COURT FILE NO.: CV-11-440637-00A1

DATE: 20190121

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: myNEXT CORPORATION, Plaintiff

AND:

PACIFIC MORTGAGE GROUP INC., PACIFIC NA FINANCIAL GROUP INC., myNEXT LENDING CORPORATION, MORTGAGE ARCHITECTS INC., myNEXT MORTGAGE COMPANY LIMITED and RADIUS FINANCIAL INC., Defendants

and RE:

PACIFIC MORTGAGE GROUP INC., Plaintiff by Counterclaim

AND:

myNEXT CORPORATION, JOHN VOGEL, NEWSHORE FINANCIAL SERVICES INC., BORIS KOGUT, GARY WEE and ROBERT ORD, Defendants by Counterclaim

AND:

MICHEL TRUDEAU, ROD WILMER, MACDONALD-CARTIER INVESTMENTS INC., SVEN HOLDINGS INC., WILLIAM K. LUBY, KENNTH O’BRIEN, RODERIC L. PRAT, LANCE UGGLA, MIDDLEMARCH PARTNERS LIMITED, MORESAND TRADING LIMITED, THE PRIESTLEY PITBLADO TRUST, Third Parties by Counterclaim

BEFORE: Darla A. Wilson J.

COUNSEL: Matthew Lerner, Counsel for the Plaintiff

Alex Haditaghi, in person, on behalf of the Defendant Pacific

Neil Paris, Counsel for the Defendants by Counterclaim Robert Ord

Bryan McLeese, Counsel for the Defendant by Counterclaim, Newshore financial, Boris Kogut, Gary Wee, as agent for Third Parties by counterclaim

Christopher Stanek, in attendance

HEARD: January 18, 2019

ENDORSEMENT

[1] This action is a claim on a promissory note in the sum of $600,000 plus interest, which was signed in March, 2010. The note was issued as part of the consideration in a deal for the purchase of limited partnership units sold by the Plaintiff (“myNext”) to Pacific Mortgage Group (“Pacific”). The Plaintiff alleges the Defendant refused to pay the note and consequently, it commenced this action in 2011.

[2] In response, Pacific launched a counterclaim alleging numerous undisclosed liabilities and misrepresentations made prior to the closing of the deal totalling $11 million. Alex Haditaghi (“Mr. Haditaghi”) is the principal of Pacific and the directing mind of the company. The counterclaim resulted in numerous other parties being added as defendants to the counterclaim.

[3] During the course of the litigation, Pacific admitted the promissory note was valid, but claimed a set off of the various liabilities such that nothing was owing on the note. The counterclaim alleges fraudulent and negligent misrepresentations against myNext and the other defendants to the counterclaim.

[4] The action was set down for trial in October, 2015 and on consent, a trial date was fixed for 3 weeks to commence on January 28, 2019. Today, Mr. Haditaghi requested an adjournment of the trial, which was strongly opposed by the Plaintiff and the various Defendants to the Counterclaim. Some background is necessary in order to place the adjournment request in context.

[5] I presided over the pretrial on October 10, 2017. It was not completed and, on consent, it was scheduled to continue November 27, 2017. At the pretrial, Pacific was represented by George Karayannides. On the continued pretrial, Mr, Haditaghi was not present and neither was Mr. Karayannides, although another counsel from his firm was in attendance. I dealt with certain trial management matters and confirmed the trial date of January 28, 2019.

[6] On December 7, Mr. Karayannides sent correspondence indicating it was necessary for him to bring a motion to remove himself as counsel of record. It was unclear whether that motion would be opposed by Mr. Haditaghi. I was asked, and I agreed, to convene a case conference to discuss this matter.

[7] On December 14 during the case conference, Mr. Haditaghi indicated he was not consenting to an order removing his counsel of record. Thus, a formal motion was filed and I heard submissions on December 20, 2018. On December 23, I released written reasons removing Mr. Karayannides as solicitor of record for Pacific and indicated if an adjournment was being sought, a motion should be brought on a proper record before me.

[8] My order was served on Mr. Haditaghi the day it was sent to counsel, December 23. Counsel requested a further case conference the first week of January. Since Mr. Haditaghi indicated he was not available, I scheduled the case conference for January 14. A solicitor, Robert Cohen from Cassels Brock, participated in the teleconference and indicated he had been contacted by Mr. Haditaghi to assume carriage of this matter.

[9] Mr. Lerner, counsel for the plaintiff, advised that Mr. Cohen had been involved in the underlying transaction and earlier in this litigation, in 2013, had acknowledged a conflict of interest and the fact that he could, accordingly, not act for Pacific. Mr. Cohen indicated he had no recollection of this, but, would discuss the point with Mr. Lerner. For the first time, Mr. Haditaghi stated that he would be requesting an adjournment of the trial date, which other counsel indicated would be opposed.

[10] On January 15, 2019, I received a letter from Christopher Stanek of the Gowling’s firm advising that he had been consulted by Mr. Haditaghi to assume carriage of the file. Mr. Stanek advised that he would be prepared to go on the record for Pacific if an adjournment of the trial date was obtained because he has other work commitments the week of January 28. I agreed to hear submissions on the adjournment request January 18. The Plaintiff filed a motion record which included the affidavit of Mr. Posen setting out the history of the action.

Positions of the Parties

Pacific

[11] Both Mr. Haditaghi and Mr. Stanek addressed the court. Mr. Stanek pointed out that the corporate defendant is currently unrepresented and Rule 15.04 allows 30 days for a corporation to appoint a new lawyer or obtain an order granting it leave to be represented by a person other than a lawyer, and that time period will not have expired when the trial is set to commence. He submitted that denying the adjournment request would have the effect of “punishing” Mr. Haditaghi. Mr. Stanek suggested that as the pre-trial judge, I ought not to hear the motion for the adjournment of the trial and he relied on Rules 50.09 and 50.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg 194, in support of his position.

[12] Mr. Haditaghi submitted that he did not have counsel, he tried to get a lawyer but the opposing counsel took the position his counsel of choice could not act due to a conflict of interest. He denied he was a sophisticated litigant with access to a variety of counsel. Simply put, he wishes Mr. Stanek to act for him but he needs an adjournment of the trial date in order for that to occur.

The Plaintiff and the Defendants to the Counterclaim

[13] Mr. Lerner spoke on behalf his own client and the other parties to the Counterclaim. He strongly objected to any adjournment of the trial. He noted that Mr. Haditaghi has known since December 7 that Mr. Karayannides intended on removing himself as his counsel. Mr. Haditaghi is a very experienced litigant and has numerous lawyers at his disposal, who could have been contacted more than a month ago about assuming carriage of this file.

[14] Mr. Lerner described Mr. Cohen’s potential involvement as a “stunt”; Mr. Cohen had previously attempted to get on the record in this action in 2013 and was unable to do so because of a conflict of interest. Mr. Lerner referred to his email of June 21, 2013, which confirmed this. For Mr. Haditaghi to suggest that Mr. Cohen would assume carriage of this case and do the trial was, simply, absurd.

[15] Mr. Lerner submitted that Rules 1.04(1) and 2.01(1) require judges to deal with matters in the most expeditious and least expensive manner to ensure the just determination of matters in dispute. In this case, the trial date has been fixed since 2017 and the validity of the promissory note has been admitted. The reality is that if an adjournment is granted, the case will not get tried until 2020.

[16] In the alternative, if the trial date of January 28 is adjourned, Mr. Lerner submitted it should be done so only on strict terms, one of which is that the sum of $800,000 should be paid into court by Pacific.

Analysis

[17] I will deal first with the submission of Mr. Stanek that it is inappropriate for me to deal with the adjournment request because I was the pretrial judge. This submission is devoid of merit in my view. Rules 50.09 and 50.10 relied on by Mr. Stanek deal with communications at the pre-trial and stipulate that the pre-trial judge shall not be the trial judge in the absence of consent from all parties. In dealing with the requested adjournment of the trial date, I am not sitting as the “trial judge”.

[18] Rule 50.07 is the applicable rule and it states that the pretrial judge may establish a timetable for further steps, order a case conference and “make any such order as the judge considers necessary or advisable with respect to the conduct of the proceeding.”

[19] In my view, it was preferable for me to deal with the motion for the removal of Pacific’s counsel, given the approaching trial date and my familiarity with the file. Similarly, it is preferable for me to deal with the adjournment request of Mr. Haditaghi instead of leaving it to the trial judge. Indeed, pre-trial judges are tasked with completing the trial management so that the trial can proceed as efficiently as possible.

[20] The Saskatchewan Court of Appeal case relied on by Mr. Stanek, Babich v. Babich, 2017 SKCA 48, has no application to the instant case. That case involved a recusal motion of a judge who had conducted the pretrial and then proceeded to hear a motion for custody and made an interim custody order. That is a very different situation than dealing with a request for an adjournment of a trial.

[21] Similarly, the Royal Bank of Canada v. Hussain, 2016 ONCA 637 involved a pretrial judge who presided over a Summary Judgment motion. The Court of Appeal determined that deciding a Summary Judgment motion was akin to deciding the merits of the action and so was prohibited in the absence of the consent of the parties. Dealing with an adjournment request is not deciding a substantive issue in an action; it is part of the powers conferred on a pretrial judge under rule 50.07 to deal with the conduct of the proceeding.

[22] I turn now to the issue of whether or not the trial ought to be adjourned. This action arises from a promissory note executed in 2010; the litigation was commenced in 2011 and the trial date was set in 2017. At the initial pretrial, all of the parties evinced a desire to have this matter adjudicated upon if it was not going to resolve.

[23] Whether an adjournment should be granted is clearly within my discretion, based on the entirety of the circumstances. I am mindful of the fact that in exercising this discretion, I must balance the interests of all of the parties, including the competing interests of the parties in advancing or delaying the progress of the litigation: Ariston Realty Corp. v. Elcarim Inc., 2007 CanLII 13360 (ON SC), [2007] O.J. No. 1497 (S.C.). In so doing, I must ensure that the just determination of the real matters in dispute will be achieved, in accordance with Rule 2.01(1)(a).

[24] At the present time, Pacific is without representation. Mr. Stanek has undertaken to become solicitor of record if the trial is adjourned. This trial will be about the counterclaim and the alleged misrepresentations and liabilities that were not disclosed at the time of the purchase of the business; the validity of the promissory note is not disputed.

[25] Mr. Haditaghi is no stranger to the judicial system; he is a sophisticated businessman and has been and continues to be involved in numerous pieces of litigation. That said, he is not a lawyer and it would be difficult for him to represent Pacific at the trial set for January 28. The motion by Mr. Karayaniddes to be removed from the record came late in the day, and by saying this, I am not being critical of Mr. Karayaniddes. He clearly could not continue to represent Pacific in the circumstances. I am mindful of the fact that the motion was argued right before the holiday season and during that period of time, it might have been difficult for Mr. Haditaghi to retain counsel.

[26] His choice of Mr. Cohen as his lawyer was ill-conceived, given the clear conflict of interest, which Mr. Cohen conceded back in 2013. Mr. Stanek has undertaken to go on the record for Pacific on the condition of the trial being adjourned. I appreciate that his schedule renders him unable to do the trial January 28, and as well, it would be difficult for him to prepare properly in a week’s time.

[27] It is with great reluctance that I have determined that the trial must be adjourned. In arriving at this conclusion, I am mindful of the comments of Chief Justice Strathy in Turbo Logistics Canada Inc. v. HSBC Bank Canada, 2016 ONCA 222 where he stated, “Last minute adjournments waste judicial resources and public funds. They affect public confidence in the administration of justice. They leave parties and witnesses disillusioned. They cost money to litigants who have prepared for trial in the expectation that a fixed trial date means just that.” To a large extent, it is Mr. Haditaghi who is responsible for the adjournment. It is his conduct that led to Mr. Karayaniddes to remove himself from the record; Mr. Haditaghi failed to act with dispatch when the order of removal was made; he chose a lawyer he must have known would be unable to act due to a conflict of interest, because this exact issue was raised earlier in the litigation and Mr. Cohen conceded it was inappropriate for him to act at that time so the situation would be no different now; and despite his familiarity with the legal system and his contact with numerous lawyers, Mr. Haditaghi was and is seemingly unable to find counsel who is able and prepared to do the trial January 28. I note the time between Mr. Karayannides’s removal from the record has been short, with the intervening holiday season.

[28] One fact that has weighed heavily in favour of granting the adjournment is the fact that this is the first trial date that has been fixed in this matter. There is no evidence that the Defendants to the counterclaim will suffer prejudice as a result of a brief adjournment.

[29] If the trial time is 3 weeks, the trial cannot take place until 2020. If it is a 2 week case, it can be heard September 23 or November 25, 2019. I am of the view that if managed properly, this trial, the bulk of which will be the counterclaim, can be tried in 2 weeks and thus I fix the new trial date for September 23, 2019 for a period of 2 weeks. If that date is not agreeable, counsel shall contact the trial co-ordinator by January 23, 2019 and secure the other available date, November 25, 2019. I will continue to manage the case to ensure it is ready for trial.

[30] This trial date is peremptory on the Defendant Pacific. Mr. Stanek is to serve and file a Notice of Change of Solicitors no later than January 25, 2019. The opposing counsel are entitled to their costs thrown away as a result of the adjournment and their costs of this motion. If the amount of the costs cannot be agreed on, I will receive brief written submissions of no more than 5 pages following which I will fix the costs. If the costs of the continued pretrial of November 27 which I ordered in my endorsement of January 2, 2019 have not been paid, they are to be paid by January 25, 2019.

[31] Mr. Lerner in his motion materials included evidence that monies were deposited into an escrow account following the sale of a one of Mr. Haditaghi’s businesses, and that this was done in order to satisfy the Plaintiff’s claim, depending on the outcome of the litigation. Given the circumstances, Pacific did not have an opportunity to address this issue. The Plaintiff is granted leave to bring a motion for payment in of a sum of money, pending the trial. This motion shall be brought on a proper record. The parties to the Counterclaim are granted leave to bring a motion for an order for security for costs, if they wish.

D. A. Wilson J.

Date: January 21, 2019