Superior Court of Justice - Ontario

COURT FILE NO.: CV-17-581739

MOTION HEARD: 20210716

RE: Mamdouh Labib Henein, Plaintiff

AND:

Louai Alala, Defendant

BEFORE: Master La Horey

COUNSEL: Joseph F. LoGreco, Counsel for the Moving Party Plaintiff

Arie Gaertner, Counsel for the Responding Party Defendant

HEARD: July 16, 2021 by videoconference

REASONS FOR DECISION

[1] The plaintiff brings this motion to compel answers to questions refused at the cross-examinations conducted of two deponents on the defendant’s pending motion for the discharge of a certificate of pending litigation (“CPL”), which is now scheduled to proceed before me on August 25, 2021.

[2] This action arises out the purchase of a condominium unit, Suite 1004, 100 Echo Point, Toronto (the “Property”) by the defendant on November 2, 2016. The plaintiff claims a 50% interest in property purchased by the defendant pursuant to a written trust agreement entered into the day prior to the closing (the “Trust Agreement”). The defendant’s position is that he is the sole owner of the property and the plaintiff’s only role with respect to the purchase was acting as the defendant’s real estate agent.

Procedural History

[3] The plaintiff commenced this action on August 29, 2017. The claim was later amended on February 18, 2019 to provide the legal description of the Property.

[4] The defendant delivered a notice of intent to defend on October 24, 2019.

[5] The plaintiff obtained an order for the CPL without notice on December 19, 2019.

[6] The defendant’s statement of defence and counterclaim was delivered January 10, 2020.

[7] By notice of motion dated May 7, 2021 the defendant moves to set aside the CPL. In support of the motion the defendant relies on his affidavits sworn May 7, 2021 and June 18, 2021. In addition he has filed the affidavit of his father, Mohamad Nabil Alala (Mr. Alala Sr.) sworn May 7, 2021.

[8] In response to the CPL motion, the plaintiff has delivered his affidavits of June 11, 2021 and June 28, 2021. He has also filed the affidavit of Matthew Hicks sworn June 10, 2021. Mr. Hicks acted as a mortgage broker on the transaction.

[9] The defendant and his father were cross-examined on their affidavits on June 23, 2021.

[10] The defendant’s motion to discharge the CPL was initially scheduled to be heard on July 16, 2021. However, the plaintiff indicated an intention to move on refusals arising from the cross-examinations and the July 16, 2021 date was used instead for this refusals motion.

[11] As set out in the notice of motion, the plaintiff seeks an order compelling the defendant to answer 16 questions refused[^1] on his cross-examination and answers to six questions refused on the cross-examination of Mr. Alala Sr. At the outset of the hearing of this motion the plaintiff withdrew the motion in respect of six of the 16 questions refused on the defendant’s cross-examination and all six of the questions refused on Mr. Alala Sr.’s cross-examination.

[12] The motion record filed by the plaintiff on this motion includes the affidavit of one of the plaintiff’s lawyers, Jacob Stilman, sworn July 8, 2021. At the hearing of this motion, the defendant’s counsel objected to the filing of this affidavit as it was tendered after the cross-examination of the defendant and his father and thus he says is not admissible without leave. The plaintiff says that the affidavit was filed in support of the refusals motion and is therefore admissible. The affidavit attaches materials that have been previously filed. In particular it attaches an employment letter that was apparently included with the mortgage application submitted on behalf of the defendant when he purchased the Property. The plaintiff says that the employment information submitted to the mortgagor was false. The employment letter was attached as part of Exhibit B to the defendant’s supplementary affidavit sworn June 18, 2021 and filed on the discharge motion. I agree with the plaintiff that the affidavit is properly before me. I also agree with the defendant that the employment information is irrelevant on the CPL discharge motion as set out below.

Applicable Law

[13] Justice Perell has summarized the applicable principles concerning the scope of the cross-examination of a deponent on a motion in Ontario v Rothmans.[^2]

[14] One such principle is that the proper scope of the cross-examination is dependent on the nature of the motion.[^3]

[15] Thus the proper scope of cross-examination needs to be viewed through the lens of the issues to be decided on a motion to discharge a CPL. The plaintiff will be required to establish that he has a triable interest with respect to an interest in land and that the court should exercise its discretion in equity having regard to such factors as whether (i) the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intention of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (vii) the harm to each party if the CPL is or is not removed with or without security.[^4]

[16] The Court of Appeal recently commented on the scope of cross-examination on an interlocutory motion stating:[^5]

10 As Borins J. noted in Moyle v. Palmerston Police Services Board, 1995 10659 (ON SC), [1995] O.J. No. 627 (Div. Ct.), at para. 11, "the nature of the relief sought on an interlocutory motion often plays a significant role in determining the proper scope of cross-examination". This is because the cross-examination is meant to serve the fact-finding needs that the motion requires. Accordingly, as Borins J. affirmed, quoting Gale J. from Thomson v. Thomson, [1948] O.W.N 137 (H.C.) at 138, a person cross-examining on an affidavit is not confined to the four corners of the affidavit but may cross-examine on matters that are relevant to the issue in respect of which the affidavit was filed. Therefore, although the cross-examiner is not free to cross-examine on all matters that touch upon the underlying action, if the cross-examiner has a bona fide intention to direct questions to the issues relevant to the resolution of the motion and those questions are fair, the question should be answered, not refused. This includes questions relevant to credibility determinations that are within the competence of the motion judge, which would include questions intended to expose "errors, omissions, inconsistencies, exaggerations or improbabilities of the deponent's testimony contained in his or her affidavit": Moyle, at para. 14.

Refusal 1 - Question 13 – Production of defendant’s drivers license

[17] On cross-examination the defendant was asked where he currently lives. He answered that he lives at 1840 Victoria Park, Toronto and that he has lived there since he put the Property up for sale. Plaintiff’s counsel then asked the defendant to produce his driver’s license. This question was refused.

[18] In his May 7, 2021 affidavit the defendant takes issue with the allegation that he was served with the statement of claim in October 2017. He says he did not receive notice of the plaintiff’s claim for an interest in the Property until almost two years later in August 2019. At paragraph 36 of his affidavit the defendant refers to the affidavit of service of the statement of claim sworn October 6, 2017. This affidavit of service states that service of the statement of claim was effected on October 4, 2017 by leaving a copy with an individual appearing to be a member of the same household of the defendant at 90 Waller Street, Whitby. At paragraph 37 of his affidavit the defendant says he did not live on Waller Street at that time, does not know the named individual and did not receive the statement of claim. Further, he says that plaintiff knew that he was living at the Property. The defendant states that prior to living at the Property, he lived at 1840 Victoria Park Avenue, Toronto. The defendant also deposes that the plaintiff prevented him from defending the matter by attempting to serve the statement of claim at an address that was not his residence (paragraph 64(i)).

[19] In his responding record on the CPL discharge motion, the plaintiff has attached to his affidavit sworn June 11, 2021 a copy of the defendant’s driver’s license issued July 11, 2014 with an expiry date of June 27, 2018 showing an address of 1840 Victoria Park Avenue, Toronto. The plaintiff says that this document was attached to the defendant’s affidavit sworn December 20, 2019 on the defendant’s motion for an order dismissing this action for delay that did not proceed. The plaintiff also attaches a copy of the defendant’s later issued driver’s license issued May 2, 2016 expiring June 27, 2018 which shows his address as Waller St. The plaintiff says that this driver’s license shows that at the time the statement of claim was served that he was living at Waller Street where the claim was left and that the statement in the defendant’s affidavit on this motion as to his residence when the statement of claim was served is false. The plaintiff also says that the defendant was attempting to mislead the court in his December 20, 2019 affidavit by providing his superseded driver’s licence. On cross-examination the defendant said that he planned to move to Waller Street at one point, but never did.

[20] The plaintiff says that the question is relevant as the defendant put his residence in issue in his affidavit on the discharge motion. The plaintiff says that the address shown on his driver’s license is relevant to whether he was served properly and whether he has ever lived at the Property as claimed.

[21] The defendant takes the position that the question goes to a point of credibility unrelated to the issues on the motion. The defendant answered the question about his current residence and the only reason to demand production of the drivers’ license is to see if the defendant was telling the truth.

[22] Even though the question goes to credibility, cross-examination of the defendant on this point goes to an issue raised by the defendant on the CPL discharge motion. Although cross-examination intended to impeach the character of the witness on a motion is not permitted, cross-examination on errors, omissions, inconsistencies, exaggerations or improbabilities of the witness’s evidence in his affidavit is permitted.[^6] It is also possible that the driver’s license might shed light on whether the defendant has ever lived at the Property.

[23] Although a close call, given that the plaintiff has already put two versions of the driver’s license into evidence, I order that the defendant produce a copy of his current driver’s license.

Refusals 2, 4 – 8, 11, Under advisement 1 – Questions 35, 63, 102, 110, 142, 203 and 96 Defendant’s banking and tax records

[24] The plaintiff moves on refusals to produce the defendant’s income tax return for 2016 and 2017 and for information regarding the defendant’s bank accounts. These refusals were dealt with together by agreement.

[25] The Trust Agreement pursuant to which the plaintiff makes his claim provides in part that the Property was to be purchased by the plaintiff and defendant as joint owners but would be registered solely in the name of the defendant, with the defendant being a bare trustee of the plaintiff’s 50% interest, and that they are to be equally responsible for ongoing charges with respect to the Property. The Trust Agreement further provides the purchase will be financed by a mortgage and funds from the trustee (the defendant) and the beneficiary (the plaintiff) in equal contribution. The Trust Agreement states the beneficiary (plaintiff) will be contributing $27,208.67 towards the closing costs and required down payment which is to be advanced to the defendant’s father, Mr. Alala Sr., in accordance with the direction of the defendant. The mortage broker, Mr. Hicks, has sworn an affidavit stating he witnessed the execution of the Trust Agreement and that he knew that the plaintiff and defendant were going to be equal partners in the Property.

[26] The defendant has deposed that while he recalls meeting with the plaintiff to sign documents in respect of the purchase of the Property, he has no recollection of signing the Trust Agreement. He further says that he did not receive independent legal advice in connection with the Trust Agreement and the plaintiff has not contributed to the expenses in connection with the Property. He also says he never would have agreed to the terms of the Trust Agreement, which are unreasonable and contrary to his interest.

[27] The defendant acknowledges that the plaintiff provided the defendant’s father with the sum of $27,208.23 but says that the money was not for the purchase of the Property. Rather the monies related to dealings between the plaintiff and Mr. Alala Sr. The plaintiff acted as Mr. Alala Sr.’s real estate agent on the purchase of two properties. One of the properties was jointly purchased by the plaintiff and Mr. Alala Sr. On the other property transaction the plaintiff only acted as real estate agent.

[28] The plaintiff says that banking and tax information are relevant to the defendant’s ability to make the down payment on the purchase of the Property and his ability to qualify for a mortgage of the Property. Furthermore, the plaintiff says that the documents will show that the mortgage application submitted on behalf of the defendant (the defendant denies that he submitted it) contains false documents and therefore undermines the defendant’s credibility.

[29] The plaintiff says the defendant has put the source of the funds for the down payment in issue in his affidavit at paragraph 23 when he says the total amount “paid by me” on closing was $64,417.34.

[30] The defendant says that the defendant’s financial status prior to his mortgage application, his ability to qualify for a mortgage and the source of the defendant’s down payment are not relevant to the discharge motion, although they may be relevant at examinations for discovery. Further, the defendant says that the credibility issues raised by the plaintiff, i.e. whether the defendant lied on his mortgage application, is not a credibility issue germane to the motion. In addition, the defendant’s position is that some of the requests under this category are overbroad.

[31] As set out above, the scope of the cross-examination is defined by the nature of the motion. On a motion to discharge a CPL, the plaintiff has to show a triable interest with respect to an interest in land. The court on the motion is not required to determine the merits of the plaintiff’s claim. Accordingly, at this stage, the court will not have to decide whether the defendant is credible and his version of events regarding the purchase of the Property should be believed. In particular, the court will not be called upon to decide whether the defendant’s evidence concerning the Trust Agreement should be believed.

[32] I agree with the defendant that the questions under this grouping are not relevant to the motion for discharge of the CPL. Moreover, many of the questions are overbroad and amount to a premature discovery request.

[33] These refusals are upheld.

Refusal 13 – Questions 369-370 – Advise whether the defendant’s notice of intention to act in person was related to money or financial issues or circumstances

[34] The defendant’s evidence is that he first retained counsel in connection with this litigation in 2019. In January 2020 he delivered a notice of intention to act in person. He later retained his present lawyer.

[35] At the cross-examination the defendant was asked if he delivered a notice of intention to act in person because of monetary reasons. The refusals chart delivered by the plaintiff did not set out the issues that are the subject to the refusals and the connection to the pleadings or affidavit, contrary to Rule 37.10(10)(a). At the hearing of the motion plaintiff’s counsel said that the question was relevant to the issue of delay. One of the grounds relied upon by the defendant for the discharge of the CPL is the plaintiffs’ alleged failure to prosecute the proceeding with reasonable diligence. The fact that the defendant was self-represented for a time is not relevant to the plaintiff’s ability to prosecute the action. In any event, the reason the defendant delivered a notice of intention to act in person in 2020 has no bearing on any issue.

[36] The refusal is upheld.

COSTS

[37] The defendant has had overwhelming success on this motion. The plaintiff originally moved on 22 refusals and was successful on only one, which I have said was a close call. At the commencement of the hearing the plaintiff withdrew 12 questions. The defendant is entitled to his costs of this motion.

[38] The defendant has submitted a costs outline seeking costs on a substantial indemnity basis. He says that an award of substantial indemnity costs is appropriate because the refusals motion forced the adjournment of the defendant’s urgent motion to vacate the CPL, the plaintiff’s motion was not in compliance with the Rules and several questions were withdrawn only at the commencement of the hearing. He has filed a costs outline which claims $14,011.29 on a substantial indemnity basis and $9,340.97 on a partial indemnity basis.

[39] The plaintiff has filed a costs outline which seeks $5,608.40 on a partial indemnity basis. The plaintiff’s costs are less than the defendant’s in part because the defendant prepared a factum and book of authorities on the motion which were helpful to the court. In addition, the defendant seeks recovery for two senior lawyers, whereas the plaintiff seeks recovery for one senior lawyer.

[40] Substantial indemnity costs are awarded only in rare and exceptional circumstances such as where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties.[^7] This is not one of those circumstances and accordingly I award costs on a partial indemnity basis.

[41] In my view a fair and reasonable of costs award in respect of this motion is $8,500 inclusive of HST and disbursements which shall be paid by the plaintiff to the defendant within 30 days.

Master La Horey

Date: July 28, 2021

[^1]: This includes one question initially taken under advisement. [^2]: 2011 ONSC 2504 at para 14. See also Twelve Gates Capital Group Inc. v Eminence Living Inc. 2017 ONSC 3506 (Master). [^3]: Ibid [^4]: Perruzza v Spatone, 2010 ONSC 841 (Master) at para 20 [^5]: Volk v Volk, 2020 ONCA 256 [^6]: Moyle v Palmerston Police Services Board, 1995 10659 (Ont. Div. Ct.) at para 15 [^7]: Mars Canada Inc. v Bemco Cash & Carry Inc., 2018 ONCA 239 at para 43