COURT FILE NO.: CV-13-480407

DATE: 20210625

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: ANTONIO MARROCCO and ANTONIETTA MARROCCO Plaintiffs

AND:

FERNDALE VINEYARDS INC. and SAMEER MIRZA Defendants

BEFORE: Mr. Justice Chalmers

COUNSEL: B. Romano for the Plaintiffs

D. Laframboise, for the Defendant

HEARD: April 19, 2021, by videoconference

ENDORSEMENT

OVERVIEW

[1] In October 2018, the Plaintiffs, Antonio and Antonietta Marrocco brought a motion for an order to remove Doug Laframboise as lawyer of record for the Defendant, Ferndale Vineyards Inc. (“Ferndale”) and for an order that Ferndale post security for costs of the Counterclaim. The motion was argued before Master Short on January 11, 2019. At the outset of the motion, counsel for the Plaintiffs objected to Mr. Laframboise arguing the motion on the basis that Mr. Laframboise was the affiant. Master Short permitted Mr. Laframboise to argue the motion. By endorsement dated April 23, 2019, Master Short dismissed the motion to remove Mr. Laframboise as counsel of record for Ferndale. He adjourned the security for costs motion. The security for costs motion was argued on June 6, 2019. Master Short dismissed the motion for security for costs, for reasons to follow. To date, Master Short has not provided his reasons with respect to the security for costs motion.

[2] The Plaintiffs appeal the Orders of Master Short dated April 23, 2019 with respect to his decision to not remove Mr. Laframboise as counsel for Ferndale, and the order dated June 6, 2019 dismissing the motion for security for costs. The Plaintiffs also appeal Master Short’s decision to allow Mr. Laframboise to argue the motion.

[3] For the reasons set out below, I dismiss the appeal with respect to the decision to allow Mr. Laframboise to argue the motion and the order dated April 23, 2019 dismissing the motion to remove Mr. Laframboise as counsel for Ferndale. No reasons were provided with respect to the order dated June 6, 2019 regarding the motion for security for costs, and therefore that matter is not capable of appellate review. I refer the security of costs motion back to Master Short for determination.

BACKGROUND FACTS

[4] On December 7, 2011, Antonio and Antonietta Marrocco loaned $1,173,750 to Ferndale. The loan was guaranteed by the Defendant, Sameer Mirza. The present whereabouts of Mr. Mirza are unknown. He has been noted in default and has not participated in this action. The loan was secured by a mortgage registered on the property located at 3026 8th Avenue Jordan Station, Ontario (the “Property”). The mortgage was for a one-year term at 8% interest. The monthly payments were $7,825.

[5] Ferndale made the first mortgage payment on January 1, 2012. Soon after the payment was made, the building at the Property was damaged by fire. Ferndale was insured. The first insurance payment was in the amount of $245,000 and was payable to the Plaintiffs and Ferndale. The insurance payment was deposited into the trust account of Pomer & Boccia Professional Corporation. Pomer & Boccia was the law firm for the Plaintiffs at that time.

[6] Ferndale did not make the mortgage payment due in February 2012. The Plaintiffs entered into possession of the Property and sold it under Power of Sale in June 2016. The amount recovered by the Plaintiffs from the sale of the Property was not disclosed. The Plaintiffs take the position that there remains a balance owing on the mortgage.

[7] On May 14, 2013, the Plaintiffs commenced this action against the Defendants. The Plaintiffs claim damages for the balance owing on the mortgage. Ferndale defended the action and brought a Counterclaim. In the Counterclaim, Ferndale takes the position that the Plaintiffs failed to use the insurance proceeds to make the mortgage payments or to release the money to allow for the reconstruction of the Property. Ferndale alleges that the Plaintiffs used the insurance proceeds for their own benefit. Ferndale also alleges that the Plaintiffs were negligent when they went into possession and failed to maintain and protect the Property.

[8] Counsel for Ferndale is Doug Laframboise. Mr. Laframboise articled at Pomer & Boccia in 2011-2012. He left Pomer & Boccia in early 2012 and started his own firm. He denies that he was involved in this matter when he was an articling student. He also denies that he had any personal or confidential information about the Plaintiffs as a result of articling at Pomer & Boccia.

[9] The Plaintiffs brought a motion for an order requiring Ferndale to post security for costs with respect to the Counterclaim. The Plaintiffs also sought an order removing Mr. Laframboise as lawyer of record for Ferndale. The motion came before Master Short on January 11, 2019. At the beginning of the motion, counsel for the Plaintiffs took the position that Mr. Laframboise could not argue the motion because he was the affiant. Master Short permitted Mr. Laframboise to argue the motion.

[10] Master Short heard argument with respect to the removal of Mr. Laframboise as counsel of record for Ferndale. By endorsement dated April 23, 2019, Master Short dismissed the motion removing Mr. Laframboise as solicitor for record. He adjourned the motion with respect to the security for costs to a date after any applicable appeal period has expired.

[11] Master Short heard argument with respect to the security for costs motion on June 6, 2019. He dismissed the motion for security for costs. Master Short’s endorsement provides; “for brief reasons to follow I am not satisfied that this is [an] appropriate case for security to costs.” No reasons were provided.

[12] The Plaintiffs appeal Master Short’s orders both with respect to the removal of Mr. Laframboise as solicitor of record, and for security for costs. The Amended Notice of Appeal is dated August 14, 2019.

THE ISSUES

[13] The issues to be determined on this appeal are as follows:

(i) Is the Plaintiffs’ appeal out of time?

(ii) What is the standard of review?

(iii) Did Master Short err in allowing Mr. Laframboise to argue the motions?

(iv) Did Master Short err in dismissing the Plaintiffs’ motion to remove Mr. Laframboise as solicitor of record for Ferndale? and

(v) Did Master Short err in dismissing the Plaintiffs’/Defendants’ by Counterclaim motion for security for costs?

ANALYSIS

Is the Plaintiffs’ Appeal out of Time?

[14] The orders appealed from are interlocutory. The time for commencing an appeal of an interlocutory order is seven days from the making of the order appealed from: R. 62.01(2). The Amended Notice of Appeal is dated August 14, 2019.

[15] The endorsement with respect to the Master’s decision to allow Mr. Laframboise to argue the motion and the motion to remove Mr. Laframboise as solicitor of record for Ferndale was released on April 23, 2019. In the endorsement, Master Short adjourned the security for costs motion to a date after “any applicable appeal perceived with respect to these reasons has expired.”

[16] The Plaintiffs argue that the Master’s reasons for the security for costs motion were necessary for the appeal of the removal motion. The security for costs reasons were not provided and the Plaintiffs argue that the time to commence the appeal did not start to run. In the alternative, the Plaintiffs seek leave to extend the time to bring the appeal. Ferndale argues that the removal order is separate from the security for costs order, and there is no reason why the appeal of the removal order, could not have been brought within the time limit set out in the Rules.

[17] The time for commencing an appeal runs from the date of the final pronouncement of the order. The final pronouncement of the order with respect to Mr. Laframboise arguing the motion and the removal motion was April 23, 2019. It is my view that the removal order is unrelated to the security for costs order. There was nothing about the order for security for costs that was required for the Plaintiffs to determine whether to appeal the removal order.

[18] The Plaintiffs seek an order extending the time to appeal the removal order. The overriding principle in determining whether an extension of time to appeal is granted, is whether the justice of the case requires that an extension be given. The court is to take into account all relevant considerations, including whether the moving party formed a bona fide intention to appeal within the relevant time period, the length of and the explanation for the delay, any prejudice to the responding parties, and the merits of the appeal: Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, at para 15.

[19] I am not satisfied on the record before me that the Plaintiffs intended to appeal the removal order within the relevant time period. Master Short decided the removal motion first and adjourned the security for costs motion to a date after the appeal period for the removal order. This provided an opportunity for the Plaintiffs to appeal the removal order before Mr. Laframboise would argue the security for costs motion. If the Plaintiffs intended to appeal the removal order, the Plaintiffs ought to have done so within the time period and before the argument in the security for costs motion.

[20] I am also of the view that the Plaintiffs have not provided a satisfactory explanation for why the appeal was not brought in time. The Plaintiffs state that they were waiting for the reasons in the security for costs order. The Plaintiffs do not state why those reasons were necessary. The two orders are separate issues.

[21] I decline to exercise my discretion to extend the time to bring the appeal of the order of Master Short with respect to whether Mr. Laframboise could argue the motion and the decision to not remove Mr. Laframboise as the lawyer for Ferndale.

[22] With respect to the appeal of the security for costs, I am satisfied that there was was no clear “final pronouncement” of the motion and therefore the time to bring the appeal did not start to run. In any event, it would be appropriate to extend the time to appeal the security for costs order. It is my view that waiting for the reasons to be provided for the security for costs order is a reasonable explanation for not bringing the appeal in time.

What is the Standard of Review?

[23] The standard of appellate review of a Master’s order is that questions of law are reviewed on a standard of “correctness”. Questions of fact or mixed fact and law are reviewed on a standard of “palpable and overriding error”. Palpable and overriding error is a “highly deferential standard”: Zero Spill Systems (Int’l) Inc. v. Heide, 2015 FCA 115 at para. 49. A palpable error is one that is plain and obvious to see. An error is overriding when it goes to the root of the challenged finding of fact: Burridge v. Hardy, 2018 ONSC 202 (Div. Ct.) at para. 53-55.

[24] An appeal from a decision of a Master is not a re-hearing. On questions of fact and mixed fact and law, deference applies. The appellate court is not to substitute its interpretation of the facts or re-weigh the evidence simply because it takes a different view of the evidence: Adrian Peel Architect Inc. v. Al Soorty, 2013 ONSC 6183, at para. 12.

Did Master Short err in allowing Mr. Laframboise to argue the motions?

[25] As noted at paragraphs 14-21, the appeal with respect to Master Short’s decision to allow Mr. Laframboise to argue the motion is out of time. In any event, it is my view that Master Short did not err in allowing Mr. Laframboise to argue the motion.

[26] For the motion returnable on January 19, 2019, Ferndale filed Mr. Laframboise’s affidavit sworn on January 6, 2019. In the affidavit, he deposes that he articled at Pomer & Boccia in 2011-2012, and that in early 2012 he left the firm to open his own practice. He further deposes that when he was at Pomer & Boccia, he did not receive any confidential information about the Plaintiffs and did not know anything about the mortgage with Ferndale.

[27] The affidavit sets out the background of Mr. Laframboise’s involvement. The Plaintiffs did not cross-examine Mr. Laframboise on his affidavit. There was no issue taken before the motion that the affidavit contained contested facts. Mr. Laframboise states that counsel for the moving party knew he was going to argue the motion but did not take any issue before the date the motion was argued.

[28] On the return of the motion, counsel for the Plaintiffs objected to Mr. Laframboise arguing the motion in which he was a personal affiant. Master Short permitted Mr. Laframboise to argue the motion. In his endorsement released April 23, 2019, Master Short stated:

More and more young lawyers are starting out as “solo” practitioners. This makes it difficult in a number of situations to get evidence before the court where there are no other lawyers in the firm to swear the affidavits upon, “information and belief”. Generally, little is gained by presenting the necessary evidence by way of a secretary or some other party having no personal knowledge of the matters in issue.

[29] Master Short also noted that the facts contained in the affidavit are not overly controversial:

Here the facts do not appear to be in dispute as to the “actual” involvement of Mr. LaFramboise. Rather it is the “circumstances” which are being referred upon to remove him from the record.

[30] There is a longstanding prohibition against counsel, who is a witness in the proceeding, from appearing as counsel. In Imperial Oil Ltd. v. Grabarchuk, 1974 CanLII 869 (ON CA), 3 O.R. (2d) 783 CA), the Court of Appeal stated that it is a “well-settled rule which the Court has strictly enforced over the years” that a lawyer ought not to appear on a motion where they are a personal affiant: at para. 2.

[31] Although a lawyer is not to appear as counsel and witness, there may be circumstances in which it is in the interests of justice that the rule be relaxed to achieve the “just, most expeditious and least expensive determination” of the matter in issue: R. 1.04 of the Rules of Civil Procedure. In considering this issue, the court is to be guided by the principles of proportionality. Convenience, cost effectiveness and efficiency are important considerations: Services Financiers Element v. 1851424 Ontario Incorporated, 2017 ONSC 5224, at para. 15.

[32] Here, Mr. Laframboise swore the affidavit and argued the motion. As noted by Master Short, the facts are not in dispute as to the actual involvement of Mr. Laframboise. There was no cross-examination on Mr. Laframboise’s affidavit in advance of the motion. Mr. Laframboise is a sole practitioner and did not have a lawyer in his office to swear the affidavit. I agree with Master Short’s comment that in the circumstances of this case there would be little value in having an assistant swear an affidavit on information and belief.

[33] I am satisfied that in the unique circumstances of this case, Master Short did not err in allowing Mr. Laframboise to argue the motion.

Did the Master err in dismissing the Appellant’s motion to remove Mr. Laframboise as counsel of record for Ferndale?

[34] As noted at paragraphs 14-21 above, it is my view that the Plaintiffs’ appeal with respect to the removal order is out of time. Even if the appeal was not out time, I find that Master Short did not err in denying the Plaintiffs’ motion to remove Mr. Laframboise from acting for Ferndale.

[35] A court should not grant a removal motion except in the rarest of circumstances. As stated by the Court of Appeal in Kaiser (Re), 2011 ONCA 713:

As the motion judge properly noted, “A litigant should not be deprived of counsel of its choice without good cause …” For this reason, Canadian courts exercise the highest level of restraint before interfering with a party’s choice of counsel. Where such discretionary, equitable relief is invoked there must be a possibility of real mischief should a removal order be refused. The test is whether a fair-minded and reasonably informed member of the public would conclude that counsel’s removal is necessary for the proper administration of justice …: at para. 21.

[36] In determining whether to grant a removal motion, the court must strike a balance between the high repute of the legal profession and the administration of justice on the one hand, with allowing the client’s choice of counsel and permitting the reasonable mobility in the legal profession, on the other: Wallace v. Canadian Pacific Railway, 2013 CarswellSask 432 (SCC), at para. 22. In his brief reasons, Master Short relied on the Wallace decision and concluded that in striking the balance, the client’s desire to have a particular counsel representing it, should prevail.

[37] Mr. Laframboise denies that he had any involvement with respect to this matter during his articles. The mortgage was arranged just before he completed his articles. He was not involved in the file. He knew nothing about the mortgage and had no confidential information. There was no cross-examination of Mr. Laframboise’s affidavit on this point. There is no evidence to the contrary. It is my view that the risk of prejudice to the moving party is minimal. The minimal risk is not sufficient to deny Ferndale its right to counsel of its choice.

[38] In the circumstances of this case, I am satisfied that in balancing between the risk of prejudice on to the Plaintiffs, with Ferndale’s right to choose their lawyer on the other; Ferndale’s right to choose its counsel prevails. I am also satisfied that a “fair-minded and reasonably informed member of the public” would not conclude that for the proper administration of justice, Mr. Laframboise, who had no involvement of the matter when he was a law student, must be removed as Ferndale’s lawyer.

Did the Master err in dismissing the Appellant’s motion for security for costs?

[39] The Plaintiffs argue that Ferndale is no longer in operation and its only asset was the Property, which was later sold under Power of Sale. The Plaintiffs argue that Ferndale is a corporation without assets and therefore they are entitled to an order for security for costs of the Counterclaim, pursuant to R. 56.01(1)(d). Ferndale argues that the Counterclaim is derivative to the main action, and relies on the general proposition that where the Counterclaim arises out of the same transaction or circumstances as the Claim, and the Counterclaim is in substance a defence to the Claim, security for costs will not be ordered: Singh v. Trump Sr., 2018 ONSC 4649, at para. 35. The Plaintiffs argue that the Counterclaim is an entirely separate cause of action and is not derivative.

[40] The motion judge dismissed the motion for security for costs. His handwritten endorsement dated June 6, 2019 provides as follows:

For brief reasons to follow I am not satisfied that this is [an] appropriate case for security for costs.

[41] Master Short did not provide his reasons with respect to the security for costs motion and as a result, the Master’s reasoning is not apparent: Bruno v. Dacosta, 2020 ONCA 602, at para. 23. Master Short’s dismissal of the motion for security for costs, is not capable of appellate review. The motion for security for costs is remitted back to the Master for determination.

DISPOSITION

[42] I make the following order:

(i) I dismiss the appeal with respect to Master Short’s decision to allow Mr. Laframboise to argue the motion;

(ii) I dismiss the appeal with respect to the removal order dated April 23, 2019; and

(iii) I remit the security for costs motion back to Master Short for determination.

[43] I order costs of the appeal to Ferndale, fixed in the amount of $5,000 inclusive of counsel fee, disbursements and HST.

DATE: JUNE 25, 2021