Reuben Moses et al. v. Metro Hardware and Maintenance Inc. et al.
COURT FILE NO.: CV-20-642688
DATE: 2020-11-02
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Reuben Moses et al., Plaintiffs
- and -
Metro Hardware and Maintenance Inc. et al., Defendants
BEFORE: F.L. Myers J.
COUNSEL: James Klein and Matthew Klein, for the plaintiffs Matthew Gottlieb and Paul Fruitman, for the defendants
HEARD: October 29, 2020
endorsement
The Motion and Outcome
[1] The defendants move to discharge the certificate of pending litigation registered against the land owned by 2188661 Ontario Inc. on which the business of Metro Hardware and Maintenance Inc. is located.
[2] The plaintiffs obtained the order for the issuance of the CPL without notice to the defendants. In doing so, the plaintiffs made no effort to fulfill their duties to make full and fair disclosure of all material facts to the Master. They failed to disclose material facts of which they were aware. They did not identify any of the defendants’ likely responses to their evidence and allegations. They relied improperly on inadmissible evidence.
[3] There was no necessity for the plaintiffs to bring the motion for a CPL without notice. Having chosen to do so, as they were entitled to do, the plaintiffs voluntarily and knowingly undertook the extra obligations under Rule 39.01 (6) of the Rules of Civil Procedure, RRO 1990, Reg 194, to make full disclosure and fair disclosure of the facts and law to the Master. They did not even try to meet these obligations. Therefore, on that basis alone, the order should be set aside and the CPL discharged.
Background Facts
[4] This case sadly involves a family fight. The plaintiff Reuben Moses and his spouse sue Reuben’s mother Rosy Moses and the estate of his late father Aby Moses. Rachel Moses is Reuben’s sister. She and her mother are the targets of the claim.
[5] Aby Moses owned and ran a hardware business through the defendant Metro.
[6] In 2009, the numbered company bought the land on which Metro operates. The shares of the numbered company have always been owned 50/50 between Aby Moses and Rosy Moses.
[7] Rachel Moses is a lawyer and is not involved in the hardware business.
[8] Reuben Moses, by contrast, worked his entire adult life in the business with his father. He says that he was integral to the substantial growth of the revenues of the business over the past decade or more. When Aby Moses became ill in 2018, Reuben Moses ran the business on his own until Aby Moses’ death in July, 2019.
[9] Reuben Moses claims that his father orally promised him the business and either his half of the land or the whole thing. In the statement of claim, the plaintiffs claim the full piece of land. In his affidavits however, Reuben Moses says that his father promised him his 50% interest in the land. Reuben Moses pleads that Aby Moses’ oral promises were made as agent for Rosy and bind her. I am not sure I understand how that works legally. But it is not before me today.
[10] On Aby Moses’ death, he left all his property to Rosy Moses in his will. Reuben Moses was left only a conditional opportunity to buy the business (but not the land) if Rosy Moses predeceased Aby Moses or if she died within 30 days of his passing. Neither of those events came to pass.
[11] Reuben Moses sues to enforce the oral promises made by his father. Recognizing that under Ontario law an oral promise to convey land is not enforceable, Reuben Moses relies on the equitable doctrine of promissory estoppel. The Supreme Court of Canada has applied the doctrine of promissory estoppel to bind people to their promises to convey land when the person to whom the land was promised relied on the promise to his or her detriment. Cowper-Smith v. Morgan, 2017 SCC 61.
Reuben Moses’ Evidence on the Motion Without Notice
[12] Reuben Moses swore a 33 paragraph affidavit on June 23, 2020. He commenced by describing the parties and the business of Metro. He first mentions in para. 6 that his father had always promised that he would inherit the business on the father’s death.
[13] The only evidence of detrimental reliance adduced by Reuben Moses is in paras. 7 and 8 of his affidavit as follows:
During the time I was employed at Metro, I was underpaid for the work I was doing, I accepted being underpaid because I believed I was investing into my future, when my father would transfer the business to me. In 2001, my wife, Laura Harkin ("Laura"), also joined our business, leaving her career at Bombardier to help Metro grow. She became responsible for accounts payable and receivables, performing HR for our 35 employees, and managing our orders.
Both of us worked for Metro expecting to receive the business of Metro as was promised. Laura, like me was underpaid but accepted that in the same manner I did with the belief we were investing in our future and that of our family.
[14] The affidavit continues with Reuben Moses providing some historical evidence of the origins of family strife
[15] In para. 16, Reuben Moses gave another version of his father’s promise as follows:
- Despite these serious challenges, I believed in filial piety. I had always done my best to respect the wishes of my parents and believed my loyalty was acknowledged and appreciated. My father repeated his promise often, in front of family, employees, and even in a recording in 2014, that I would receive the business and 50% of the Property when he died.
[16] The affidavit continues by describing the period after Aby Moses became ill in 2018. Reuben Moses describes his mother’s efforts to become involved in the business and to stall the transition of the business to his ownership.
[17] I reproduce paras. 21 to 23 of the affidavit of Reuben Moses:
I engaged in protracted negotiations with my mother to bring about the fulfillment of my father's wishes. While she was prepared to give me the business for free, the transfer became complicated by her desire to defer paying taxes on the transaction. Furthermore, she refused to acknowledge my 50% interest in the Property. I could not continue to negotiate at this point and we could not come to terms regarding my continued employment. Negotiations broke down and I was constructively dismissed on February 13", 2020.
The business I had spent 30 years of my life building with my wife and father was denied to me. At the date of my constructive dismissal, the business had a value of $3,000,000.00 consisting of cash in the bank, receivables, inventory and goodwill. At the time of my departure, the Property to which I was promised a 50% interest was valued at $5,000,000,00.
I am seeking the transfer of a 50% ownership interest in the property. It is a unique property out of which Metro has operated for over 10 years. I would not have rented a new premises out of which to operate my new business had my 50% interest been transferred to me in good faith along with the business of Metro.
[18] Mr. Moses summarized his evidence on the nub of his case in para. 26 of his affidavit as follows:
Furthermore, both Laura and I worked diligently in the business of Metro at less than the value of our services in reliance of these promises and for the good of the family business Metro, and our own family, in the
reasonable expectations of receiving the business and 50% of the Property. As Metro was the main tenant of 218, it was essential for the business of Metro to be located in the Property. In this regard, as stated the Property is unique. The Property was renovated and designed by me to facilitate the business needs of Metro.
[19] Finally, Mr. Moses swore to there being urgency to the plaintiffs’ need for a CPL to protect his interest in the land as follows:
I believe if a CPL is not registered on title, I will be unable to preserve my interest in the Property and the Defendants will sell it before my claim is completed.
I have received information on June 11, 2020 from Moti Ankri ("Ankri"), a lock salesman with C.P.C. Locksmith services which I believe to be true. Ankri spoke to the general manager at Metro, Chandra Buvanasandra, who told him the business of Metro and the Property were subject to an offer to purchase by a third party for $6,000,000.00.
I have not been able to obtain any further information about a third party offer but have a concern that the Property will be sold without my consent, thereby creating urgency to have the registration of a Certificate of Pending Litigation against title to the Property to protect my claim to an interest.
The Duty to Make Full and Fair Disclosure
[20] Our system of civil justice is adversarial. It is premised upon parties each putting forward their own case and challenging each others’ cases. A dispassionate trier of fact and law is charged with the task of determining the outcome based on the idea that the parties and their professional advocates are best able to establish the truth through their own industry and self-interest.
[21] However, the adversarial system operates within the rule of law. Despite the system being adversarial, we do not have trial by battle in which the spoils go to the strongest or to the richest combatant. The rule of law requires that above all else, the resolution of civil disputes must be fair and just. Hryniak v. Mauldin, 2014 SCC 7, at para. 23.
[22] Although lawyers are duty-bound to advocate for their clients zealously and fearlessly, they too are required to do so “in a way that promotes the parties' right to a fair hearing in which justice can be done.” See: Rules of Professional Conduct, Law Society of Ontario, Commentary 5.1-1.
[23] Court proceedings without notice to one side or the other are an exception to the underlying premise of the adversarial system. When only one side is heard, the assurances of mutual self-interest and mutual, competitive advocacy by professionals committed to the fairness of the process are missing.
[24] To protect the rule of law and the fundamental assurance of a fair civil justice system, Rule 39.01 (6) imposes vital, extra burdens on parties who seek relief before the court without notice to their adversary. They are required to make “full and fair disclosure of all material facts.” The rule provides that the failure to make “full and fair disclosure of all material facts” is itself a basis to set aside an order obtained without notice regardless of the merits of the request for relief.
[25] Rule 39.01 (6) is not just speaking to witnesses’ testimony. It applies to the party who brings a motion without notice.
[26] The party who moves without notice must be fair. The regular zeal that is perfectly appropriate in face of an equally zealous adversary does not apply when a party chooses to go before a judicial officer without anyone else present to keep his or her zealousness in check.
[27] In United States v Friedland, [1996] OJ No. 4399 (Ont Gen Div) Sharpe J. (as he then was) described the issue as follows:
The rationale for this rule is obvious. The Judge hearing an ex parte motion and the absent party are literally at the mercy of the party seeking injunctive relief. The ordinary checks and balances of the adversary system are not operative. The opposite party is deprived of the opportunity to challenge the factual and legal contentions advanced by
the moving party in support of the injunction. The situation is rife with the danger that an injustice will be done to the absent party. As a British Columbia judge noted recently:
There is no situation more fraught with potential injustice and abuse of the Court's powers than an application for an ex parte injunction. (Watson v. Slavik, [1996] B.C.J. No. 1885, August 23rd, 1996, paragraph 10.)
[28] The duties to make full and fair disclosure replace the checks and balances of the adversarial system. The court has no choice but to trust the moving party when he or she says they are fully disclosing and fairly presenting all material facts and the applicable law. It is the need to trust an otherwise zealously adversarial party that makes the situation so fraught with risk and renders justice so vulnerable to abuse.
[29] Justice Sharpe described the duty on a party who moves without notice in this way:
27…That party is not entitled to present only its side of the case in the best possible light, as it would if the other side were present. Rather, it is incumbent on the moving party to make a balanced presentation of the facts and law. The moving party must state its own case fairly and must inform the Court of any points of fact or law known to it which favour the other side. The duty of full and frank disclosure is required to mitigate the obvious risk of injustice inherent in any situation where a Judge is asked to grant an order without hearing from the other side.
28 If the party seeking ex parte relief fails to abide by this duty to make full and frank disclosure by omitting or misrepresenting material facts, the opposite party is entitled to have the injunction set aside. That is the price the Plaintiff must pay for failure to live up to the duty imposed by the law. Were it otherwise, the duty would be empty and the law would be powerless to protect the absent party. [Emphasis added.]
[30] Justice Sharpe also discussed the scope of the obligation to disclose all material facts. Materiality is determined objectively. He held that a party cannot be heard to say that she or he (or their lawyer) did not believe a point was relevant to the case. He adopted the following expression of the rule:
... The duty extends to placing before the court all matters which are relevant to the court's assessment of the application, and it is no answer to a complaint of non-disclosure that if the relevant matters had been placed before the court, the decision would have been the same. The test as to materiality is an objective one, and it is not for the applicant or his advisers to decide the question; hence it is no excuse for the applicant subsequently to say that he was genuinely unaware, or did not believe, that the facts were relevant or important. All matters which are relevant to the 'weighing operation' that the court has to make in deciding whether or not to grant the order must be disclosed. [Emphasis added.]
[31] The question then is whether the plaintiffs presented their case fairly and made full disclosure of all material facts. Did they recognize that they could not just present their own case in the best possible light, but that they were duty-bound to make a balanced presentation of both sides’ cases? Did they fulfil their obligation to inform the court of all material facts known to them that favour the other side? Did they disclose all facts that the Master might consider relevant as part in her “weighing operation”?
Some of the Undisclosed Parts of the Story
[32] I start by repeating that there was no attempt by the plaintiffs to put the defendants’ case, or any part of it, before the Master. It is a best practice to see in affidavits used on motions made without notice a section expressly entitled something like “Full Disclosure” or “Facts that may be Relied upon by the Defendants”. If not in the affidavit, then it should at least be in the factum in cases where sworn evidence is not necessary to advert to the other side’s position. In this case, the plaintiffs did not make any reference to any facts or evidence that might be relied upon by the defendants in answer to their claims.
Nondisclosure of Aby Moses’ Will
[33] The defendants argue that the plaintiffs failed to put into evidence the fact that Aby Moses left a will that did not leave the business or his shares in the numbered company that owned the land to Reuben Moses. That evidence goes to Aby’s testamentary intention and may undermine Reuben Moses’ evidence of there being promises made to him.
[34] In cross-examination, Reuben Moses testified that although he knew that his father was seeing a lawyer for estate planning purposes, he did not know that his father had finalized a will. In the year after his father’s death, no one had told Reuben Moses that there was a will and he did not ask.
[35] I frankly do not see this as a significant issue. Had Aby Moses’ will left the business and his shares in the numbered company to Reuben, there would be no lawsuit. There is no evidence denying the promises made by Aby Moses. The fact that there may be a contest as to whether Aby Moses intended his promises to be binding in light of his will, does not undermine the existence of a triable issue on the merits.
[36] The fact that Reuben may not have known about the will and did not ask about it simply confirms that the executor or executrix did not contact Reuben to give him any bequest and shows the degree of the parties’ estrangement. The plaintiffs were not required to disclose a will that they did not know existed.
Improper Opinion Evidence of Detrimental Reliance
[37] As mentioned above, the only evidence that Reuben Moses relied on his father’s promise to his detriment was the evidence in paras. 7 and 8 of his affidavit that he and his spouse were “underpaid” and accepted their underpayment due to the father’s promise to give the business to Reuben. At para. 26, Reuben Moses reiterated that they were paid “less than the value of our services in reliance of these promises”.
[38] Evidence of being underpaid is either an opinion or a comparison of the compensation paid to Mr. Moses and Ms. Harkin to others who worked in similar positions in the market place. To the extent that the evidence is opinion evidence, it was inadmissible.
[39] Even if it were admissible, as a conclusion or a subjective layman’s comparison, it is bald and of little meaning without some evidence as to the baseline comparators against which the conclusion was drawn. In para. 26, Reuben Moses notes the comparative nature of his judgment by contrasting the plaintiffs’ compensation to some objective “value” of their services.
[40] The defendants have adduced evidence that Reuben Moses was paid almost $100,000 plus untracked cash and a car allowance in each year from 2015 to 2018. In 2019, he was paid over $325,000 plus untracked cash and car allowance. Ms. Harkin worked part time as a bookkeeper and was paid $178,000 plus benefits and a car allowance in 2019.
[41] I do not know the market salary for the manager of a hardware business with revenues of around $7 million in Toronto in 2019 or the market value of a part time bookkeeper. Mr. Moses conceded in cross-examinations that he does not know either. He had no comparators and presented no factual basis at all on which to base the conclusion that he and Ms. Harkin were underpaid.
[42] By adducing this evidence, knowing that he had to be fair, Reuben Moses must be implicitly testifying to having some awareness of the market value of his compensation and having a good faith basis on which to swear to the truth of his conclusion. Not only did he not have that basis, he did not disclose even the salaries that he and his wife made so that the Master might see some raw data on which Mr. Moses’ opinion was based.
[43] It may not be surprising for employees to have a lay opinion of their own worth and to feel under-appreciated. However, here, detrimental reliance is a required element of the cause of action. The only evidence on the issue was Reuben Moses’ non-expert opinion. Knowing that he was not facing cross-examination and that he had no objective basis to support the opinion, this evidence was not fairly given. By omitting the actual salary, the plaintiffs also did not disclose all material facts of which they were aware. Moreover, by not disclosing the actual salary numbers, they did not disclose facts on which the defendants would obviously rely to argue that the plaintiffs were not underpaid and incurred neither a detriment nor detrimental reliance.
The Negotiations with Rosy Moses and the Uniqueness of the Land
[44] I quoted paras. 21 to 23 of Reuben Moses’ affidavit above in full because they set out a story. It starts with negotiations “to bring about the fulfillment of my father's wishes”. That is, Reuben Moses was negotiating to take the business and 50% of the land as promised. He says that his mother offered him the business although there was a tax issue. “But she refused to acknowledge my 50% interest in the Property.”
[45] As a result, he swears, negotiations broke down and he was constructively dismissed on February 13, 2020.
[46] What Reuben Moses did not say in his affidavit is that he offered to buy the land for $4 million. Mr. Klein objects to this evidence because the negotiations were protected by settlement privilege and the two letters written by Mr. Klein containing Reuben Moses’ offers were raised for the first time on his in cross-examination.
[47] To be privileged settlement negotiations, there must be litigation reasonably in view. There is no evidence that Reuben Moses was considering litigating in January, 2020 or at all until he went to court without notice this past June. There is no evidence of anyone indicating that a settlement was being considered to avoid threatened or contemplated litigation. To the contrary, when negotiations concerning the business failed, Reuben opened a competing hardware business, took employees, and wrote to customers and suppliers of Metro to solicit their business. There is no objective hint of litigation in evidence.
[48] Even if the negotiations had been privileged, Reuben Moses disclosed their purpose and blamed his mother’s failure to recognize his father’s promise to give him 50% of the land as the reason the negotiations failed. It is common ground that the land is worth something in the order of $5 million. By offering $4 million, Reuben Moses was not offering to buy his mother’s share as if he already owned his father’s share of the land. He was offering something near fair market value for the entire lot. One might question how he can say he owned 50% already if he was offering fair market value to buy the lot? He couldn’t have been offering something for the business as he says he was already promised it too. The characterization of the purpose of the negotiations as being “to bring about the fulfillment of [his] father's wishes” was a debatable position.
[49] Having put forward a purpose and basis for the failure of the negotiations, Reuben Moses must be taken to have waived any privilege that could have attached at least to those two facts. He opened those issues for cross-examination to prove that his evidence was not correct.
[50] Reuben Moses also did not disclose to the Master that he incorporated a new company in October, 2019, months before negotiations ended. He rented space for a hardware business in Mississauga 30 km away. When he ended the negotiations with his mother in January, 2020, Reuben Moses wrote to tell her that he was leaving the business and she was free to do with it as she pleased. He wrote this in two different communications. He then opened his competing business.
[51] Looking at paras. 22 and 23 of his affidavit before the Master, Reuben Moses tells of being excluded from the business where he spent his life. He mentions renting land for a new business but does not say that he made a unilateral decision to leave, take 10 employees, and, despite being the former senior officer of the corporation, immediately solicit suppliers and customers.
[52] The defendants are counterclaiming against Rueben Moses for these acts. Of course, the counterclaim had not been advanced at the time Reuben Moses sought the ex parte CPL. But, Reuben Moses’ basis for claiming that the land is unique and must be preserved by a CPL is that it is needed for the business and he is entitled to the business. Mightn’t the defendants have been expected to respond to Reuben’s claim that he needs this unique land to operate the business by mentioning that Reuben had told his mother that he was leaving and she could do what she wanted with the business - twice? Might his ability to plan for and open a new business doing the very same things as Metro, soliciting the same employees, customers, and suppliers not be reasonably expected to bear on the claim that the land for which a CPL was sought is unique?
[53] Reuben’s response was that when he told his mother she could do what she wanted with the business, he was just using a figure of speech. In addition, he says he rented the Mississauga land for the potential expansion of the business of Metro. That might well be the case. But the decision as to how to treat these competing facts and arguments was for the Master to consider in her weighing operation.
[54] The narrative in paras. 21 to 23 of Reuben Moses’ affidavit is one-sided spin. It leaves out the other side. His evidence that he was negotiating to bring about his father’s wishes, his mother refused to acknowledge his entitlement,
he was constructively dismissed, and the land is unique to the business all have a response that was fully known to the plaintiffs. As submitted by Mr. Gottlieb, Reuben was negotiating to buy the full piece of land at fair market
value. He decided to open a competing business believing that he could take the bulk of Metro’s business with him to Mississauga. He left the family, Metro, and its land in the rear view mirror and told his mother that she could do what she wanted with the empty corporate shell he intended to leave behind.
[55] I do not know which version is true or closer to the truth at this early stage. But Reuben Moses’ affidavit simply omitted the whole other side of the story of the negotiations and his leaving.
[56] One might fairly ask how a plaintiff is supposed to know with any precision what the competing arguments or spin may be? The answer is that when proceeding on an ex parte basis, a plaintiff should never be in the position of having to guess. Every spin has a counter-spin. What Reuben Moses did in paras. 21 to 23 of his affidavit was to characterize months of negotiations into three short paragraphs to fit his narrative. Full and fair disclosure would have mandated that if the plaintiffs wanted to use those events as evidence for the motion, they should have described the actual events, supported by the relevant documents, without the spin or characterization.
[57] On a motion made without notice, disclosure must be full. Disclosure must be fair. These words have meaning. Three paragraphs characterizing months of events is neither full nor fair disclosure of all the material facts.
[58] If Mr. Moses had just set out the actual negotiations and the relevant letters, his lawyer could have argued their meaning while acknowledging any number of competing possible meanings. The plaintiffs ran afoul of Justice Sharpe’s admonition that a party moving without notice:
…is not entitled to present only its side of the case in the best possible light, as it would if the other side were present.
[59] Similarly, had the plaintiffs disclosed the actual events supported by the documents, Mr. Moses would have had no complaint when he was confronted with his own counsel’s letters on cross-examination. Mr. Klein argues that Mr. Gottlieb and Mr. Fruitman were required to give notice before confronting the witness with his counsel’s letters on cross-examination. I am not aware of any
basis for that objection. The plaintiffs had not yet conducted their own cross-examinations. They could have delivered further material if they felt that the defendants’ counsel cherry-picked letters. Better still, they could have disclosed all the material facts and documents at the outset and then never have faced the issue.
Double hearsay Evidence of Urgency
[60] In para. 32 of his affidavit, Mr. Moses swore that the lock salesman Moti Ankri told him that Chandra Buvanasandra, the general manager of Metro, told him that someone had made an offer to buy Metro and the land for $6 million.
[61] In para. 33, Mr. Moses continued:
I have not been able to obtain any further information about a third party offer but have a concern that the Property will be sold without my consent, thereby creating urgency to have the registration of a Certificate of Pending Litigation against title to the Property to protect my claim to an interest.
[62] So, the urgent need for a CPL without notice is that Moti says that Chandra says that the business and land are being sold. Mr. Moses has not been able to obtain any further information about it and fears the loss of the land.
[63] On cross-examination on his statement that he was unable to obtain any further information about a sale, Mr. Moses conceded that he did not ask anyone to try to obtain any further information. Mr. Moses explains that he was not comfortable calling his mother or Chandra Buvanasandra to try to confirm Moti’s rumour. However, his statement that he had “not been able to obtain any further information” implies that he tried to do so. That was neither truthful nor fairly put.
[64] Rule 39.01 (5) allows hearsay evidence to be used with respect to facts that are not contentious. The evidence of a purported sale is not a background fact that is of no moment itself but might be helpful to understand the story. It is not a fact proven by irrefutable evidence so as to be beyond contention. It is a fact that may or may not be true asserted to support legal consequences. It was a contentious fact.
[65] Whether contentious or not, double hearsay, or hearsay built on hearsay - “Moti says that Chandra says” - is inadmissible. The most Reuben Moses can say is that he believes Moti who tells him something that someone else said. Neither Moti Ankri nor Reuben Moses swore to the truth of what Chandra allegedly told Moti. Even if the fact was not contentious, it was not presented in an admissible way.
[66] Hearsay is defined as a statement made out of court that is tendered to prove its contents. Here it is Chandra’s alleged statement that there is an offer outstanding that is used to prove that the business and land are for sale to support a claim of urgency. While Mr. Klein submits that the statement is used to support Mr Moses’ belief that there is urgency, the relevant fact is the urgency itself rather than Mr. Moses’ belief. Mr. Moses tendered Chandra’s alleged statement for its truth i.e. there was an actual offer outstanding that makes the motion urgent.
[67] It is neither full nor fair disclosure to adduce inadmissible evidence to prove a fact in issue. Parties seeking relief in proceedings on notice often agree to the use of inadmissible evidence. Facts can be hotly contested and yet counsel may have a reason for deciding to agree, for some particular proceeding, not to contest the propriety of proof. A party moving without notice does not have that luxury.
[68] It turns out, on June 26, 2020, which was the day after the plaintiffs obtained the CPL, Moti Ankri told Mr. Moses that he had been wrong. Chandra had confirmed to him that there was no offer. Chandra Buvanasandra confirmed this with his own affidavit affirmed July 22, 2020. The plaintiffs did not go back to the Master to advise her that they had relied on evidence that turned out to be untruthful.
[69] In his affidavit sworn August 18, 2020 for this motion, Mr. Moses explained:
- In terms of the possible sale of the building which was set out in paragraph 32 of my Affidavit dated June 23, 2020, I set out the information I received and the source of that information, I disclosed all the information I had on the issue of the sale to the court.
[70] Mr. Moses swore this affidavit after Chandra Buvanasandra’s affidavit denied any sale but over a month before Moti Ankri was examined under summons. On August 18, 2020, only Mr. Moses knew that Moti Ankri had told him the day after the CPL was obtained that the rumour that the business was for sale was not true. Mr. Moses says in his new affidavit that he disclosed to the Master the information that he had at the time. But he does not disclose in his new affidavit that he knew that the evidence in his first affidavit was not true the next day, a month before Chandra’s affidavit was delivered. Had Mr. Ankri not been examined under summons, no one would have known that Mr. Moses knew the business and land were not for sale on the day after he obtained the CPL and a month before Chandra’s affidavit was delivered.
Maintaining the CPL
[71] The plaintiffs ask to maintain the CPL on the basis that they meet the Dhunna factors (572383 Ontario Inc. v Dhunna, 1987 CarswellOnt 551 (SC – Mast.) at paras. 10 – 18) and the plaintiffs require protection to prevent the defendants from selling the land.
[72] A CPL can be maintained or, perhaps, reissued, despite the order under which it was issued being set aside. K.A. v Mitchell, [2013] OJ No. 2889 at para. 19. The court has a continuing discretion to act in the interests of justice on the totality of the evidence.
[73] Mr. Gottlieb fairly conceded that there is a triable issue as to whether the plaintiffs claim an interest in the land. The availability of a CPL then turns on the Dhunna factors.
[74] In my view, the Dhunna factors do not support the plaintiffs’ claim for a CPL however.
a. The plaintiffs are not a shell company. But they also do not offer an undertaking in damages. I know nothing about their financial wherewithal;
b. The value of the land is known. Damages are claimed and are readily calculable.
c. The only sense in which the land is unique is that Metro operates there. But Mr. Moses discussed expanding Metro to the east end and the west end. I put no weight on Mr. Moses’ sentimental attachment to the premises particularly considering the content of his notes to his mother leaving the business to her to deal with as she wishes and his efforts to compete against it directly.
d. I do have a concern that the land and business could be sold and the proceeds of sale put out of reach. But that is a question of dealing with proceeds of sale. Preventing a sale with a CPL to protect a claim for specific performance of the father’s promise to convey the land itself is a different remedy.
[75] Even without the plaintiffs’ many breaches of their duties to make full disclosure and to do so fairly, I would not have maintained the CPL on the Dhunna factors as proven now. In my view, this is a damages case. The plaintiffs need to prove their entitlement to enforce Aby Moses’ promises and resist liability for competing with Metro when they decided that they were constructively dismissed when the negotiations with Rosy Moses and Rachel Moses had reached an impasse. I do not view the plaintiffs’ damages claim as a technical, fallback alternative plea. It is the realistic main event given the current state of the two competing businesses and the counterclaim.
[76] In addition, on a finding being made that a plaintiff has breached the duties of full disclosure and fair disclosure, the presumptive remedy should be to set aside the order. The plaintiff should have to bear a real burden to show why it is just and equitable for the court to exercise its discretion to maintain or reissue the order on all the facts. I agree with Sharpe J. that were it otherwise, the duties would be empty and the law would be powerless to protect the absent party. As I have already discussed, I do not find a need to issue or reissue a CPL to protect the plaintiffs’ claim to the land on the facts as a whole. If I had found that the Dhunna factors favoured the reissuance of a CPL, I then would have had to consider whether the overall justice of the case supported that outcome despite the plaintiffs’ many breaches of their duties.
[77] I wish to be clear as well that I am not undermining in the least the law that accepts that moving without notice for a CPL is the norm. However, parties must be mindful of the nature of the enhanced and exacting duties that they undertake when they decide to do so. Sometimes, in face of true urgency,
one has no practical alternative. However, parties often do have a choice as to whether they truly need to proceed ex parte. If they do not really need to do so, they may wish to consider whether it is worth the risk.
[78] The test for a CPL is not a difficult test to meet. A plaintiff starts from the position an aggrieved party seeking the court’s protection. That is a favourable strategic position to occupy. However, on a motion to set aside an order obtained without notice due to a breach of the duties to make full and fair disclosure, the plaintiff is no longer seen as the aggrieved party facing a light test. Rather, it becomes the alleged wrongdoer facing a very high standard of performance. While it may be tempting to move without notice to obtain an order without opposition, in my view, it is a questionable strategy to voluntarily undertake the exacting duties of full disclosure and fair disclosure where it is not absolutely necessary to do so.
Result
[79] The motion is granted. The order of the Master granting the CPL is set aside.
Costs
[80] Counsel agreed that on this outcome, the defendants should have their costs on a partial indemnity basis. The defendants ask for costs of $69,000 all-in. The plaintiffs confirm that this amount is about 10% less than their own costs calculated on a partial indemnity basis. Accordingly, I find the request
reasonable both on the effort invested and from the perspective of what the unsuccessful parties ought reasonably to have anticipated. The plaintiffs shall therefore pay the defendants costs fixed in the amount of $69,000 by December 31, 2020.
_______________________________ F.L. Myers J.
Date: November 2, 2020