Court File and Parties
COURT FILE NO.: CV-20-647679-0000
DATE: 20211201
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Shaw Communications Inc.
AND:
Kenrick Young et al.
BEFORE: J.T. Akbarali J.
COUNSEL: Shanti E. Barclay, for the Plaintiff
Lorne Sabsay, for the Defendant Christopher Anthony Mornan
No one appearing for the Defendants Kenrick Young, Garnett A. Ricketts, and Ian Anthony Mitchell
HEARD: November 30, 2021
ENDORSEMENT
Overview
[1] On this motion, the plaintiff seeks to continue, and the defendant Christopher Anthony Mornan seeks to set aside, an ex parte Mareva injunction granted by Myers J. on December 14, 2020. Mr. Mornan also seeks to set aside three certificates of pending litigation that were issued against properties in which he has an interest.
Brief Background
[2] On March 13, 2019, the plaintiff was the victim of an armed robbery, at which about $8 million in locked cellphones were stolen from a FedEx truck that was intended to deliver the phones from a warehouse where they were being stored to various retailers.
[3] The four defendants to this action were charged in connection with the robbery around September 2019. The charges against the defendant, Mr. Mornan, were withdrawn by the Crown on June 18, 2020.
[4] The plaintiff brought an ex parte application in writing for a Mareva injunction. As I have noted, the application was granted by Myers J. on December 14, 2020. The evidence in support of the Mareva injunction was found primarily in the affidavit of a junior lawyer of the plaintiff’s counsel’s office, sworn October 20, 2020. I refer to the affiant as X, because, having in mind their junior role on the file, I cannot be certain how much control X had over the content of the affidavit and I do not wish to unfairly create a public record criticizing X for matters that may have been beyond their practical control.
[5] Various procedural issues resulted in the return of the motion being brought before me nearly a year later, on November 30, 2021.
[6] Mr. Mornan has brought a cross-motion seeking to have the Mareva injunction lifted as against him, arguing that (i) the plaintiff did not make full and fair disclosure as it relates to him before Myers J.; (ii) the plaintiff does not have a strong prima facie case against him; (iii) there is no evidence that Mr. Mornan will dissipate his assets for the purpose of hindering the plaintiff’s ability to collect on any judgment granted, and (iv) there is no evidence that the plaintiff would be irreparably harmed if the injunction is not continued.
[7] There are issues with service of the motion materials on the other defendants. At the end of these reasons I address the timetabling of the return of the motion as it relates to the other defendants. At this stage, I consider the Mareva injunction only as it relates to Mr. Mornan.
Conclusion
[8] For the reasons below, I set aside the Mareva injunction as it applies to Mr. Mornan, and award him costs on a full indemnity scale, in the amount of $55,863.26.
Test for a Mareva Injunction
[9] A Mareva injunction is an extraordinary remedy. As Estey J. explained in Aetna Financial Services v. Geifelman, 1985 55 (S.C.C.), in our jurisprudence, execution cannot be obtained prior to judgment and judgment cannot be recovered before trial. A party should not be restrained by an interlocutory injunction unless some irreparable harm is likely to result to the plaintiff. The court must be particularly cautious about granting such extraordinary relief where there is a serious question as to whether the plaintiff would succeed in the action: at paras. 7, 8.
[10] The parties agree on the test to be applied when a plaintiff seeks a Mareva injunction. The test is set out in, for example, Chitel v. Rothbart, 1982 1956 (Ont. C.A.) and Sibley and Associates LP v. Ross, 2011 ONSC 2951, at para. 10.
a. The plaintiff must make full and frank disclosure of all material matters within its knowledge;
b. The plaintiff must give particulars of the claim against the defendant stating the grounds of the claim and the amount thereof, and the points fairly made against it by the defendant;
c. The plaintiff must give grounds for believing that the defendant has assets in the jurisdiction;
d. The plaintiff must give grounds for believing that there is a real risk of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with so that the plaintiff will be unable to satisfy a judgment awarded to him or her; and
e. The plaintiff must give an undertaking as to damages.
[11] It is a condition precedent to the order that the plaintiff demonstrate a strong prima facie case on the merits: Aetna Financial, at p. 27.
[12] Here, Mr. Mornan argues that, as it relates to him, (i) the plaintiff did not make full and frank disclosure before Myers J.; (ii) the plaintiff cannot establish a strong prima facie case; (iii) there are no grounds for believing that there is a risk of dissipation of assets.
Did the plaintiff make full and frank disclosure before Myers J.?
[13] The requirement to make full and frank disclosure (sometimes called full and fair disclosure) is an important one, and is designed to ensure the integrity of the court’s process on an ex parte application.
[14] In Moses v. Metro Hardware, 2020 ONSC 6684, beginning at para. 20, Myers J. addressed the duty to make full and frank disclosure. He noted the importance of each party challenging the other’s cases in our adversarial system of civil justice. When a matter proceeds ex parte, the usual assurances of mutual self-interest and mutual advocacy of competing parties is missing. Thus, r. 39.06 of the Rules of Civil Procedure, W.W.O. 1990, Reg. 194, “imposes vital, extra burdens on parties who seek relief before the court without notice to their adversary.” They must make full and frank disclosure of all material facts. As Myers J. explained, the duty to make full and frank disclosure replaces the usual checks and balances of the adversarial system.
[15] “Material facts” are those of which the non-disclosure may affect the outcome of the motion: Girsberger v. Kresz, [1998] O.J. No. 911, at para. 28. Materiality is assessed objectively, and all matters relevant to the weighing operation the court has to undertake in deciding whether to grant the order must be disclosed: Moses, at para. 30, citing United States v. Friedland, [1996] O.J. No. 4399 (Ont. Gen. Div.).
[16] The duty of full and frank disclosure extends to any points of fact or law known to the plaintiff which favours the other side: Friedland at para. 27, cited by Myers J. in Moses, at para. 27.
[17] A party may fail to meet the duty of full and frank disclosure by failing to disclose material facts in support of the defendant’s position; misstating the then current state of affairs and law; overstating the position in support of the moving party; and selective exclusion of relevant information, among others: United States of America v. Yemec, 2003 23436 (ON SC), [2003] O.J. No. 3863, (S.C.J.) at para. 35, aff’d, 2005 8709 (ON SCDC), [2005] O.J. No. 1165 (Div. Ct.).
[18] The duty to make full and frank disclosure extends to a party’s factum: Yemec, S.C.J., at para. 36.
[19] A party who fails to make full and frank disclosure risks having the order set aside regardless of the merits of the request for relief: Moses, at para. 29, r. 39.01(6), Rules of Civil Procedure. As the court put it in Friedland, at para. 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.
[20] The question before me is whether the plaintiff made full and frank disclosure as it was required to do. At this juncture, I turn to review some aspects of the plaintiff’s evidence and written argument that are concerning.
[21] X’s affidavit begins with a description of the robbery the plaintiff suffered. It is all hearsay. X does not identify the source of their information or indicate that they believe it to be true. Rather, they purport to describe the robbery, including that the phones were to be shipped to Bali and the Caribbean, that the robbery took place at a vulnerable time in the transportation of the goods, and they describe how the robbery took place. They do not explain how they know what they depose to; there is no evidence or even indication that they were present during the robbery.
[22] Hearsay evidence is a common feature of X’s affidavit. For example, they rely on reports prepared by others, including an insurance adjuster, an accounting firm retained by the insurance adjuster, and a private investigator. None of these individuals filed affidavits; rather, X deposes as to the content of their reports. While X is able to depose to the information contained in those reports, as X’s affidavit includes the generic statement at the outset that, where they do not have personal knowledge of the matters to which they depose, they identify the source of the information and they believe it to be true, that takes care only of the admissibility issue. It does not address the issue of the weight that ought to be attached to evidence of third parties adduced in this manner. I am concerned about some of the statements that come into the record in this manner, insulated from cross-examination, and yet very important to the issues on the motion, and highly prejudicial to Mr. Mornan. I address some of these in greater detail below. Here, I note that I am disinclined to place significant weight on key assertions that are conclusions of others based on X’s evidence.
[23] There are troubling omissions and overstatements in X’s affidavit. By way of example only:
a. The affidavit in support of the plaintiff’s original request for the Mareva injunction states that Mr. Mornan “has been charged” with certain criminal offences. In fact, by the time X’s affidavit was sworn, the charges against Mr. Mornan had been withdrawn for some four months. Although the plaintiff argues it was unable to access this information, I note that (i) it did not, in the affidavit, qualify to what point its knowledge was current, or explain any difficulties in accessing up-to-date information; and (ii) when eventually advised by Mr. Mornan’s counsel that the charges had been withdrawn, it was able to confirm that information with the Crown very quickly. It seems the plaintiff simply did not bother to try to update its information before swearing the affidavit in support of its request for extraordinary relief, and did not bother to disclose that fact to Myers J.;
b. At times, the affidavit does not accurately report the charges that were laid against Mr. Mornan. For example, although X deposes that Mr. Mornan was charged with possession of stolen property, that was not true. Neither was Mr. Mornan charged with robbery using a firearm, as X deposes; Mr. Mornan was charged with robbery. Mr. Mornan was not charged with use of a firearm during a criminal act and kidnapping, as the affidavit states; he was charged with using an imitation firearm while committing a robbery and kidnapping. The correct charges are identified elsewhere in Z’s affidavit. This inconsistency evidences a lack of care in the accuracy of the affidavit, as the charges were obviously known to the plaintiff at the time the affidavit was sworn.
c. X deposes that Mr. Mornan owned or controlled the warehouse where the stolen merchandise was shipped, and that stolen cell phones were found in Mr. Mornan’s warehouse. The insinuation in X’s affidavit is that all, or a lot of, the stolen merchandise was stored in Mr. Mornan’s warehouse. The evidence before me indicates that Mr. Mornan came into possession of stolen phones in a quantity small enough to be carried in a single box. At the same time, the boxes of phones that were stolen took over an hour to load into the FedEx truck. X had, at best, no knowledge as to how many phones were found in Mr. Mornan’s warehouse, but their affidavit implied that very many of them were.
d. X deposes that an insurance adjuster authored a report dated September 24, 2019, which X summarizes in their affidavit. In doing so, X deposes that the insurance adjuster “has been made aware that the persons who executed the robbery are part of a gang from Toronto who have been involved in several other armed robberies.” This statement can fairly be said to implicate Mr. Mornan, because X deposes that Mr. Mornan was charged with robbery. In fact, the insurance adjuster was provided this information by a “risk manager,” named Amanda Pazarka. The affidavit does not indicate who Ms. Pazarka is, how she came into possession of this information, or whether there is any basis to believe it to be true. Thus, X, in summarizing the insurance adjuster’s report, relies on hearsay in the report to depose to Mr. Mornan being part of a “gang” involved in “several other armed robberies.” This allegation is highly prejudicial to Mr. Mornan, and there was no evidentiary foundation for X to make it.
e. X deposes that cell phone records placed Mr. Mornan at the scene of the robbery. That was false. The Crown synopsis of its theory, contained in the record, alleges that, at different times, the defendants’ phones were registering at a cell tower close to Mr. Mornan’s warehouse, not the scene of the robbery.
f. X also deposes that another robbery occurred on June 22, 2019, and that the “same suspects” – which again, can fairly be understood to include Mr. Mornan – were involved. There is absolutely no evidence that Mr. Mornan was implicated in any other robbery. Mr. Mornan was never charged in connection with any other robbery to which X refers (and, for clarity, no other robbery of which I am aware).
g. A heading in X’s affidavit reads “ZTGH [the plaintiff’s counsel’s firm] follows all criminal proceedings.” X deposes that they “attended every court appearance related to the first robbery,” and relays a number of dates that continue until the court shut down at the outset of the COVID-19 pandemic. This leaves the reader with the false impression that X attended relevant court appearances relating to Mr. Mornan, when in fact, they only ever attended one court appearance related to Mr. Mornan, an assignment court appearance on November 25, 2019.
h. X’s affidavit relies heavily on statements made in the bail hearings of the other accused to describe the allegations against Mr. Mornan. For the most part, X’s affidavit does not describe these statements as what they were - submissions, or the synopsis read into a bail hearing, setting out what the police think occurred. Rather, X concludes that the “evidence” – of which they had none – supported the civil liability of all defendants, and X made reference to the defendants’ “criminal involvement in a robbery and the severity of charges against them” as if it were a fact.
[24] The plaintiff’s factum filed on the original motion is equally, if not more, problematic. For example:
a. The factum alleges that the “defendants” carried out a violent robbery, and that Mr. Mornan “hid the stolen goods in his warehouse.” By the time the factum was drafted, the charges against Mr. Mornan had been withdrawn, the plaintiff had no other basis on which to assert that Mr. Mornan “carried out a violent robbery,” and there was never any basis to say Mr. Mornan hid “the” stolen goods in his warehouse, as that statement implies Mr. Mornan actively concealed all the stolen property, when at most one can say that stolen property that fit inside one box was found inside his property.
b. The factum alleges that “all the defendants were present during the armed robbery and were found in possession of a robbery kit and/or items stolen from the Fed/Ex truck.” This statement is problematic because it lumps Mr. Mornan in with the other defendants. The plaintiff has not identified any evidence, or even any information, that Mr. Mornan was ever found in possession of a robbery kit. He was found in possession of some items that were stolen from the truck, but the wording of the sentence is vague, and implicates Mr. Mornan in the possession of a robbery kit.
c. The factum alleges that the defendants were “caught red-handed.” There is no evidence Mr. Mornan was “caught red-handed.” Other defendants were arrested when they were allegedly in process of committing another robbery. Mr. Mornan was never implicated in that subsequent robbery.
d. The factum alleges that the “defendants were attempting a third similar robbery when arrested.” That is simply not true as it relates to Mr. Mornan. There is no evidence, and the plaintiff never had any reason to believe, that Mr. Mornan was arrested while attempting a robbery.
e. Most egregiously, the factum states that X’s affidavit “details the evidence to be presented at the trial of the defendants.” It did no such thing. It set out the Crown’s theory of the case as had been disclosed at the bail hearing of Mr. Mornan’s co-defendant. The factum goes on to say that “the particulars known to date are sufficient to support a civil finding of fact in favour of the plaintiff on a balance of probabilities.” But no “particulars” were “known” by the plaintiff. The plaintiff had heard the Crown’s theory of the case. That’s it. Yet the factum confidently predicts the result of the civil case based on unsworn statements made in another defendant’s bail hearing.
[25] Neither the affidavit nor the factum accurately disclose what the plaintiff knew, or did not know. By indiscriminately lumping Mr. Mornan in with other defendants, and by describing matters about which the plaintiff had no current information as if the information was then-current, the documents both, overstate the plaintiff’s case, and misstate Mr. Mornan’s involvement – and even his suspected involvement – in the robbery. The plaintiff makes no effort in either document to disclose, or even wonder, what Mr. Mornan might have said if the motion was not proceeding ex parte. The documents are drafted as if the plaintiff was fully engaging in the adversarial process, not an ex parte hearing where the plaintiff has the duty of full and frank disclosure because the normal checks and balances of the adversarial system were not present. Moreover, the obfuscation in the affidavit and factum were material to the issues before Myers J., and highly prejudicial to Mr. Mornan. In my view, had full and frank disclosure been made about what the plaintiff actually knew and did not know about Mr. Mornan, the Mareva injunction would not have been granted in the first place.
[26] I am not making a finding that X, the plaintiff, or anyone on behalf of the plaintiff, lied. The plaintiff’s counsel states the affidavit records the facts as they knew them. For purposes of this hearing, I need not go further than determining that the affidavit and factum were over-zealous, and that the plaintiff did not discharge its duty to the court.
[27] That conclusion is a sufficient basis on which to set the Mareva injunction aside, and on that basis alone, I set it aside.
[28] However, for the sake of completeness of the record, I briefly comment on certain other aspects of the Mareva injunction test with which Mr. Mornan has joined issue.
Strong Prima Facie Case
[29] In my view, the plaintiff has failed, on this motion, to make out a strong prima facie case against Mr. Mornan.
[30] In argument, the plaintiff indicated its claim against Mr. Mornan was pleaded in negligence. However, in the statement of claim, the plaintiff claims against Mr. Mornan for:
a. Wrongful and intentional theft;
b. Trespass to chattels;
c. Conversion.
[31] Considering first what is pleaded, Mr. Mornan is no longer charged. Contrary to the plaintiff’s evidence, there never was any evidence that Mr. Mornan was present at the scene of the robbery, took delivery of “the stolen goods” (as opposed to one box that contained some unknown number of phones), was part of a gang that had participated in similar armed robberies, was arrested while committing another robbery, or was caught red-handed.
[32] Moreover, photos in the record suggest that Mr. Mornan had neither the space in his parking lot to accommodate a truck to unload all the stolen phones, nor the space in his warehouse to store the number of phones that were stolen.
[33] Mr. Mornan deposes that he was not involved in the robbery. He deposes that he and the defendants Kenrick Young and Ian Mitchell were friends. He explains that Mr. Young, Mr. Mitchell, and another man, Garnett Ricketts, came to his warehouse on the night of the robbery. He was introduced to Mr. Ricketts as a friend of Mr. Young and Mr. Mitchell. Mr. Ricketts offered to sell Mr. Mornan some refurbished, damaged, or demo phones that he could get through work, and said that he could get them at a discount, because they were locked to a US network and could not be used in Canada. Mr. Mornan deposes that he agreed to buy them to donate them to a school.
[34] Even if Mr. Mornan’s explanation of how he came to be in possession of the stolen phones is eventually rejected, the most one can say is that there is a prima facie case that Mr. Mornan purchased some phones that he may well have suspected were stolen, and which were subsequently seized by the police and presumably returned to the plaintiff. Even if Mr. Mornan’s explanation is ultimately rejected, it is difficult to understand why those facts – which put the plaintiff’s case at its highest based on the evidence before me – justifies the extraordinary remedy of a Mareva injunction, freezing Mr. Mornan’s significant assets with the exception of what he needs to live or run his business.
[35] I note that the plaintiff points out some inconsistencies in Mr. Mornan’s evidence. I have considered these. In some cases, the plaintiff has overstated the inconsistency. For example, the plaintiff argues that Mr. Mornan claimed to have sent $80,000 to his daughter to pay for her university tuition when the tuition was only $13,000. A proper reading of his evidence indicates that he sent her money for tuition, with the balance to be held for his legal fees. There is no inconsistency.
[36] Where the plaintiff has been able to demonstrate some inconsistencies in Mr. Mornan’s evidence, I find that they are on matters that are not material to my analysis.
[37] If Mr. Mornan were liable to the plaintiff, on the evidence before me, it might be for Mr. Mornan’s possession of some goods stolen from the plaintiff. But those have been returned.
[38] On what basis can the plaintiff establish a strong prima facie case against Mr. Mornan for the totality of its losses? Presumably the weakness in its case in theft is what led counsel to argue at the hearing that the case sounds in negligence. Apart from the fact that negligence is not pleaded in the statement of claim[^1], I have real doubts that the plaintiff could establish a relationship of proximity grounding a duty of care owed by Mr. Mornan to the plaintiff, or that, even if he did, failure to report the stolen goods to the police amounts to a breach of duty owed to the plaintiff, but for which the plaintiff would have recovered all the stolen goods and been made whole. That argument requires rampant speculation and leaps of logic, not to mention the inherent policy challenges in concluding that someone who does not turn in goods they suspect might be stolen should be responsible for the entirety of the wronged party’s underlying loss from the theft.
[39] I note that, in attempting to bolster its case against Mr. Mornan, the plaintiff sought to rely on an email counsel received from a police officer confirming that charges against Mr. Mornan were dropped. The email implies that charges were dropped because the state could not meet its burden of proof to convict Mr. Mornan, but that Mr. Mornan may well have been implicated in the crime. The email is inadmissible hearsay. There is no evidence from the police officer, who is immune from cross-examination. There is not even any evidence as to why the police officer would be in a position to draw any conclusions about Mr. Mornan’s guilt or innocence, or how she was involved in the investigation.
[40] When I asked counsel about the admissibility of the evidence, she indicated that Mr. Mornan’s counsel had not objected, nor brought a motion to strike, which, in her view, is the usual course where there is an issue with the admissibility of evidence. She suggested my concerns should go to weight. I disagree. First, Mr. Mornan’s counsel did raise hearsay concerns. Second, a motion to strike is often an expensive and time-wasting diversion from the real issues in dispute. In most cases, it is more efficient to deal with concerns around admissibility of evidence through submissions in which counsel can ask the court to ignore evidence in the record. Finally, whether Mr. Mornan objects or not, I am not bound to accept hearsay evidence for proof of the truth of its contents, particularly on such a key and contested issue.
[41] I am, however, troubled by the ease at which – on a motion where the transparency of the plaintiff’s disclosure was placed so clearly in issue – the plaintiff continued to make veiled, and not-so-veiled, insinuations about Mr. Mornan’s honesty, without evidence. I have just reviewed one example – the police officer’s email.
[42] In another instance, plaintiff’s counsel submitted that Mr. Mornan’s own evidence indicated he had defrauded a bank, and that it was criminal behaviour to have done so. The actual evidence leads to no such conclusion. Mr. Mornan gave evidence about an occasion when he was seeking a business loan, and the bank suggested to him that he would be more likely to receive it were he on title to the home he shares with his common-law partner. They decided to put Mr. Mornan on title for that purpose, although Mr. Mornan did not, in the end, take out a bank loan. Absolutely nothing in Mr. Mornan’s evidence suggests that he was not transparent with the bank; rather, it suggests the bank suggested that he get on title to the home. Absolutely nothing in Mr. Mornan’s evidence suggests he finagled his way onto title by being dishonest with his partner – rather, the implication of his evidence is that they together decided it would be a good idea for him to come on title.
[43] This ongoing suggestion of fraud, dishonesty and criminality, in the face of no evidence in support of it, is inappropriate. Allegations of that nature and seriousness must be based on more than speculation.
[44] On the record as a whole, the plaintiff has failed to meet its burden to establish a strong prima facie case against Mr. Mornan for anything either pleaded, or alleged at the hearing before me.
Dissipation
[45] In finding that there was a real risk of assets being moved out of the jurisdiction, it is apparent from Myers J.’s endorsement that he inferred the risk of dissipation relying on the plaintiff’s evidence about the robbery.
[46] The plaintiff is correct that, as stated in its factum, “where the evidence of fraud is so strong that coupled with the surrounding circumstances it gives rise to an inference that there is a real risk that the Defendants will try to dissipate or hide their assets or remove them from the jurisdiction”: Sibley and Associates LP v. Ross, 2011 ONSC 2951, at para. 63.
[47] However, as my analysis thus far makes clear, there is no strong evidence of fraud against Mr. Mornan. The court’s ability to draw an inference of dissipation hinges on the strong evidence of fraud. It follows from my conclusion that the plaintiff does not have a strong prima facie case against Mr. Mornan, that the inference of dissipation of assets is not available.
[48] There is no evidence that was in the record before Myers J. that would have supported an inference of dissipation.
[49] I note that after being served with the Mareva injunction, Mr. Mornan removed some of his assets from his accounts, in breach of the order. He explains he did so in order to have money to pay a lawyer to address this litigation. The plaintiff argues that is evidence of dissipation.
[50] While I do not condone Mr. Mornan’s actions on receiving the order, in the circumstances, I have difficulty relying on conduct subsequent to the original order to ground the plaintiff’s entitlement to the Mareva injunction, when the explanation for that conduct is that Mr. Mornan reacted to the order that would not have been issued had the plaintiff met its duty of full and frank disclosure in the first place.
Conclusion on the Mareva Injunction
[51] In these circumstances, and especially given the lack of full and frank disclosure made by the plaintiff before Myers J. as it relates to Mr. Mornan, and the plaintiff’s failure to establish a strong prima facie case against Mr. Mornan, I set aside the Mareva injunction with respect to Mr. Mornan.
Certificates of Pending Litigation
[52] I note that the original order also ordered Certificates of Pending Litigation against three properties: the warehouse where the box with phones in it was found, Mr. Mornan’s family home owned with members of his family of origin, and the home Mr. Mornan resides in with his partner.
[53] One of the CPLs, by agreement of the parties, was lifted to allow Mr. Mornan to remortgage it. Once the refinancing was complete, the parties agreed the CPL would go back on title pending this motion. It has not yet gone back on, for reasons that are not in evidence before me, but that were explained by counsel.
[54] It does not matter that the CPL is not back on the property yet, because there never should have been a CPL issued against any of the properties in the first place.
[55] A certificate of pending litigation may be issued under s. 103 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, where a proceeding has been commenced claiming an interest in land.
[56] The test for a CPL was laid out in Perruzza v. Spatone, 2010 ONSC 841, at para. 20. The threshold question is whether there is a triable issue as to an interest in land. Factors a court may consider when determining whether to discharge a CPL include whether there is an alternative claim for damages, and whether damages would be a satisfactory remedy.
[57] Similarly, under s. 103(6) of the Courts of Justice Act, the court may discharge a CPL where the party at whose instance it was issued claims a sum of money in place of, or as an alternative to, the interest in land claimed, or does not have a reasonable claim to the interest in land claimed.
[58] The plaintiff has no interest in any of the lands over which it obtained a CPL. It claims money in its statement of claim.
[59] The plaintiff argues that, in the circumstances of this case, I ought to broadly construe “interest in land” to include Mr. Mornan’s warehouse because it is connected to the robbery. It argues there is a legislative gap that I ought to fill in by broadening the “interest to land” element of the test for a CPL to include a “connection to land,” which, in this case, must be between the cause of action and the land.
[60] This argument was made for the first time in reply. I provided Mr. Mornan’s counsel with the opportunity to address it as a result.
[61] I decline to expand the test for a CPL in the manner suggested. The fact that it surfaced during reply for the first time is an indication about how ill-developed it was. I do not propose to make a significant adjustment to the long-standing test for a CPL on the basis of a thought that arose during argument and has not been properly briefed.
[62] In any event, a plaintiff who can establish a strong prima facie case against a defendant in circumstances like these has an effective remedy in a Mareva injunction. It is not also entitled to a CPL when it has no interest in land, but only an interest in recovering money if it is successful at the end of the litigation.
[63] The plaintiff’s continued argument for the CPL, and asking for it in the first place, is another indication of the misplaced zeal with which it approached this litigation against Mr. Mornan.
[64] I thus discharge the certificates of pending litigation that were issued against the warehouse property, Mr. Mornan’s family home, and Mr. Mornan’s home with his partner.
Costs
[65] At the hearing, the parties agreed to upload their costs outline and that, based on those documents alone, I could determine costs once I had reached my determination on the merits.
[66] The three main purposes of modern costs rules are to indemnify successful litigants for the costs of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330, at para. 22.
[67] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act. The court exercises its discretion taking into account the factors enumerated in r. 57.01 of the Rules of Civil Procedure, including the principle of indemnity, the reasonable expectations of the unsuccessful party, and the complexity and importance of the issues. Overall, costs must be fair and reasonable: Boucher v. Public Accountants’ Council for the Province of Ontario, 2004 14579 (Ont. C.A.), 71 O.R. (3d) 291, at paras. 4 and 38. A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), 2002 CarswellOnt 4020, 118 A.C.W.S. (3d) 341 (C.A.), at para. 4.
[68] Mr. Mornan is the successful party. He seeks his full indemnity costs. His costs outline supports full indemnity costs in the amount of $55,833.76, all inclusive. In contrast, the plaintiff’s costs outline supports costs of $26,179.84 in full indemnity costs plus disbursements of $514.11.
[69] In my view, this is an appropriate case for full indemnity costs. Mr. Mornan has been financially impaired by the Mareva injunction for nearly a year. He has had to incur significant costs as a result, including obtaining interim variations of the order until this motion could be heard. This never should have happened to him. If the plaintiff had met its clear obligation to make full and frank disclosure, it never would have happened to him.
[70] The three main purposes of costs rules are all served with an award of full indemnity costs. Mr. Mornan will be indemnified. The plaintiff’s inappropriate behaviour will be sanctioned. Even settlement will be encouraged. The plaintiff had the opportunity to correct the situation early on, when it first learned that it had wrongly told the court that Mr. Mornan remained charged, when the charges had been withdrawn. But it persisted. The matter may have been able to be settled at that stage with far, far, less in costs incurred by both parties. But the plaintiff forged ahead, as ill-advised as it had been when it didn’t bother to even try to get more current information before assembling its record for the original motion.
[71] Of course, even full indemnity costs have to be fair and reasonable. In determining the quantum of costs payable here, I note the following:
a. This case was more complex than most Mareva injunctions. It involved the intersection of civil and criminal law, and the record was significant. The fact that there were so many accused in the criminal proceeding and co-defendants in the action also leant some complexity to the action.
b. These issues were incredibly important to Mr. Mornan. The action seeks $8 million in damages against him. His personal finances were affected by the Mareva injunction and the CPLs, and the CPLs also affected the financial interests of his partner and other family members. Mr. Mornan may suffer lasting repercussions with respect to his business property due to the CPL having been registered on it. Moreover, the plaintiff alleged, and continues to allege, serious criminal wrongdoing and dishonesty on the part of Mr. Mornan, including on this motion with no evidence to support those allegations. Mr. Mornan is rightly concerned with his reputation.
c. This entire motion against Mr. Mornan was unnecessary. A realistic assessment of the evidence against Mr. Mornan (which by necessity could only have occurred if the plaintiff had made an attempt to get up-to-date information about Mr. Mornan) should have led the plaintiff to the conclusion that it could not meet the requirements for the extraordinary relief of a Mareva injunction against him in this case. Having failed to undertake that assessment prior to bringing the motion, the plaintiff had a second chance after it was advised that its information was wrong, and the charges had been dropped. Still, it persisted, past delivery of affidavit evidence from Mr. Mornan, past cross-examinations, all the way to the hearing of this motion nearly twelve months after the original order was obtained.
d. Having obtained the Mareva injunction ex parte, the plaintiff sought an adjournment of the return date of this motion for various purposes, including a motion to obtain a copy of the Crown brief. Many of the delays in bringing this motion on related to requests from the plaintiff.
e. While the time Mr. Mornan’s counsel spent on drafting and reviewing the file appears high, it is understandable in the context of the numerous documents contained in the court’s Caselines file.
f. While the plaintiff’s costs are about half of Mr. Mornan’s costs, I conclude that Mr. Mornan’s costs should have been in the reasonable contemplation of the plaintiff, in view of the seriousness of the issues to Mr. Mornan, the complexity of the issues, and the number of documents in the file. I note that in Caselines, the plaintiff has uploaded 50 documents, and Mr. Mornan has uploaded 35 documents.
[72] Having regard to all the foregoing, I have no difficulty concluding that the costs sought by Mr. Mornan are fair and reasonable in the circumstances. The plaintiff shall pay Mr. Mornan his full indemnity costs of $55,863.26, all inclusive, within seven days. I have shortened the typical period of time within which costs are paid in this case to take into account the length of time that Mr. Mornan has suffered the effects of the Mareva injunction. He should not have to wait any longer for some financial relief.
[73] Moreover, I note that there has been some suggestion made before me that Mr. Mornan may be on the verge of suffering economic loss as a result of the Mareva injunction. This allegation is not supported by evidence before me, nor is it an issue which is before me to determine. For clarity, nothing in these reasons prejudices Mr. Mornan’s ability to seek damages against the plaintiff as arising out of the Mareva injunction and in connection with the plaintiff’s undertaking at the original motion to abide by any order concerning damages that the court may make if the granting of the injunction causes damage to Mr. Mornan for which the plaintiff ought to compensate him.
Conclusion
[74] The plaintiff’s motion to continue the Mareva order and certificates of pending litigation, as they relate to Mr. Mornan, as well as any other relief claimed that is related to Mr. Mornan, is dismissed. Mr. Mornan’s cross-motion for an order discharging the certificates of pending litigation on his properties and vacating the Mareva order made on December 14, 2020 is granted.
[75] The plaintiff shall pay Mr. Mornan his full indemnity costs of these motions, in the amount of $55,863.26 all inclusive, within seven days.
Motion for Continued Mareva Injunction related to the other Defendants
[76] Due to problems with service on the other defendants, the plaintiff was not in a position to proceed with its motion to continue Myers J.’s Mareva injunction order against the other defendants.
[77] I thus order the following schedule:
a. The plaintiff shall serve and file any updating affidavit and revised factum for the next phase of this motion by March 18, 2021. Affidavits of service must be filed.
b. The plaintiff shall seek a new caselines bundle for the return of the motion into which it shall upload all the material necessary for use on the motion.
c. The material for use on the motion shall be hyperlinked, including hyperlinks between the index and each tab in each electronic brief, and from each tab in each electronic brief back to the index.
d. The motion shall continue before me on April 1, 2022 at 10 a.m. for one hour.
e. This endorsement shall be served on the other defendants along with the motion materials, updating affidavit and revised factum, if any.
J.T. Akbarali J.
Date: December 1, 2021
[^1]: I was unable to find in the record, which is organized in a confusing manner, any amended statement of claim, nor did any party refer me to an amended statement of claim, so I assume the original claim is the only claim that exists.