COURT FILE NO.: 31-OR-208302-T DATE: 20200715 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: In the Matter of the Bankruptcy of Anthony Falasca, also known as Tony Falasca, of the City of Hamilton, Province of Ontario.

BEFORE: C. Gilmore, J.

COUNSEL: Robert A. Klotz, Counsel for the Moving Party Appellant/Respondent Howard Reininger, Counsel for the Creditor, Goldcourt Developments Inc.

HEARD: July 14, 2020

ENDORSEMENT on motion

Overview

[1] Tony Falasca is the Appellant on this appeal and the debtor on the Bankruptcy Application brought against him by the creditor, Goldcourt Developments Inc. (“Goldcourt”).

[2] The Appellant appeals the wording of the formal Order that was settled before Master Jean on December 2, 2019. Specifically, the Appellant states that the Order is inconsistent with its preamble by omitting the word “advanced” in paragraph 2. The Appellant argues that the omission of this word is material and leaves the Order ambiguous and lacking clarity. The Appellant does not appeal the reasons of Master Jean dated October 4, 2019.

[3] Alternatively, the Appellant seeks to vary Master Jean’s Order pursuant to s. 187(5) of the Bankruptcy and Insolvency Act, RSC 1985, c. B-3 (the “BIA”).

[4] Goldcourt brings a cross-motion to quash the appeal on the grounds that the appeal is out of time and as there is no procedure to appeal the form of a settled Order, the time to appeal runs from the Reasons and not the Order itself. As the Appellant has not sought leave to extend the time to appeal, the motion should be quashed.

Background

[5] Goldcourt brought a Bankruptcy Application against the Appellant on June 2, 2018 based on a judgment against the Appellant in the amount of $159,553.80 plus costs of $3,972.54. The Appellant defends the Application on several grounds including that he is not insolvent, that he does not owe the amounts claimed and that the Application has been brought for a collateral purpose.

[6] The affidavit of verification was sworn by Tasha Mazza, the daughter of Paul Mazza, who is involved with three specified investments which are at the heart of ongoing litigation in Hamilton, Ontario and relate to the Appellant’s disputes on the bankruptcy. Ms. Mazza refused to attend for cross-examination. The Appellant brought a motion to compel her attendance and to require Ms. Mazza to produce certain documentation prior to the examination, in order permit a more efficient conduct of the examination.

[7] The motion was heard by Master Jean on January 17, 2019 along with Goldcourt’s motion to strike certain paragraphs in the Dispute.

[8] Master Jean released her decision on October 4, 2019. She ordered that:

(a) Leave was granted to Falasca to cross-examine Tasha; (b) Advance production of the documents was refused for the following reasons: (i) the motion was premature; (ii) there was no foundation for establishing that Goldcourt had possession, power and control over the documents sought; (iii) third parties, from whom some documents were sought, had not been given notice of the motion; and (iv) Falasca can, if so advised, bring the appropriate motion; and (c) Two paragraphs of the Dispute (paras. 47 and 48) were struck.

[9] Counsel for Goldcourt drafted the Order. The preamble correctly described the Appellant’s motion as being for advance production before the cross-examination. However, paragraph 2 of the draft Order stated:

2. The motion for production of the documentation… is dismissed.

[10] At the settlement of the Order on December 2, 2019, the Appellant’s counsel expressed concern that counsel for Goldcourt was now refusing to bring documents in the production request to the examination on the grounds that Master Jean had dismissed the request for those productions.

[11] Counsel for the Appellant provided a copy of correspondence from Goldcourt which created this concern and requested that Master Jean include the word “advance” before the word “production” in paragraph 2 of her Order to ensure that Ms. Mazza would bring to her examination (although not required to provide in advance) all non-privileged documents in Goldcourt’s possession, control or power that were either relevant or specified in the Notice of Examination.

[12] Master Jean refused to change paragraph 2 to ensure it was congruent with the reference in the preamble. The Order was signed as drafted except that Master Jean added at paragraph 2 of the Order in her handwriting, “without prejudice to a further motion on notice to all affected parties and non parties.”

[13] On December 2, 2019 Ms. Mazza was cross-examined. The position of counsel for Goldcourt in relation to the issue of productions caused this motion to be brought. According to counsel for the Appellant, counsel for Goldcourt insisted on conflating “advance production” with “production” and objected to producing anything.

[14] The Appellant’s view is that the wording of the Order as it stands allows a misunderstanding or deliberate error which results in a frustration of the obligations of Ms. Mazza to provide certain productions.

[15] On December 12, 2019 the Appellant served a Notice of Appeal of the October 4, 2019 Order or to alternatively to vary that Order.

Issue # 1 – Is the Appeal out of Time?

[16] The Appellant argues that he is appealing the form of the Order and not the Order itself and therefore the appeal has been served in time as it was served within 10 days of the Order being settled.

[17] Goldcourt argues that no such procedure exists and that the time to appeal runs from the date of the decision. Failing an Order to extend the time to appeal, the appeal is out of time. The time to file an appeal of an order or decision of the Registrar must be made within 10 days pursuant to Rule 30.01 of the General Rules of the BIA.

[18] Goldcourt further argues that even if the appeal had been filed on time, it would only be allowed if it is demonstrated that the Registrar erred in principal or in law which led to a wrong conclusion (see Hejna 2010 ONSC 6734). No such error exists in this case.

[19] In a true appeal the bankruptcy judge may only rely on the evidence that was before the Registrar on December 2, 2019. Therefore, the Appellant’s attempts to rely on the transcript of evidence from December 2, 2019 should be rejected as this is not an appeal on the merits.

[20] I agree with counsel for Goldcourt that this is not an appeal on the merits and that a proper appeal proceeding should have been brought within 10 days of the release of the Reasons of Master Jean. I hesitate in making this finding as the draft Order was not available 10 days after the reasons were published, and it would be easy to infer that the draft Order would refer to a dismissal of the motion for “advance” production as Master Jean clearly states under that section of her Reasons that “the debtor seeks production from Tasha of the following documents in advance of her cross-examination.” However, the rules for timing of the filing of an appeal are clear as are the parameters for the grounds of an appeal.

Issue #2 – Is the Appellant Entitled to a Variation of the Order of Master Jean?

[21] Section 187(5) of the BIA provides that that every court may review, rescind or revise any Order made by it under its bankruptcy jurisdiction. Such a motion should not be substituted for an appeal where the time to appeal has elapsed.

[22] Goldcourt submits that such a variation should not be permitted as there has been no change in circumstances or further evidence between the date of the motion before the Registrar and the original date of this motion (December 12, 2019). Specifically, the Registrar did not refuse production of the requested documents, she simply found the motion to be premature and left the issue to be determined on another motion.

[23] Further, Goldcourt submits that by proceeding with its examination of Ms. Mazza the Appellant has now waived his right to seek production of the documents and should be estopped from seeking them on a further motion or by way of a variation of Master Jean’s Order. In any event, such a variation motion should have been brought before a Registrar and not before a judge of this court.

[24] First, in terms of jurisdiction I agree with the Appellant. It would not make sense to bring the appeal motion before this court and the variation motion before a Registrar when this court has the jurisdiction to decide both matters.

[25] Second, I do not agree with Goldcourt that conducting the examination of Ms. Mazza results in the Appellant somehow waiving his right to production of the documents sought or that he should be estopped from either bringing a further motion for production or this motion. While this argument is unique, it is groundless and I reject it entirely.

[26] In my view this motion is properly brought under s. 187(5) of the BIA with respect to the court’s jurisdiction to rescind, revise or vary any Order under its bankruptcy legislation. The variation must be made based on subsequently discovered facts. If there is a concern about any lack of subsequently discovered facts, one need go no further than the letter from Mr. Reininger to Mr. Klotz dated October 29, 2019 in which he states:

Please be advised that if any of the documentation you request are documents which would have been included in the production request in your motion heard by Master Jean which was dismissed, they will not be produced since you have asked for and lost your request for those productions.

[27] One can understand Mr. Klotz’s concern in reading the inaccuracy set out in this correspondence. Mr. Klotz’s motion for production was not dismissed. His motion for advance production was dismissed.

[28] If there is further doubt about the position taken by Goldcourt on this issue one need only have reference to the transcript excerpts provided by Mr. Klotz in his Appeal Record. During the examination of Ms. Mazza on December 2, 2019 Mr. Reininger insists (at page 80) that Mr. Klotz has withdrawn his request for documents on the motion heard by Master Jean. When Mr. Klotz attempts to clarify that he withdrew his request for advance production of those documents and not the general request for production, Mr. Reininger rebuffs him and relies on the wording in paragraph 2 of Master Jean’s Order for his refusal to produce many documents.

[29] Clarity is an essential element of a Court Order. As reiterated in Booth v. Christensen, 2019 ABQB 878; a judgment speaks on its face to the world at large. Clarity about the judgment’s terms is essential since many others rely on the literal meaning (para 140).

[30] The facts of this case are somewhat unusual, but an obvious error in a Court Order must be corrected. Paragraph 2 of the Order must match the preamble which in turns reflects the actual motion brought by the Appellant in January 2019.

Orders and Costs

[31] Goldcourt’s motion to quash is dismissed.

[32] The Appellant’s motion is granted. The Order of Master Jean to be amended based on the wording in paragraph 30 of the Appellant’s Revised Factum dated July 2020.

[33] The Appellant has had clear success on this motion, a motion which should not have been necessary. If the parties cannot agree on costs, they may each submit a Bill of Costs and written submissions of no more than one page starting with the Appellant on a seven-day turnaround, starting seven days from the date of this Endorsement. Costs submissions may be sent directly to me electronically. If no costs submissions are received within 35 days of the date of this Endorsement, costs will be deemed to be settled.

C. Gilmore, J. Date: July 15, 2020