ordered to give, as answers on a cross examination, may also be helpful to the moving parties in their submissions on the motion to vary.

[24] I have weighed the competing interests of the plaintiff which seeks to exercise its rights under the Rules of Civil Procedure to collect evidence, against the interests of the moving parties who seek to proceed expeditiously with the motion to vary. I find on balance that the interests of justice for the orderly conduct of this civil action, including the motion to vary, requires that the plaintiff be given the adjournment to move for answers to Mr. De Maria’s undertakings and refusals.

Terms

[25] The terms of this adjournment are as follows:

1. the plaintiff shall serve its motion on undertakings and refusals by June 3, 2016;
2. the moving parties shall serve any motion materials in response by June 10, 2016;
3. the plaintiff shall serve reply material, if any, by June 13, 2016;
4. the plaintiff’s motion on undertakings and refusals shall be heard by me for a maximum of 2 hours at 10 o’clock on Monday morning, June 20, 2016;
5. if counsel are not available on June 20, 2016, counsel may request a conference call with me to schedule another day or such other time to hear the undertakings and refusals motion;
6. A new date for the motion to vary can be scheduled on the date the motion for undertakings and refusals is heard.

[26] The costs of the adjournment are reserved until the disposition of the motion about undertakings and refusals. I will then be in a better position to determine if the questions were relevant to the motion to vary, and whether the adjournment was warranted after all.

Emery J. Date: May 27, 2016