Court File: 86-CQ-016635
MOTION HEARD: 20190605
REASONS RELEASED: 20191108
SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN:
KARL HERMANNS, REGINA HERMANNS, FRANK HERMANNS, JORG HERMANNS BY HIS LITIGATION GUARDIAN, REGINA HERMANS, HANOVERIAN FARMS U.S. INC, AND BARCREST FARMS OF AMERICA INC.
Plaintiffs
and -
JOHN DWIGHT INGLE, NORTH CANADIAN INSCO GROUP LTD. AND LANDO KREIGER GOLDBERG INC., TRUSTEE OF THE ESTATE OF BARCREST FARMS INC.
Defendants
BEFORE: MASTER D. E. SHORT
COUNSEL: John Philpott/Lorne Honickman F (416) 362-8410
- for moving plaintiffs/ judgment
creditors lhonickman@btlegal.ca
John Ingle johningle44@gmail.com
- responding party in person
RELEASED: November 8, 2019
Reasons for Decision
There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat…
I. Overview
[1] Brutus delivers the above observations to Cassius in Act 4, of Shakespeare’s Julius Caesar.
[2] On this motion, counsel for, Karl Hermanns the main plaintiff (and other plaintiffs) moves, in 2019, to enforce a judgment obtained over twenty years ago, in an action commenced in 1986.
[3] The failure to take all appropriate steps, on a timely basis, to enforce the judgment delivered over two decades ago in my mind has come to “miseries” which largely ought to be beached and ended.
[4] Black’s Law Dictionary notes that the term laches comes from the French for “remissness; slackness”.
[5] Here, the Court’s Case History Report documents that the trial record in this case was filed in December of 1991. Well before the turn of the millennium, this matter was consolidated with a 1987 action and ordered tried together with a 1988 matter. Apparently, the trial records were sent to the Trial Office on May 30, 1994 (i.e. over a quarter century ago).
[6] That Case History reflects a Judgment being rendered on October 29, 1997 by Justice Hawkins.
[7] Following an Appeal (and a lengthy 1998-99 Reference to Master Linton), writs of seizure and sale were issued in 2002.
[8] In March of 2007 a notice of change of solicitors was filed by the plaintiff Karl Hermanns.
[9] Other than an ex parte renewal of a number of Writs of Execution no activity is reflected in the case history between January of 2002 and March of 2011, when my then colleague, Master Dash, dealt with a refusals motion which would seem to relate to a Judgment Debtor examination of the defendant John Ingle.
[10] There are no entries on the Case History between the filing of Master Dash’s Order on April 5, 2011 and the filing on October 17, 2018 of a Notice of Change of Solicitors again for new counsel acting on behalf of the Plaintiff Karl Hermanns.
II. Motion
[11] This motion was brought in 2019 seeking further information from the judgment debtor John Ingle who is now 75 years of age and asserts that he continues to be insolvent for all practical purposes. As well examinations of third parties are sought with respect to tracing the flow of any possible assets.
[12] In that regard, present Counsel for the Plaintiffs now seeks various items of relief including in part:
(a) A declaration that the judgment debtor, John Dwight Ingle ("Ingle"), has not complied with the Order of Master Short, dated February 12, 2019, to provide an accounting of the proceeds of the Wilkinson Farm for $2,700,000 and other proceeds received as particularized in Schedule B, Refusal 1 to the Order of Master Short,
(b) A further Order for Ingle to account for the proceeds of the Wilkinson Farm for $2,700,000 and other proceeds received, as particularized in Schedule B, Refusal 1 to the Order of Master Short, including with bank statements, financial records, and the particulars (names, addresses, and phone numbers) of which individuals, entitles, and financial instructions held the proceeds;
(c) A further Order for Ingle to account for the proceeds of:
(i) The sale of the horse Empire for $78,000;
(ii) The sale of the horse Granduell for $45,000;
(iii) The sale of the horse Reipo valued at $311,516;
(iv) The insurance proceeds related to the horse Goldi for $15,000
(v) The proceeds from the sale of Goldika;
(vi) The receiver fees received by Ingle.
(d) Leave to examine Melanie Ingle and Tamara Ann Ingle, the beneficiaries of the trust that previously owned by the Wilkinson Farm;
(e) Leave to examine John Christie and Gayle Christie, who previously operated companies on behalf of Ingle that owned the Wilkinson Farm;
(f) Leave to examine Janja Ingle to determine what assets she has received from the proceeds of the Wilkinson Farm, other proceeds related to his matter, or any assets from John Ingle;
(g) An Order that Ingle re-attend at his own expense to answer the outstanding undertakings and refusals as set out in Schedules "A" and "B" and any questions stemming from answers provided or any question appropriate for a judgment debtor examination; [my emphasis]
[13] I find a motion seeking an accounting 20 years after the fact, in a case where there was an inordinately long accounting with respect to this issues conducted by a Master of this court somewhat troubling. That report was delivered in May of 2000. However, given the very substantial amounts involved it has been necessary to consider a number of elements in coming to my decision in this matter.
III. Proportionality
[14] In their notes to Ontario Superior Court Practice Justice Archibald and Master Sugunasiri consider the applicable authorities with respect to the addition of Proportionality to the Rules in 2010 and observe in their 2019 edition [with my emphasis throughout]:
Proportionality: Ensuring access to justice is the greatest challenge to the rule of law in Canada today. Trials have become increasingly expensive and protracted. Most Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot afford to go to trial. Without an effective and accessible means of enforcing rights, the rule of law is threatened. Without public adjudication of civil cases, the development of the common law is stunted. Increasingly, there is recognition that a culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system. This shift entails simplifying pre-trial procedures and moving the emphasis away from the conventional trial in favour of proportional procedures tailored to the needs of the particular case. The balance between procedure and access struck by the justice system must come to reflect modern reality and recognize that new models of adjudication can be fair and just. Even where, proportionality is not specifically codified, applying rules of court that involve discretion includes an underlying principle of proportionality which means taking account of the appropriateness of the procedure, its cost and impact on the litigation, and its timeliness, given the nature and complexity of the litigation. This culture shift requires judges to actively manage the legal process in line with the principle of proportionality.
[see Hryniak v. Mauldin 2014 SCC 7]
The recognition of proportionality in the Rules may be characterized as a "cultural revolution" in the realm of civil litigation. Proportionality signals that the old ways of litigating must give way to new ways which better achieve the general principle of securing the “just, most expeditious and least expensive determination of every proceeding on its merits”. …
The principle of procedural proportionality requires taking account of the appropriateness of the procedure as a whole, as well as its individual component parts, their cost, timeliness and impact on the litigation given the nature and complexity of the litigation.
[15] In my capacity as a Registrar in Bankruptcy I have encountered several insolvent individuals who have lost everything by “betting the farm” on what originally seemed to be a prudent investment which turned out to be worthless.
[16] We do not place such individuals in a debtors’ prison, nor do we require that they remain in bankruptcy until every last dollar has been repaid to all creditors.
[17] Rather an effort is often made to identify and liquidate any remaining assets, distribute those proceeds amongst the creditors and a new beginning is made possible for the debtor.
[18] Here the defendant apparently has no meaningful assets, but has chosen not to take an escape by way of a personal bankruptcy. As a result, he continues to be pursued for payment, 33 years after this 1986 matter was commenced.
[19] More importantly for my purposes, the current counsel for the Plaintiffs seeks to examine a number of individuals related in some way with Mr Ingle. That list includes his spouse whom, I believe, was never, up to now brought into any related litigation, as a party.
[20] Before dealing with the present issues I need to set out the briefest of summaries as to how we got here.
IV. Trial of 1997
[21] Almost 22 years ago, to the day, on October 29, 1997, Mr. Justice Hawkins delivered his judgment in this matter which have been tried over a three-month period in Toronto. At the outset of his reasons Justice Hawkins provided these helpful capsulizations of the situation in the 1980’s:
The Parties:
6 Karl and Regina Hermanns are spouses. Their sons Frank, Jorg and Gerd are approximately 33, 30 and 27 respectively.
7 John Dwight Ingle is a self-employed entrepreneur. He testified that he is an industrial engineer with an M.B.A. and Master of Engineering degree and previous experience as a receiver and manager.
The History:
9 The Hermanns were breeders, trainers and traders of horses, primarily Hannoverian "warm bloods" which performed in jumping and dressage events. The Hermanns are of German origin and practised their calling in Germany until 1980 when they emigrated to Canada bringing with them a herd of about 80 horses, approximately $3,000,000 in cash together with furniture and effects. I do not recall if any explanation was given as to why an affluent and seemingly-successful business couple would wish to leave their native land, but leave it they did.
10 On arrival in Canada they incorporated Barcrest Farms Inc. ("BFI") and through it purchased the Barcrest Farm property on 30 September, 1980 for $1,000,000 paying $700,000 cash and assuming a first mortgage with an outstanding $300,000 balance.
11 That same month, again through BFI, the Hermanns purchased a property known as the “Wilkinson Farm” for $350,000 cash.
12 In 1982 the Hermans bought a hotel in North Bay for about $1,000.000 and lost the investment entirely within two years.
13 Endeavouring to recover from the million dollar loss on the hotel and their cash flow problems, the Hermanns caused BFI to mortgage Barcrest Farms to the Bank of Montreal for $600,000 in April 1983 and, contemporaneously, caused BFI to grant a floating charge debenture to the Bank of Montreal in the nomimal sum of$1,000.000.
14 A year later, BFI mortgaged the Wilkinson Farm to Charles Orenstein for $300,000 in February 1984 and in March 1984 mortgaged Barcrest Farm to Norman Stoneburg for $100,000.
15 These additional borrowings did not solve their cash flow problems. By the Fall of 1985 the Hermanns’ financial difficulties were reaching crisis proportions. Unsecured trade creditors of approximately $200,000 were pressing for payment and the mortgagees of the two properties were taking enforcement proceedings.
16 An execution creditor had caused the Sheriff of Halton to effect a seizure.”
[22] Apparently, at this point the Hermanns went in search of additional professional assistance. The decision of the trial judge, with my emphasis added, continues:
The Hermanns consulted E.A. DuVernet, Q.C. who introduced them to a client of his, the defendant Ingle. Acting on the advice of Du Vernet and Boris Freesman, Q.C., BFI made an assignment in bankruptcy on 15 January 1986. I pause here to state that I reject categorically the protestations of the Hermanns that they were unaware of the relationship between Ingle and DuVernet, i.e. that Ingle was a client of DuVernet and that DuVernet was an officer of Ingle's companies. I also reject the Hermanns' protestations that they were forced to sign various documents, acknowledgements, guarantees, etc. The Hermanns had brought themselves to the brink of financial ruin on their own. It was their financial desperation that made them sign the documents.
Ingle caused Insco to purchase the Bank of Montreal's cause of action against BFI and the Hermanns for $230,000 representing payment of 100¢ on the dollar. I was quite astonished that anyone would purchase a receivable, especially a questionable one for 100¢ on the dollar, and I asked Ingle about that in the following exchange.
Transcript of the evidence of Ingle in chief, p. 296:
The court: You paid a hundred cents on the dollar for an account receivable or by ... Witness: Yes.
The court: Why?
Witness: Well, I thought I would get 25% interest and my receiver's fees and it looked like I had coverage. And it seemed like a good idea at the time, Your Honour.
[23] Clearly it wasn’t. Ultimately, at the end of those reasons, substantial potential liability was ascribed to the receiver, who the trial judge assessed as clearly working “out of his depth”.
[24] Following a detailed analysis of a number of elements of the plaintiffs’ claims Justice Hawkins made these observations:
Conduct of the Receiver:
111 Ingle has displayed a total lack of comprehension of his duties as a receiver. Instead of proceeding with dispatch to collect the debt of $230,000 which BFI owed the Bank of Montreal and which he had bought through his company Insco, he has proceeded in a manner consistent with his avowed object of maximizing advances on which he intended to charge 25% per annum interest and maximizing receiver's fees which he intended to charge and did charge at $10,000 per month. His demeanour throughout the trial was one of insouciant indifference, as though he failed utterly to grasp the gravity of the situation. He has no time dockets to support his' charges for receiver fees.
113 I have already commented throughout these reasons as to the appalling state of record keeping. In my view, the only appropriate way to register the court's disapproval of his conduct is to deprive him of any receiver's fees whatsoever and I so order. There will also be disallowed in the accounting all remuneration paid to Melanie Ingle.
[25] Given those findings it seems a somewhat quixotic quest for the plaintiffs to expect better records more than years later.
[26] This to this observer, it appears that the lack of reliable data at trial lead the trial judge to conclude his decision with this direction:
Reference:
114 Ingle is to be given one final opportunity to prepare and pass proper accounts of his stewardship. They will, therefore, be a reference to a Master at Toronto to take the accounts of John Dwight Ingle as receiver and manager of BFI, such accounts to be in such form as the Master may direct. In the taking of the accounts, the plaintiffs are to be credited with the following sums:
Re sale of Wilkinson Farm $ 149,000
Re Wilkinson Farm furniture theft $ 233,900
Re Empire $ 103,177
Re Wendland $ 100,000
Re Reipo $ 311,516
Re Goldi $15,000
Re Goldika $ 5,000
Re Household effects $ 134,195
Total $1,051,788
[27] To demonstrate how far back in time, we are addressing, I note the interest rate awarded by the Court at that time, on any sums found owing to the receiver:
“The interest rate on proper disbursements and advances is to be 13.5 %”
[28] The matter was then referred to the Master of the court at Toronto “for the purpose of taking of the accounts of John Dwight Ingle and Canadian North Canadian Insco Group Ltd. in the Receivership of Barcrest Farms Inc.”
V. The Reference
[29] As a result, my colleague Master Linton undertook a complex reference which lead to this Order:
IN ACCORDANCE WITH the Judgment of Mr. Justice Hawkins dated October 29, 1997, this reference for an accounting between the plaintiffs and the defendants, John Dwight Ingle and North Canadian Insco., was heard on July 15, 19, 20, 21, 22, 26, 27, 28, August 16, 17, 18, 19, 23, 31, September 15, November 10, 29, 1999, and November 27 and December 14, 2000, at 393 University Avenue, Toronto, Ontario.
ON READING the evidence filed by the parties, and their written submissions and upon hearing the evidence and submissions for counsel for the parties, and John Ingle, occasionally appearing in person, and upon entry of this report:
THIS COURT DECLARES THAT the accounting attached as Schedule "A" to this report is an accurate and true Accounting between the plaintiffs and the defendant, John Dwight Ingle and North Canadian Insco;
THIS COURT ORDERS THAT there be a Judgment in favour of the plaintiffs in the amount of $7,970,869.81 against the defendants;
THIS COURT FURTHER ORDERS THAT post-judgment interest accrue at the rate of 5% per annum; and
- THIS COURT RECOMMENDS that costs of the reference be payable to the plaintiffs on a solicitor and client basis in the amount of $75,816.04. [my emphasis]
[30] Prior to releasing this Report, Master Linton, following the numerous days of hearings, issued a 172 paragraph document, styled “Interim Reasons”. Those reasons commence with these observations:
This case has to be one of the clearest illustrations of the catastrophic and tragic consequences that can occur when a person consents to be appointed a receiver manager when not qualified to be one.
Likewise, there could be no clearer illustration of the tragic and catastrophic consequences that can occur when a person attempts to be his own lawyer in a cases such as these. Most lawyers other than those who have had several years of experience in commercial litigation (especially insolvency) would shy away from these.
3 . The trial before Mr. Justice Hawkins, a very cases such as able and experienced judge, went on for eight weeks, and, even then, after the evidence was completed, he felt that even more evidence was required from the receiver manager to satisfy the Court as to the proper state of the account between the Plaintiffs and the Defendants Insco and Ingle, and so he ordered a reference to complete the accounting.
However, notwithstanding his order of reference, the learned trial judge made some specific findings as to the state of account which clearly showed that Insco and Ingle were in serious trouble.
Firstly, the trial judge made a finding "that no Receiver fees are to be allowed as an expense of the Defendants in the receivership."
Secondly, a finding was. made that the Plaintiffs should be-credited with $1,051,788.00.
The above findings illustrate, without more, (but there is more) that the trial judge was less than satisfied with Ingle's performance as a receiver.
Prior to the formal judgment being issued, the trial judge gave written reasons. I do not propose to recite those reasons in full but rather a copy has been attached as a schedule to my reasons because to understand the issues as they were raised before me, it essential that these reasons be read.
Needless to say, I am bound by the findings which have been made by the trial judge.
Some of the findings which are relevant to the reference are as follows.
"By dint of an agreement amongst the plaintiffs it is not necessary to determine any questions of ownership of property inter se”.
"I reject the Hermanns' protestations that they were forced to sign various documents, acknowledgements, guarantees, etc."
"Ingle’s total lack of comprehension of his obligations as a receiver and manager shouts from the opening lines of his written argument concerning the sale of Barcrest Farm. "The sale of Barcrest Farm by the Bank of Montreal is outside the scope of this proceeding and need not be dealt with by the court for the following reasons."
“How the receiver and manager appointed by the debenture holder and selling a major asset of the debenture debtor can suggest that the transaction is beyond the purview of this action is simply astonishing.”
[31] Despite these impediments, the Master came to a conclusion as to amounts properly owing, as noted at paragraph 29 above.
VI. Court of Appeal
[32] Following that Reference, the parties headed to the Court of Appeal. On December 20, 2001 Justices Carthy, Sharpe and Cronk JJ.A heard the appeal from Justice Hawkins decision. Their reasons released on April 2, 2002 upheld the original judgement. However, the court refused to grant the cross appeal by the plaintiffs seeking punitive damages against Mr. Ingle. The decision which can be found at [2002] OJ No 1138; 2002 CanLII 41669 (ON CA), 158 OAC 21; 112 ACWS (3d) 820. Again, by way of background, I am setting out these extracts from their decision:
John Dwight Ingle ("Ingle") and North Canadian Insco Group Ltd. ("Insco") were defendants in two actions involving Ingle's receivership and management of Barcrest Farms Inc. ("BFI"), a corporation established by the Hermanns family to conduct a large horse farming operation near Milton, Ontario, known as Barcrest Farms. The actions involved numerous complex accounting matters and issues related to Ingle's conduct as receiver and manager. The salient background may be summarized as follows.
The Hermanns were breeders, trainers and traders of horses, primarily Hannoverian horses, which performed in jumping and dressage events. Upon their arrival in Canada in 1980, they incorporated BFI and, through it, purchased Barcrest Farms, a property known as the "Wilkinson Farm", and a hotel in North Bay. When the hotel business suffered losses, the Hermanns caused BFI to mortgage Barcrest Farms to the Bank of Montreal for $600,000 and to Stoneburgh for $100,000, and contemporaneously granted debenture security to the Bank of Montreal. They also caused BFI to mortgage the Wilkinson Farm to Charles Orenstein for $300,000.
By late 1985, the Hermanns family continued to experience significant financial difficulties, creditors were pressing for payment and the mortgagees of the two farm properties had commenced enforcement proceedings under their security. The Hermanns' lawyer introduced them to Ingle who proposed steps to address the financial crisis, including (a) the assignment of BFI into bankruptcy, (b) the acquisition by Ingle's company, Insco, of the debenture against Barcrest Farms, (c) Insco's private appointment of Ingle, following its acquisition of the Bank's debenture, as the receiver and manager of BFI, (d) the negotiation by Ingle of settlements with the Hermanns' creditors and, (e) the financing of the Barcrest Farms operations by Ingle for two or three years until the receivership could be terminated.
These arrangements were agreed upon by the Hermanns family and, in January 1986, Ingle was appointed by Insco as receiver of BFI. Within a matter of months the relationship between Ingle and the Hermanns family had imploded: various improprieties were alleged against Ingle in his conduct of the receivership, two professional accounting firms - appointed by the courts to act as BFI's receiver - served for brief periods, various assets of BFI or the Hermanns family were transferred or sold by Ingle, and Ingle resumed his role as receiver and manager of BFI and evicted the Hermanns family from their property.
Matters came to a head in late March 1987 when various assets of BFI and the Hermanns family, including many valuable horses, household effects and other personal items, were sold at auction. Two lawsuits ensued.
[33] With respect to the issue of an accounting, with my emphasis added, the Court made these observations, findings and rulings:
29 Insco and Ingle breached their trust duties in various ways. The trial judge found that Ingle engaged in self-dealing in relation to the Wilkinson Farm. In so doing, he acted in conflict with his duties as receiver and both he and Insco secured profits upon disposition of part of the Wilkinson Farm in 1990 for $2,720,000 and in 1991 for $20,000. Neither party, to date, has fully accounted for the Wilkinson Farm or the proceeds generated therefrom.
30 An award of the equitable remedy of tracing is discretionary. It depends upon all of the circumstances of the case and the established facts. In this case, having regard to the findings of the trial judge regarding the conduct of Ingle and Insco and the breaches by Ingle and Insco of their duties to the Hermanns Group, BFI and the unsecured creditors of BFI as represented by Stoneburgh, we conclude that the respondents are entitled in equity to trace proceeds realized from the Wilkinson Farm through Ingle, Insco and the companies and individuals controlling such companies identified by the trial judge as being Ingle-related until such time as the property was sold to a bona fide third party purchaser. We are also of the view that Ingle and Insco should be required to account for and disgorge to the respondents any profits from the sale or other disposition of the Wilkinson Farm in which they have been involved in any way, and to reconvey to BFI any and all interest which Ingle and Insco, or either of them, may have in the Wilkinson Farm, directly or indirectly. In tracing the Wilkinson Farm, and the proceeds realized by Ingle and Insco from it, the $149,000 credit already allowed to the respondents by the trial judge in connection with the Wilkinson Farm must be taken into account. The companies identified by the trial judge as acting for the benefit of Ingle, are as follows:
North Canadian Insurance Company
663235 Ontario Limited
Mansewood Town Industrial Estates Ltd.
947338 Ontario Inc.
664832 Ontario Inc.
Insco
[34] The Court of Appeal then turned its attention to the claim for Punitive Damages:
31 In their factum on their cross-appeal, the individual members of the Hermanns Group also seek an award of punitive damages in the sum of $200,000.
32 No substantial oral argument was advanced before this court in support of such an award. Moreover, in the exercise of his discretion, the trial judge made no award of punitive damages. In these circumstances, and in view of the other relief granted by these reasons to the Hermanns Group, including the individual members of the Hermanns family, we are not prepared to interfere with the trial judge's decision on this issue.
VII. The Quiet Decades
[35] As noted at the outset of these reasons there has been a total lack of alacrity in this matter over decades. The fourteen page case history for this matter as at the date of release of these reasons reflects nothing being filed after January 18,2001 until a Notice of Change of Solicitors was filed on the Plaintiffs’ behalf on March 28, 2007 except for requisitions for Writs of Seizure and Sale on January 25, 2002.
[36] The next relevant document filed was a motion before Master Dash in March of 2011 relating to a judgment debtor examination of Mr. Ingle.
[37] Some seven years later on October 17, 2018, the next document was filed, being another Notice of Change of Solicitor to the Plaintiffs’ present counsel.
[38] That lead to the first appearance of the parties before me on December 7,2018.
[39] This would seem to be a quintessential lack of a “sense of urgency” on the part of the Plaintiffs. The approach to seeking to recover this judgment is in my view a near perfect example of an approach demonstrating remissness and slackness.
[40] I find it hard to imagine a clearer case of Laches by the plaintiffs.
[41] However, I also need to consider whether there is any practical use that the plaintiffs might make of an effort to examine non-parties at this stage.
VIII. Limitations Act, 2002
[42] In 2004 the legislation relating to a wide range of legal matters in Ontario underwent significant changes. I have bolded portions of these new provisions to highlight my concerns.
[43] Of particular concern in my analysis of the appropriate disposition of claims after prolonged periods. Section 15 entitled “Ultimate limitation periods” provides:
15 (1) Even if the limitation period established by any other section of this Act in respect of a claim has not expired, no proceeding shall be commenced in respect of the claim after the expiry of a limitation period established by this section.
General
(2) No proceeding shall be commenced in respect of any claim after the 15th anniversary of the day on which the act or omission on which the claim is based took place.
Period not to run
(4) The limitation period established by subsection (2) does not run during any time in which,
(c) the person against whom the claim is made,
(i) wilfully conceals from the person with the claim the fact that injury, loss or damage has occurred, that it was caused by or contributed to by an act or omission or that the act or omission was that of the person against whom the claim is made, or
(ii) wilfully misleads the person with the claim as to the appropriateness of a proceeding as a means of remedying the injury, loss or damage.
Burden
(5) The burden of proving that subsection (4) applies is on the person with the claim.
[44] Of importance is the next subsection which addresses the “Day of occurrence” and provides:
(6) For the purposes of this section, the day an act or omission on which a claim is based takes place is,
(a) in the case of a continuous act or omission, the day on which the act or omission ceases;
(b) in the case of a series of acts or omissions in respect of the same obligation, the day on which the last act or omission in the series occurs;
(c) in the case of an act or omission in respect of a demand obligation, the first day on which there is a failure to perform the obligation, once a demand for the performance is made.
(7) Clause (6) (c) applies in respect of every demand obligation created on or after January 1, 2004.
[45] It is my understanding that to date no proceeding has been commenced by any of the plaintiffs against any individual other than Mr Ingle. In his case it may well be that Section 16 will mean that he will continue to be liable for the amount found by the court in the last century. The provision, which came into force after the judgment was delivered, provides in part:
16 (1) There is no limitation period in respect of,
(a) a proceeding for a declaration if no consequential relief is sought;
(b) a proceeding to enforce an order of a court, or any other order that may be enforced in the same way as an order of a court;
[46] However, with respect to the parties sought to be examined it would seem that the Basic limitation period provisions will apply:
4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
Discovery
5 (1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
Presumption
(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
[47] In my view, all the parties with respect to whom the plaintiffs are now seeking to investigate have a limitations defence which would prevent any recovery at this stage. Their identity has been known for over 20 years.
[48] The plaintiffs are now seeking the evidence that might justify an action. Without in any way determining the propriety of any transfers that may have, in fact, been made by Mr Ingle, it is, in my view, simply too late to canvas these allegations. The issue, as a result, is simply moot as against the other individuals.
IX. Examinations in Aid of Execution
[49] The plaintiffs seek to attempt to find evidence that might help them make a meaningful recovery at this stage Rule 60.18 provides:
60.18 (1) In subrules (2) to (6),
“creditor” includes a person entitled to obtain or enforce a writ of possession, delivery or sequestration;
“debtor” includes a person against whom a writ of possession, delivery or sequestration may be or has been issued. Examination of Debtor
(2) A creditor may examine the debtor in relation to,
(a) the reason for nonpayment or nonperformance of the order;
(b) the debtor’s income and property;
(c) the debts owed to and by the debtor;
(d) the disposal the debtor has 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.
(4) Only one examination under subrule (2) or (3) may be held in a twelve month period in respect of a debtor in the same proceeding, unless the court orders otherwise.
(5) Where it appears from an examination under subrules (2) to (4) that a debtor has concealed or made away with property to defeat or defraud creditors, a judge may make a contempt order against the debtor.
[50] Here the plaintiffs have had more than a decade to find any needles in the haystack. The defendant has provided what he asserts are all the records remaining in his possession.
[51] He had no obligation to retain out of date records in perpetuity.
[52] Receivers have been appointed by others perhaps they have the documents. Any banking records are likely difficult to find after the generally understood 7 year retention period.
[53] This brings me to consideration of the part of rule 60.18 dealing with the “Examination of Person other than Debtor”. That section of the rule provides:
(6) Where any difficulty arises concerning the enforcement of an order, the court may,
(a) make an order for the examination of any person who the court is satisfied may have knowledge of the matters set out in subrule (2); and
(b) make such order for the examination of any other person as is just.
X. Comparable Caselaw
[54] The moving party referred me to Justice Myers decision in Kristina Zakhary Professional Corp. v. Age-less Dermal Therapy Inc., 2015 ONSC 5428, 2015 CarswellOnt 13236, 27 C.B.R. (6th) 328, 76 C.P.C. (7th) 355 (S.C.J.); leave to appeal refused 2015 ONSC 7736, 2015 CarswellOnt 19334, 33 C.B.R. (6th) 117 (S.C.J.). There, on appeal from a Master, the court permitted examination of an officer of the corporate judgment debtor despite a new fraudulent conveyance action against the officer in her personal capacity given the nature and complexity of the litigation.
[55] The fact situation in that case was very different from the present case. Justice Myers observed that in her decision, the Master held that Rule 60.18(2) is discretionary and that the judgment creditors did not have an automatic right to conduct an examination under that Rule. His reasons continue:
With respect, I do not believe that this is correct. The rule expresses a prima facie entitlement of a creditor under a court order to conduct an examination in aid of execution on the judgment debtor. No court intervention or other discretion is involved when a creditor delivers a notice of examination to invoke its entitlement to examine. It does so as of right. See AGB Halifax Enterprises Inc. v. Wood Street Developments Inc., 1996 CarswellOnt 4215 (Ont. C.A.) at para. 2. If a judgment debtor fails to attend an examination in aid of execution after service upon her of a notice of examination, the judgment debtor may be held in contempt of court. Cellupica v. Di Giulio, 2010 ONSC 5839 (Ont. S.C.J.). It is not a discretionary process.
[56] Here there is no issue of the judgment debtor failing to attend. What is sought is a further accounting as opposed to the debtor answering questions based on his present state of knowledge.
[57] Here the individuals sought to be added have had no connection with the matters addressed at the trial in 1998 for over two decades. Without very specific evidence that would justify a contemporary examination, I am satisfied that the portions of the Plaintiffs’ motion seeking to examine third parties ought to be dismissed.
[58] I do so having considered the portions of Justice Myers decision dealing with the examination of “Third-Parties in Aid of Execution”:
14 If a judgment creditor is unable to obtain satisfaction through the examination of the judgment debtor, Rule 60.18(6) authorizes the court to order an examination of “any other person.” In referring to “any other person” the Rule is referring to someone other than the judgment debtor.
15 There is a long line of old cases that say that the purpose of the examination in aid of execution of a third-party under rule 60.18(6) is to afford a judgment creditor an opportunity to confirm or allay its suspicions before embarking upon a lawsuit against the third-party. See, for example, Chote v. Rowan, 1943 CarswellOnt 159 (Ont. Master) at para. 3.
16 If the purpose of an examination is solely to obtain facts in order to decide whether to sue a third-party, then, once a lawsuit is commenced against the third-party, the purpose of the rule is spent. However, in Canadian Imperial Bank of Commerce v. Sutton, 1981 CarswellOnt 365 (Ont. C.A.) the Court of Appeal held that the purpose of the predecessor of rule 60.18(6) was not limited to determining whether the judgment creditor wishes to sue the third-party whom it proposes to examine in aid of execution. At paragraph 8 of the Court’s reasons Lacourciere J.A. wrote:
We are all of the opinion that the clear and unambiguous words of Rule 591 must be interpreted without the limitations argued for by the appellant. Caution, however, should be exercised by a judge before whom an application is made so that persons who are strangers to the litigation are not unduly harassed by examinations. The relatives of a judgment debtor or a stranger should not be ordered to be examined unless the judgment creditor has exhausted all means available before resorting to an application of this kind. [Emphasis added in original]
17 All of the cases referred to by the Master involved motions to examine a third-party rather than the debtor. That is, they were all motions under rule 60.18(6) and its predecessors. They were all infused with the pre-Sutton law that limited the purpose of that subrule to considering whether the judgment creditor wished to start a lawsuit against a third-party witness. Since the decision in Sutton, however, the purpose of rule 60.18(6) is not viewed as being so limited. However, the Court of Appeal also clearly cautioned in Sutton that strangers to the litigation were to be protected from being dragged into litigation unless the judgment creditor had exhausted all means of obtaining satisfaction available to it. (my emphasis)
[59] In Justice Myers’ case the proposed witness was not a third-party stranger to the lawsuit. In particular he notes:
- … She was a member of the judgment debtor’s board of directors. She was the person who conveyed the judgment debtor’s default to the judgment creditors. He held that he judgment creditors are entitled to obtain information from the judgment debtor under rule 60.18(2). They are entitled to know the reason for the judgment debtor’s non-performance of its court ordered obligation. They are entitled to know if the judgment debtor disposed of any assets in the last several years.”
[60] I interpret his decision as allowing creditors to examine a directing mind of a defendant corporation to look for other assets that may be owned by the judgment debtor that may be unrelated to the transfer of its business assets. But persons not connected with the corporation fall into a very different category. I therefore do not regard the case as governing the fact situation before me.
[61] In his affidavit filed on this motion Mr Ingle asserts:
- In December 2018, I met with Mr. Philpot, plaintiff's counsel, to discuss the terms of the draft Order for Master Short. I insisted on the words "best efforts" or "to the best of my knowledge and belief ”. Mr Philpot demanded complete accounting including copies of bank records. He suggested that he would seek a contempt order and jail for me and he said he would pursue my family in a new action if I did not do things his way.
[62] Whether such statements were made is not for this occasion. What is to be clearly stated is that, in my opinion, based on the law and the evidence before me and the history of this dispute, there is no basis upon which the plaintiffs could pursue Mr. Ingle’s family in any action commenced at this point in time
XI. Mr. Ingle’s Obligations
[63] Rule 62, as set out above, includes these provisions:
(2) A creditor may examine the debtor in relation to,
(a) the reason for nonpayment or nonperformance of the order;
(b) the debtor’s income and property;
(c) the debts owed to and by the debtor;
(d) the disposal the debtor has 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.
(4) Only one examination under subrule (2) or (3) may be held in a twelve month period in respect of a debtor in the same proceeding, unless the court orders otherwise.
[64] Subsection 2(d) requires the disposal the debtor has made of any property either before or after the making of the order. I can not imagine a case where more analysis has been made since the 1980’s on where the money went. Receivers and Accountings have turned over every rock and pebble relating to the original dispute.
[65] Mr Ingle owes over three million dollars in back taxes to Revenue Canada. He is seventy-five and there is no suggestion he is carrying on any money-making enterprise.
[66] His affidavit on the motion states:
“3. I cannot provide a full accounting as demanded by the plaintiff. I am not an accountant. I do not have possession, care or control of accounting records. I can only answer to the best of my knowledge and belief .”
[67] He also points out:
In September of 1986, on motion by the plaintiffs, the Honourable Mr. Justice White, appointed Laventhol & Horwath to Receive and Manage the assets of Barcrest Farms Inc. The court ordered all of the available records to be delivered up to Laventhol and Horwath.
On 28th November 1986 Clarkson Gordon Inc., was appointed by Mr. Justice Hollingworth to replace Laventhol and Horowath as receiver-manager without security of all the assets, property and undertakings of Barcrest Farms Inc., as contained in a debenture dated 14th April 1983 and given by Barcrest to the Bank of Montreal and further assigned to North Canadian Insco Group Ltd.
On December 22nd 1986 Master Linton ordered the sale of assets be conducted by Eurosport of Virginia with the requirement that Eurosport provide it's accounting of the sale to the court.
Clarkson Gordon Inc. was receiver-manager up to and including 19th January 1987, when the appointment was terminated by further order of the court on the grounds that there were not sufficient assets to meet the ongoing expenses. Clarkson did not deliver the records to me.
[68] The affidavit annexes extracts from the assessment of fees for Clarkson Gordon, which was appointed as receiver manager of Barcrest Farms by Justice Hollingworth in 1986. In his reasons Assessment Officer Clarke [68 C.B.R.(N.S.) 15] addressed the lack of proper control and identification of what had been alleged to be very valuable horses:
"34. …Mr. Treleavan admitted in cross-examination that he was aware of allegations of horse-switching prior to 28th November 1986.
The 2nd Report contained no glad tidings. It reports that although all that could be done had been done to prepare the horses for sale at public auction, because of the hostility and lack of co-operation of the plaintiffs Hermanns, the sale had been frustrated. Without the sale, or even the prospect of a sale, there was no cash flow and the report concluded that the estate farm was insolvent. The report requested that Clarkson Gordon Inc. be relieved of its duties as receiver-manager and be granted a lien and charge on the estate assets to cover fees and disbursements. That request was granted as of 19th January 1987.
I am satisfied on the evidence that the receiver-manger knew within two weeks of its appointment that the estate was insolvent. Mr. Hoover admitted that in cross-examination. As Mr. Treleavan said, the cash expenses required to run the farm, and preserve the assets of Barcrest ( exclusive of Clarkson Gordon Inc. fees), amounted to $26,000 per week. With no off-setting cash flow, the receiver-manager was required to pay these expenses.”
[69] At this stage, Mr. Ingle has agreed to provide his “best efforts” to answer questions that Rule 62 defines. He is not obliged to produce an audit
[70] That does not mean the re-opening of the matters that gave rise to the financial obligations established by Master Linton.
[71] The time to draw the curtain on this case is fast approaching.
XII. Contemplated Third Party claims
[72] Having determined that any third party claims are statute barred I do no intend to examine the grounds put forward on most of the related claims.
[73] However, to provide a sense of the kinds for information now sought I set out the following extracts from Mr. Ingle’s Factum:
- The plaintiffs seek leave to examine my children.
My children Tamara and Melanie have no knowledge of any financial transactions in this action. They are not parties to this action. They received no profit from any transaction involving the Wilkinson farm. The only purpose of such an examination is to harass.
The horse Reipo: On March 25, 1987 Justice Catzman granted leave to bid at the public auction and to receive credit on account of any successful bid up to the aggregate amount of $400,000. Reipo was purchased under that authority and was charged on the account with $150,000 which was the reserve amount set for that horse. No money changed hands because $150,000 was credited to the account pursuant to the Order of Justice Catzman. The ownership of the horse was gifted to a trust set up for my children. My children Tamara and Melanie have no knowledge about the transaction involving Reipo. This issue was fully litigated at trial. The horse is long since dead.
My children have no knowledge of (a) the reason for nonpayment or nonperformance of the order; (b) the debtor's income and property; (c) the debts owed to and by the debtor; (d) the disposal the debtor has 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.
[74] It would seem that the old saying concerning dead horses is apt in this situation.
XIII. “Show Me the Money” ?
[75] Mr. Ingle accepts the obligations found by the courts but presents explanations that seem to me to explain was he continues to have no exigible assets:
The plaintiff seeks an order that I produce a full accounting of all funds received by me and North Canadian Insco when the Wilkenson Farm was sold, a full accounting of the sale, a full accounting of the receiver's fees, the sale of any horses and a full accounting of what any firms received North Canadian Insurance Company, 6662325 Ontario Inc., the company Manswood, Town Industrial Estates Limited, 947338 Ontario Incorporated, 664832 Ontario Incorporated and the company known as Insco.
I cannot provide a full accounting. I am not an accountant. I can only answer to the best of my knowledge and belief for the following reasons:
a. With respect to the sale of horses:
i) All of the records for the sale of horses were kept by Euro sport. To the best of my knowledge and belief, Eurosport delivered its accounting to the court as it was required to do.
b. With respect to receiver's fees:
i) Insco was credited with $200,000 for receiver's fees and it used that credit to purchase horses at auction as permitted by the order of Justice Catzman.
ii) All horses purchased by Insco have long since died. Any funds received by any horses sold by Insco were used to pay for the care and maintenance of the horses. There was no profit made from owning a horse.
c. With respect to the Wilkenson Farm:
i) an attempted rezoning and development of the property failed. One lot was sold and the property was foreclosed on by the mortgagee in 1995. The funds were used to pay development costs, finance costs and mortgage interest charges that were then running at 12% and 17%. There was no profit. No dividends were paid. I do not have any accounting records.
ii) North Canadian Insurance Company surrendered its charter in 1995 delivering up its books and records. There was no profit. No dividends were paid. I do not have any accounting records.
iii) North Canadian Insco became insolvent and has been defunct since 1995. The accountant who kept the accounting records died in about 1997 and his widow was not able to find any records. The best available records were deposited in court as exhibits during the trial and the reference before Master Linton. There was no profit. No dividends were paid. I do not have any accounting records.
[76] Mr. Ingle sets out similar answers on other claims and ends his submissions with these points:
There were no funds available to pay for legal fees. If there had been any funds available, I would have retained a lawyer to provide the proper defence at trial rather than acting for myself.
I have answered all questions and undertakings many times in the past eighteen years.
XIV. Ingle’s Draft Order
[77] If the law permitted me to do so I would have been inclined to hold that the enforceability of Justice Hawkins’ Order from 1997 had been spent. To the extent the Order remains in force I am satisfied that Mr. Ingle’s efforts to provide the information sought from him are well above that exhibited by many judgment debtors.
[78] In his factum he sets out a draft order and I have elected to adopt much of that document his Order. Subject to any submissions from the parties on clarifying any portions of what follows I am directing that an Order is to issue on the terms relevant to him (but not any third parties):
THIS COURT ORDERS THAT the undertaking set out as Undertaking number 1 in the chart [to be] appended as Schedule "A" to this Order has been answered and need not be answered again.
THIS COURT ORDERS THAT the following questions refused and set out in the chart which is appended as Schedule "B" to the Order need not be answered and are withdrawn without prejudice to move again with a proper foundation Refusals numbers 4, 5, 6, 7, 8, 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 21, 23, 26, 28, 34, 35, 36;
THIS COURT ORDERS THAT the following questions refused and set out in the chart which is appended as Schedule "B" to this Order were answered elsewhere and need not be answered again.
Refusals numbers 9, 19, 25, 26, 32, 33
- THIS COURT ORDERS THAT the following questions refused and set out in the chart which is appended as Schedule "B" to this Order shall be answered on a best efforts basis to the best of John Dwight Ingle's knowledge and belief.
Refusals numbers 1, 2, 3, 29, 30,
- THIS COURT ORDERS THAT the following questions refused and set out in the chart which is appended as Schedule "B" to this Order shall be answered by John Dwight Ingle ….
Refusals numbers 22, 24, 31
THIS COURT ORDERS THAT the defendant John Dwight Ingle shall attend at a further examination in aid of execution to answer questions ordered today and any proper follow-up questions at a date, time and place to be set by the plaintiff in a notice of examination.
THIS COURT ORDERS THAT there shall be no costs of this motion.
XV. Finality
[79] The content of a current printout of the Case History in this case shows the “Case Status” as “IN-ACTIVE”. It seems to me at this point this is somewhat parallel to the Pythonesque description of a particular parrot.
[80] In 2007 in the Giant Tiger case MacPherson, Sharpe and Juriansz JJ.A. dealt with the need for finality in our current judicial system. [see: Marche D'Alimentation Denis Theriault Ltée v Giant Tiger Stores Ltd, 2007 ONCA 695, 87 OR (3d) 660].
[81] I find these paragraphs as highly relevant to my decision set out above:
[37] Finality, like the avoidance of unnecessary delay, is a central principle in the administration of justice. "The law rightly seeks a finality to litigation" and finality is "a compelling consideration": Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, [2001] S.C.J. No. 46, at paras. 18 and 19.
[38] When an action has been disposed of in favour of a party, that party's entitlement to rely on the finality principle grows stronger as the years pass. Even when the order dismissing the action was made for delay or default and not on the merits, and even when the party relying on the order could still defend itself despite the delay, it seems to me that at some point the interest in finality must trump the opposite party's plea for an indulgence. This is especially true where, as in the present case, the opposite party appears to have another remedy available.
[39] The delay in this case was inordinate. From the appellant's perspective, the respondents did absolutely nothing to move this file forward for more than five years, and before that, the respondents had proceeded in what could only be described as a desultory fashion for two and one-half years after commencing the action.
[40] I agree with the Master that, when viewed in the light of a delay of this magnitude, the security of the legal position obtained by the appellant becomes an important factor to consider. Five years after the action against it had been dismissed, the appellant was entitled to rest on the assurance that the judicial system had disposed of the respondents' claim once and for all.
Conclusion
[41] I conclude that the Master's analysis is appropriate because it takes account of important principles and values of the civil justice system. The solicitor's behaviour resulted in an excessive delay. Delays of this kind are inimical to the important goal of timely justice. The legal system should not condone the solicitor's behaviour as to do so would fail to provide appropriate incentives to those engaged in the justice system and would risk harming the integrity and repute of the administration of justice. Reinstating the action at this point would undermine the finality principle while refusing [to] reinstate the action does not interfere with the need to ensure adequate remedies.
XVI. Disposition
[82] In conclusion I thank both sides for their courtesy, professionalism and assistance in this very unusual case.
[83] Order to go as outlined above. If clarifications are required, I will convene a telephone case conference.
[84] There will be no order as to costs.
R. 300/DS __________________
Master D.E. Short