SUPERIOR COURT OF JUSTICE - ONTARIO
RE: KULWANT CHUHAN and JUNG BAHADUR CHUHAN, Plaintiffs
AND:
PONNIAH SOUNDRARAJAN, MANGALAHOWRY SOUNDRARAJAN, THIVYA SOUNDRARAJAN, THILUXAN SOUNDRARAJAN, SANDWICH BOX INC., THE SANDWICH BOX (388 RICHMOND STREET WEST) INC. and SANDWICH BOX (1200 BAY ST.) INC., Defendants
BEFORE: VERMETTE J.
COUNSEL: Paul Starkman, for the Plaintiffs
David Milosevic, for the Defendants
HEARD: February 11, 2022
ENDORSEMENT
1The Plaintiffs appeal from the Order of Associate Justice Jolley dismissing their motion to strike the Statement of Defence of the Defendants Ponniah Soundrarajan (“P.S.”) and Thiluxan Soundrarajan (“T.S.”) for non-compliance with consent orders requiring them to answer certain undertakings. The Plaintiffs also seek leave to appeal the Associate Judge’s order as to costs awarding $20,000 in costs to the Defendants.
2This appeal has no merit. The Plaintiffs are rearguing the same points that they unsuccessfully argued before the Associate Judge. They have not demonstrated any error reviewable on appeal. Accordingly, the appeal is dismissed and leave to appeal the costs order is denied.
I. FACTUAL BACKGROUND
A. The action, the undertakings and the consent orders
3This action was commenced on May 9, 2016. It alleges the fraudulent conveyance of the following property to P.S.’s wife (the Defendant Mangalahowry Soundrarajan) and P.S.’s children (the Defendants T.S. and Thivya Soundrarajan): (i) real estate owned by P.S., (ii) shares owned by P.S., and (iii) corporate trademarks owned by the Defendant Sandwich Box Inc. (“SBI”). It is alleged that the transfers in issue were done for the purpose of defeating, delaying, hindering or defrauding P.S.’s creditors, including the Plaintiffs who obtained a judgment against P.S. and SBI in the amount of $657,999.89 on December 15, 2015. With interest continuing to accrue, the amount currently owed under the judgment exceeds $1 million.
4The examinations for discovery of the Defendants took place at the end of August 2017. Undertakings were given during the examinations for discovery.
5On January 22, 2018, Master Wiebe (as his title then was) ordered on consent that P.S., T.S., Mangalahowry Soundrarajan and Thivya Soundrarajan answer certain outstanding undertakings and certain refusals.
6The Plaintiffs subsequently brought a motion returnable December 7, 2018 alleging that the Defendants had not complied with the Order of Master Wiebe. On December 7, 2018, Master Short (as his title then was) ordered on consent that the Defendants fully comply with the Order of Master Wiebe by February 11, 2019, which was the new return date of the Plaintiffs’ motion.
7At the time of the return of the motion, six undertakings remained in issue between the parties. There was only one undertaking in issue with respect to P.S. (Undertaking 7: “To provide the financial statements and tax returns for Sandwich Box Inc. from 2003 to date.”
8There were five undertakings in issue with respect to T.S. (Undertakings 3, 4, 5, 6 and 7):
(a) Undertaking 3: To advise if the January 16, 2014 deposit in the amount of $4,300 was made by cash or cheque.
(b) Undertaking 4: To advise if the March 1, 2014 deposit of $4,250 was made by cash or cheque.
(c) Undertaking 5: To advise who made the deposits of $1,400 and $2,900 of April 1st.
(d) Undertaking 6: To advise who made the deposit of $4,000 on May 31, 2014.
(e) Undertaking 7: To advise who made the deposits on June 30th and July 2nd.
9On February 11, 2019, Master Short wrote an endorsement noting that the parties had agreed on the terms of an order regarding undertakings. The Order provides that P.S. is to comply with Undertaking 7 within 30 days, and that T.S. is to use reasonable efforts to produce bank statements and/or credit card statements to comply with Undertakings 3, 4, 5, 6 and 7 within 30 days.
B. The motion
10In September 2019, the Plaintiffs brought a motion under Rules 60.12 and 30.08(2) of the Rules of Civil Procedure for an order striking the Statement of Defence of P.S. and T.S. or, in the alternative, an order that P.S. and T.S. comply with the undertakings listed above and set out in the undertakings chart attached to the Notice of Motion. The Plaintiffs amended their Notice of Motion at least twice. Their “Fresh as Amended Notice of Motion” is dated August 31, 2021.
11The undertakings chart for P.S. that is attached to the Fresh as Amended Notice of Motion shows that answers were provided on nine different occasions with respect to Undertaking 7 (from November 28, 2017 to August 23, 2019). The last note in the chart regarding this undertaking states the following: “THIS UNDERTAKING REMAINS OUTSTANDING re: tax returns from CRA – only have provided information for the period 2003 to 2008, which was previously provided. Nothing has been provided for 2009 to date”.
12The undertakings chart for T.S. that is attached to the Fresh as Amended Notice of Motion shows that answers were provided on six different occasions with respect to each of Undertakings 3, 4, 5, 6 and 7 (from December 7, 2017 to March 13, 2019). The last note in the chart regarding each of these undertakings simply states that these undertakings remain outstanding.
13In response to the Plaintiffs’ motion, P.S. and T.S. each swore an affidavit in November 2019. In addition, a legal assistant working at the law firm retained by P.S. and T.S., Lynda Karim, provided affidavit evidence in September 2020. P.S., T.S. and Ms. Karim were all cross-examined by the Plaintiffs. The evidence filed by the Plaintiffs included many affidavits, including three affidavits of a law clerk at the law firm retained by the Plaintiffs, which were sworn in November 2019, June 2020 and August 2020.
II. Decision of the Associate Judge
14The Associate Judge heard the Plaintiffs’ motion on October 29, 2021 and released her decision on November 4, 2021. Her endorsement reads, in part:
[1] The plaintiffs seek an order striking the defendants’ statement of defence as a result of their alleged failure to answer undertakings as required by a series of earlier court orders.
[3] The plaintiffs attached a number of schedules to their amended motion record including a schedule of undertakings from the cross examination of the defendant Thiluxan Soundrarajan (“Thiluxan”) and undertakings and refusals given by the legal assistant during her cross examination of the affidavit she swore in support of the defendants’ position on the motion. The plaintiffs confirmed that they were not seeking any order with respect to these particular undertakings or refusals but relied on the fact that they had not been answered as evidence of the defendants’ continued obfuscation and delay.
[4] Lastly, the plaintiffs seek to strike portions of two affidavits filed by the legal assistant in the employ of the defendant’s [sic] law firm.
[5] For the reasons set out below, the motion is dismissed. I am satisfied that the defendants have either answered or used best efforts to answer the undertakings. Where certain undertakings have not been answered, the default would not warrant an order striking the defendants’ defence.
Pooniah [sic]
[9] Undertaking 7 required Pooniah to provide the financial statements and tax returns of the defendant Sandwich Box Inc. from 2003 to date.
[20] I find that a signed direction from Pooniah sent by his lawyer to Yogi requesting financial statements and tax returns, along with the earlier requests to CRA and to Uthaya to be sufficient to constitute reasonable efforts. It is open to the plaintiffs to bring a 30.10 motion to compel Yogi to produce the documents should he not comply with the direction. Assuming there is evidence at trial that Pooniah was aware that Yogi was the preparer of the documents in question and or that Pooniah was the one who had retained Yogi, as the plaintiffs allege, they may also argue whatever inferences they wish at trial about the late delivery of the direction to Yogi. But on this motion, there are no grounds with respect to this undertaking that would warrant an order striking Pooniah’s defence.
[21] To the extent there was impermissible hearsay or other issues with the legal assistant’s affidavit, it did not impact any of the evidence set out above or my conclusion on this point.
Thiluxan
[22] By the consent order made by Master Wiebe, Thiluxan was required to answer five outstanding undertakings, referenced as undertakings 3, 4, 5, 6 and 7.
[29] These answers each gave rise to further questions and a further undertaking to use reasonable efforts to obtain the bank statements or credit card statements, as memorialized in the consent order of Master Short.
[30] The plaintiffs argue that Thiluxan has not made reasonable efforts to do so. I disagree. At issue are account statements and visa statements from Scotiabank, visa statements from RBC and Scotiabank and bank statements from TD.
[34] Specifically for undertaking 3, while he advised he did not know the source of funds into his account, he provided the TD bank account statement showing the $4,300 withdrawal. The plaintiffs argue that this is not a statement but must have been manoeuvred by Thiluxan so that no credits were listed. A review of the statement shows that it does list credits. There is no evidence that this is not what a statement would look like when requested after an account is closed or after the passage of some five years of inactivity. In any event, this production shows the $4,300 transfer from this TD account on 16 January 2014 and Thiluxan’s own statements show the deposit of that same amount on that same day in answer to undertaking 3.
[35] For undertaking 4, Thiluxan produced an RBC credit card statement of his mother showing the cash advance of $3,000 on 24 February 2014. His counsel advised that he was unable to track down Thiluxan’s TD account statements showing the remaining $1,250 withdrawal which he said was the second source of the funds referenced in undertaking 4. Counsel shall advise the plaintiffs when that request was made of TD and, if they cannot do so, they are to make a further written request for the statement within 14 days of the date of this decision.
[36] For undertaking 5, Thiluxan provided his mother’s Scotiabank visa statement for 1 April 2014 confirming it to be the source of the $2,900 by way of cash advance. Thiluxan has provided his Scotiabank statements showing that deposit as well as his own deposit of $1,400. He has not provided the TD statement showing it to be the source of that $1,400 deposit. That shall be treated in the same way as the TD statement, set out above.
[37] For undertaking 6, Thiluxan provided the documentary support for the $2,900 that came from his mother’s Scotiabank visa and for the $1,100 from his mother’s RBC statement. While counsel could not locate the latter statement during the hearing, he shall advise counsel for the plaintiffs of its location or produce a further copy.
[38] Lastly, for undertaking 7, Thiluxan produced the visa statement for the $1,300. There is no information about the $3,000 as he has stated that he does not know the source of that deposit.
[39] The plaintiffs argue that these efforts only demonstrate continued foot-dragging by the defendants. They are particularly critical of a response from Thiluxan that suggested he was waiting for productions from Scotiabank. This characterization is not borne out by the evidence as both counsel seemed to be unaware during Thiluxan’s discovery that he had already provided the statements in question in 2017 as part of his affidavit of documents. The plaintiffs suggest that Thiluxan’s misleading position that he had to request the information from the bank was only intended to stall the process. I do not accept this inference as the statements were available to both parties but neither turned their mind to the fact that they had already been produced.
[40] The plaintiffs also argue that it was not the statements that were required but the supporting documents. This is answered by a reading of the consent order which provides:
The Defendant Thilaxan [sp] Soundrarajan shall use reasonable efforts to produce bank statements and/or credit card statements to comply with undertakings #3, 4, 5, 6, + 7 on the Plaintiffs’ Chart (pages 18, 19, 20 + 21) within 30 days.” (emphasis added.)
[41] There is no reference to any other supporting documentation.
Conclusion
[42] Pooniah made the request of CRA and of Uthaya for the income tax returns and financial statements. Once the name Yogi surfaced, he requested the documents from him as well. It is open to the plaintiffs to argue at trial that Pooniah knew of Yogi all along and that they have suffered in some way as a result of the late request. But Pooniah has made best efforts to comply with the order of Master Short.
[43] Thiluxan requested and had already produced, in fact, his savings account statements. He requested the chequing statements from Scotiabank and was advised they are not available. That is sufficient to constitute a reasonable effort to obtain them. He produced the RBC and Scotiabank credit card statements of his mother. He could not confirm whether he had produced the TD statements. The amount in issue with respect to the TD statements is $2,650. As set out above, he will either advise the plaintiffs when and how they were produced or will make the request within 14 days. If the statements are not produced, it is open to the plaintiffs to argue that Thiluxan did not personally provide the funds he said he did for the property and ask the court to [draw] whatever inference they feel is appropriate.
Costs
[44] The defendants were successful on the motion. There were no grounds on which the court would have struck their defence.
[45] Both sides incurred an enormous amount of expense on this motion. The plaintiffs filed a motion record, factum, supplementary motion record, second supplementary motion record, third supplementary motion record and fourth supplementary motion record. They also cross-examined Pooniah and Thiluxan and the legal assistant in the defendants’ firm who swore an affidavit. The defendants filed a responding record, factum, supplementary responding motion record, amended supplementary responding motion record and updated second supplementary responding motion record. I am advised this generated 3,775 pages of material for this motion concerning on [sic] six undertakings. Each side spent over $45,000.
[46] The plaintiffs’ costs pursuing these six undertakings are disproportionate and the defendants had no option but to respond, up to and including demanding an internal bank policy from Scotiabank. While the plaintiffs are entitled to pursue the litigation strategy of their choosing, there are costs consequences for that, both in terms of their own costs and exposure to the other side’s costs if they are unsuccessful.
[47] The plaintiffs seek partial indemnity costs of $35,000 in any event of the cause. I find there is no reason to depart from the usual rule that costs follow the event. The defendants seek $28,946 in partial indemnity costs.
[48] The defendants shall have their costs set at $20,000 payable within 30 days.
III. DISCUSSION
A. Standard of appellate review and appellate review of reasons
15The standards of appellate review that apply to judges’ decisions also apply to associate judges’ decisions: see Zeitoun v. The Economical Insurance Group, 2019 ONCA 415 at para. 1. Thus, as set out in Housen v. Nikolaisen, 2002 SCC 33, the standard of correctness applies to questions of law and the standard of palpable and overriding error applies to questions of fact and questions of mixed fact and law, unless an error of law can be extricated from the mixed question of fact and law, in which case the standard of correctness applies.
16The standard of palpable and overriding error was described as follows by the Court of Appeal in Farsi v. Da Rocha, 2020 ONCA 92 at para. 35:
A palpable and overriding error is one that is clearly wrong, unreasonable, or not reasonably supported on the evidence: H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401, at para. 110. The Supreme Court recently explained in Salomon v. Matte‑Thompson, 2019 SCC 14, 432 D.L.R. (4th) 1, at para. 33, “[w]here the deferential standard of palpable and overriding error applies, an appellate court can intervene only if there is an obvious error in the trial decision that is determinative of the outcome of the case.”
17The fact that an alternative factual finding could be reached based on a different ascription of weight does not mean that a palpable and overriding error has been made: see Nelson (City) v. Mowatt, 2017 SCC 8 at para. 38 and Salomon v. Matte-Thompson, 2019 SCC 14 at para. 33.
18Thus, an appeal from an associate judge’s decision is not a rehearing. On questions of fact and mixed fact and law, deference applies, and the role of the reviewing court is limited. An appellate court cannot substitute its interpretation of the facts or reweigh the evidence simply because it takes a different view of the evidence from that of the associate judge. See Prescott v. Barbon, 2018 ONCA 504 at para. 11.
19Given that the Plaintiffs raise a number of arguments regarding the Associate Judge’s reasons, it is important to discuss briefly the principles applicable to appellate review of reasons. Although originally developed in the criminal law context, the same rationale that underpins the duty to provide adequate reasons applies in the civil context as well, with necessary modifications. Reasons are necessary to justify and explain the result, tell the losing party why they lost, permit effective appellate review, and provide public accountability and satisfy the public that justice has been done and is seen to have been done: see Dovbush v. Mouzitchka, 2016 ONCA 381 at para. 22.
20The Supreme Court of Canada recently summarized the principles applicable to the appellate review of trial reasons in R. v. G.F., 2021 SCC 20 (“G.F.”). The Supreme Court stated the following at paras. 69-71, 74-75:
[69] This Court has repeatedly and consistently emphasized the importance of a functional and contextual reading of a trial judge’s reasons when those reasons are alleged to be insufficient […]. Appellate courts must not finely parse the trial judge’s reasons in a search for error: Chung, at paras. 13 and 33. Their task is much narrower: they must assess whether the reasons, read in context and as a whole, in light of the live issues at trial, explain what the trial judge decided and why they decided that way in a manner that permits effective appellate review. As McLachlin C.J. put it in R.E.M., “The foundations of the judge’s decision must be discernable, when looked at in the context of the evidence, the submissions of counsel and the history of how the trial unfolded”: para. 17. And as Charron J. stated in Dinardo, “the inquiry into the sufficiency of the reasons should be directed at whether the reasons respond to the case’s live issues”: para. 31.
[70] This Court has also emphasized the importance of reviewing the record when assessing the sufficiency of a trial judge’s reasons. This is because “bad reasons” are not an independent ground of appeal. If the trial reasons do not explain the “what” and the “why”, but the answers to those questions are clear in the record, there will be no error: R.E.M., at paras. 38-40; Sheppard, at paras. 46 and 55.
[71] The reasons must be both factually sufficient and legally sufficient. Factual sufficiency is concerned with what the trial judge decided and why: Sheppard, at para. 55. Factual sufficiency is ordinarily a very low bar, especially with the ability to review the record. Even if the trial judge expresses themselves poorly, an appellate court that understands the “what” and the “why” from the record may explain the factual basis of the finding to the aggrieved party: para. 52. It will be a very rare case where neither the aggrieved party nor the appellate court can understand the factual basis of the trial judge’s findings: paras. 50 and 52.
[74] Legal sufficiency requires that the aggrieved party be able to meaningfully exercise their right of appeal: Sheppard, at paras. 64-66. Lawyers must be able to discern the viability of an appeal and appellate courts must be able to determine whether an error has occurred: paras. 46 and 55. Legal sufficiency is highly context specific and must be assessed in light of the live issues at trial. A trial judge is under no obligation to expound on features of criminal law that are not controversial in the case before them. This stems from the presumption of correct application — the presumption that “the trial judge understands the basic principles of criminal law at issue in the trial”: R.E.M., at para. 45. As stated in R. v. Burns, 1994 CanLII 127 (SCC), [1994] 1 S.C.R. 656, at p. 664, “Trial judges are presumed to know the law with which they work day in and day out”: see also Sheppard, at para. 54. A functional and contextual reading must keep this presumption in mind. Trial judges are busy. They are not required to demonstrate their knowledge of basic criminal law principles.
[75] Conversely, legal sufficiency may require more where the trial judge is called upon to settle a controversial point of law. In those cases, cursory reasons may obscure potential legal errors and not permit an appellate court to follow the trial judge’s chain of reasoning: Sheppard, at para. 40, citing R. v. McMaster, 1996 CanLII 234 (SCC), [1996] 1 S.C.R. 740, at paras. 25-27. While trial judges do not need to provide detailed maps for well-trod paths, more is required when they are called upon to chart new territory. However, if the legal basis of the decision can nonetheless be discerned from the record, in the context of the live issues at trial, then the reasons will be legally sufficient.
B. Principles guiding the striking out of pleadings for breach of production obligations
21The Court of Appeal discussed the principles guiding the striking out of pleadings for breach of production obligations in Falcon Lumber Limited v. 2480375 Ontario Inc., 2020 ONCA 310 (“Falcon Lumber”). It is noteworthy that when the motion to strike out the statement of defence was heard and granted in that case, there had been 30 dates for motions, cross-motions and case conferences; on most attendances, the primary issue was the defendants’ failure to provide complete productions; 22 orders or judicial endorsements had been made; six production orders had been made against the defendants; and as of the date of the motion, the defendants still had not made full and complete production of relevant documents: see Falcon Lumber at para. 9.
22After noting that the scope of the remedy of striking out pleadings for breach of production obligations was one within the discretion of the Court and to be determined in the context of the particular case, the Court of Appeal set out the following principles (see paras. 49-57):
(a) Striking out a pleading under Rule 30.08(2)(b) of the Rules of Civil Procedure is not restricted to “last resort” situations, in the sense that it must be preceded by a party breaching a series of earlier orders that compelled better disclosure of production. However, courts usually want to ensure that a party has a reasonable opportunity to cure its non-compliance before striking out its pleading.
(b) A court should consider a number of common sense factors when deciding whether to strike out a pleading under r. 30.08(2), including:
(i) whether the party’s failure is deliberate or inadvertent;
(ii) whether the failure is clear and unequivocal;
(iii) whether the defaulting party can provide a reasonable explanation for its default, coupled with a credible commitment to cure the default quickly;
(iv) whether the substance of the default is material or minimal;
(v) the extent to which the party remains in default at the time of the request to strike out its pleading; and
(vi) the impact of the default on the ability of the court to do justice in the particular case.
(c) The merits of a party’s claim or defence may play only a limited role where breaches of disclosure and production obligations are alleged as one would reasonably expect a party with a strong claim or defence to comply promptly with its disclosure and production obligations.
(d) A court must consider whether an order to strike out a pleading would constitute a proportional remedy that is consistent with the recent calls of the Supreme Court of Canada to alter the Canadian litigation culture. In considering whether an order to strike out a pleading would constitute a proportional remedy in the circumstances, a court should consider:
(i) the extent to which the defaulting party’s conduct has increased the non-defaulting party’s costs of litigating the action, including the proportionality of those increased costs to the amount actually in dispute in the proceeding; and
(ii) to what extent the defaulting party’s failure to comply with its obligation to make automatic disclosure and production of documents has delayed the final adjudication of the case on its merits, taking into account the simplicity (or complexity) of the claim and the amount of money in dispute.
C. The Plaintiffs’ grounds of appeal
23The Plaintiffs’ Notice of Appeal is twelve pages long and lists numerous grounds of appeal and alleged errors on the part of the Associate Judge.
24In their Factum, the Plaintiffs raise ten specific grounds in support of their position that the Associate Judge erred in law, erred in principle and made palpable and overriding errors in rendering her decision. I discuss and reject each of these ten grounds below. The grounds raised with respect to the costs order are discussed later in this endorsement.
25First ground: The Associate Judge provides inadequate and insufficient reasons as it does not refer to any Rules or caselaw. The decision is not a legal decision. This ground has no merit in light of the principles set out in G.F. An associate judge is presumed to know the law and is not required to demonstrate their knowledge of legal principles that are not controversial before them. In this case, the test and legal principles applicable on the motion were not controversial, and the Associate Judge had the benefit of counsel’s submissions on this point. She was not called upon to settle any point of law. The Associate Judge’s reasons are more than six pages long and contain 48 paragraphs. They explain what she decided and why. It is apparent from the Associate Judge’s reasons that she considered the factors set out in the relevant case law, including proportionality.1 Given that she found that P.S. and T.S. had either answered or used best efforts to answer the undertakings in issue, a number of the factors set out in Falcon Lumber had less or no relevance.
26Second ground: The Associate Judge does not refer to evidence regarding the nature of the action and the importance of the information requested in relation to the Appellants' Claim and the Respondents' Statement of Defence. The Associate Judge did not have to expressly discuss the nature of the action. This was clear from the record before her. In any event, the Plaintiffs have not articulated how a consideration of the nature of the action would have been determinative of the outcome of the motion. With respect to the alleged importance of the information, the fact that the information requested may be important in the context of this action is neither here nor there if the information does not exist and/or the Defendants have not been able to obtain it after having used best efforts, as found by the Associate Judge. The Associate Judge implicitly considered the importance of the information sought in relation to the only outstanding production issue, i.e. the TD statements. She noted in paragraph 43 of her reasons that the amount in issue with respect to the TD statements was only $2,650. More generally, I note that the undertakings in issue with respect to T.S. relate to seven deposits that are all under $5,000 and total approximately $22,000. Given the total amount sought by the Plaintiffs in this action, it has not been established that the information requested with respect to these small amounts is important in the context of this action. Similarly, with respect to P.S.’s Undertaking 7, the importance of SBI’s tax returns and financial statements to the allegations of fraudulent conveyance in this case is unclear and has not been shown to be significant.
27Third ground: The Associate Judge does not address the motion based on non-compliance with 3 Consent Orders but merely as an Undertakings motion and fails to consider the importance of compliance with the 3 Consent Orders and the administration of justice. The Associate Judge was aware of the three consent orders. She referred to them throughout her reasons, including in her conclusion. As stated above, the Associate Judge’s decision is consistent with the principles set out in Falcon Lumber. In that case, there had been non-compliance with a number of prior court orders, but, nevertheless, this was not the only factor considered by the Court of Appeal. To the contrary, the Court indicated that the fact that a default had been cured or could be cured quickly was an important consideration, among others. In any event, the relevance of this ground of appeal is limited since the Associate Judge found that P.S. and T.S. had made best efforts to answer the undertakings and complied with the Order of Master Short dated February 11, 2019. The Plaintiffs’ argument based on non-compliance with the consent orders is based on a faulty factual premise (i.e. non-compliance) and an expansive interpretation of the undertakings that is often not grounded in their specific wording. Even if there was non-compliance, the Plaintiffs’ real complaint is that the Associate Judge should have given more weight to the alleged non-compliance with the consent orders. However, as stated above, the role of an appellate court is not to reweigh the evidence.
28Fourth ground: The Associate Judge relies on inadmissible hearsay and fails to strike out inadmissible paragraphs of the Affidavits of Lynda Karim. In paragraph 21 of her reasons, the Associate Judge states as follows: “To the extent there was impermissible hearsay or other issues with the legal assistant’s affidavit, it did not impact any of the evidence set out above or my conclusion on this point.” In my view, the Plaintiffs have not identified any evidence that the Associate Judge relied upon, or necessarily had to rely upon to reach her conclusions: (a) that was only contained in the affidavits of Ms. Karim and nowhere else in the record; and (b) that was inadmissible hearsay or inadmissible on another ground. While they did not do so in their Factum, the Plaintiffs identified during oral argument a number of specific passages of the Associate Judge’s decision which, they argued, were based only on the affidavit evidence of Ms. Karim. However, I reject the Plaintiffs’ arguments, which were largely conclusory and not properly marshaled with references to the available evidence. Based on the evidence, I find that the information in issue was available elsewhere in the record, had been previously inserted in answers to undertakings and/or did not constitute inadmissible hearsay in the context of the motion and based on Rule 39.01(4) of the Rules of Civil Procedure. Given the Associate Judge’s statement in paragraph 21 of her reasons, there was no need for her to deal with the request to strike portions of the affidavits of Ms. Karim and parse her affidavits to determine which portions were inadmissible and/or should be given little weight. The Associate Judge did, in effect, what Favreau J. (as she then was) did in Pavao v. Ferreira, 2018 ONSC 1573 at para. 45.
29Fifth ground: The Associate Judge fails to consider the Respondents' outstanding undertakings from the Cross-Examination of the deponent, Lynda Karim on her Affidavits and the Cross-Examination of [T.S.]. The Associate Judge referred to the outstanding undertakings in her reasons. She stated the following in paragraph 3:
The plaintiffs attached a number of schedules to their amended motion record including a schedule of undertakings from the cross examination of the defendant Thiluxan Soundrarajan (“Thiluxan”) and undertakings and refusals given by the legal assistant during her cross examination of the affidavit she swore in support of the defendants’ position on the motion. The plaintiffs confirmed that they were not seeking any order with respect to these particular undertakings or refusals but relied on the fact that they had not been answered as evidence of the defendants’ continued obfuscation and delay.
Again, the Plaintiffs have failed to articulate how further consideration of these outstanding undertakings would have been determinative of the outcome of the motion.
30Sixth ground: The Associate Judge concludes incorrectly that the Appellants could bring a Rule 30.10 motion or ask the Trial Judge to draw adverse inferences against the Respondents as a response to the Respondents[’] repeated non-compliance with 3 Court Orders. I see nothing incorrect in this conclusion. The Plaintiffs have failed to show that there was any legal or palpable and overriding error on this point.
31Seventh ground: The Associate Judge incorrectly concludes that [T.S.] was unable to obtain the relevant bank/credit card accounts and records, which in fact he had not requested from the bank(s). In paragraphs 22-41 of her reasons, the Associate Judge reviews in detail the answers provided by T.S. in response to the five undertakings in issue, including the issue of the bank statements and/or credit card statements referred to in the Order of Master Short dated February 11, 2019. Her findings and conclusions are supported by evidence and well explained. The Plaintiffs have failed to show any palpable and overriding error. They are simply repeating the arguments that were rejected by the Associate Judge.
32Eighth ground: The Associate Judge incorrectly states that [T.S.] has produced his purported TD Bank Account statements for January 2014, and could not obtain his TD Bank account statements for February 2014 without explanation. The Associate Judge deals with the Plaintiffs’ argument regarding the January 2014 statement in paragraph 34 of her reasons. The Plaintiffs have not demonstrated that any palpable and overriding error was made with respect to the Associate Judge’s findings on this point. With respect to the February 2014 statement, the Associate Judge ordered in paragraph 35 of her reasons that T.S.’s counsel was to advise the Plaintiffs when the request was made of TD and, if they could not do so, that they were to make a further written request for the statement within 14 days of the date of her decision. Again, there is no palpable and overriding error on this point. I note that the amount in issue for February 2014 is $1,250.
33Ninth ground: The Associate Judge concludes incorrectly that [P.S.] made reasonable efforts to obtain the Financial Statements and tax returns of SBI from Yogi & Associates not produced. In paragraphs 10-11 and 16-20 of her reasons, the Associate Judge reviews in detail the issues surrounding Yogi & Associates. Her ultimate finding and conclusion – that a direction was sent and that this is sufficient to constitute reasonable efforts – and her mention of other avenues available to the Plaintiffs – a motion under Rule 30.10 and/or a request for an adverse inference – are reasonable and supported on the evidence. The Plaintiffs have failed to show any palpable and overriding error. They simply disagree with the Associate Judge’s findings and repeat the arguments that she rejected. While the Plaintiffs may disagree with the Associate Judge’s finding that reasonable efforts have been made and may think that more is required to show reasonable efforts, this is insufficient to demonstrate a palpable and overriding error as an appellate court cannot reweigh the evidence.2
34Tenth ground: The Associate Judge incorrectly states with respect to [T.S.] that the bank statements were “available to both parties” which confuses [T.S.]’s Bank of Nova Scotia chequing account statements already produced by [T.S.] in his Affidavit of Documents with the bank/credit card statements he was ordered to produce to answer his undertakings. This ground is rejected for the same reason than the seventh ground above. Further, it is clear from paragraph 39 of the Associate Judge’s reasons that the reference to statements that were available to both parties was a reference to the statements from Scotiabank, which is mentioned in the second sentence of this paragraph. The Plaintiffs, not the Associate Judge, are creating confusion. In any event, the Associate Judge found that T.S. had complied with the undertakings and made reasonable efforts to obtain the relevant statements (with the exception of her two orders regarding the TD statements). The Plaintiffs have failed to show that any confusion as to which statements were available would have been determinative of the outcome of the motion.
35In light of the foregoing, I conclude that none of the grounds raised by the Plaintiffs have merit. The Plaintiffs are ignoring the standard of appellate review and the findings made by the Associate Judge, rearguing the motion “from scratch” and delving deep into details. They are obfuscating a number of issues and ignoring the specific wording of the undertakings and consent orders, asking for information for which no undertaking was given. The fact that the Plaintiffs may disagree with or not believe the answers that were provided does not make the answers unsatisfactory for the purpose of fulfilling an undertaking: see Fischer v IG Investment Management Ltd., 2016 ONSC 4405 at para. 37 and Yim v. Song, 2015 ONSC 7605 at para. 33.
D. Leave to appeal from costs order
36Leave to appeal from a costs order should be granted (i) sparingly, and (ii) where there are strong grounds on which the appellate court could find that the decision-maker at first instance erred in exercising their discretion because they made an error in principle or their decision is plainly wrong. A reviewing court must also be mindful that a costs award is a discretionary order and the decision-maker at first instance is in the best position to determine the entitlement, scale and quantum of any such award. See McNaughton Automotive Ltd. v. Co-operators General Insurance Co., 2008 ONCA 597 at paras. 24-27, Houghton + Houghton Inc. v Farncomb Kirkpatrick & Stirling Surveying Ltd., 2017 ONSC 1478 at para. 17, Midland Resources Holding Limited v. Bokserman, 2022 ONCA 73 at para. 35, and Smith v. Mackinnon, 2017 ONSC 4638 at para. 13 (Div. Ct.).
37Costs awards are notoriously difficult to appeal because they represent the trier’s exercise of judgment as to the overall justice of the situation that they saw unfolding before them: Strathmillan Financial Limited v. Teti, 2021 ONSC 7603 at para. 39.
38P.S. and T.S. were the successful parties on the motion. The Associate Judge granted them costs on a partial indemnity basis, not on a higher scale, and the quantum ordered was substantially less than the quantum of costs sought by the Plaintiffs themselves, showing that such amount would have been within the reasonable expectations of the Plaintiffs. Thus, I see no error in principle. The Associate Judge’s decision on costs is not plainly wrong.
39The Plaintiffs raise the following grounds of appeal with respect to the costs order: The Cost order does not refer to the applicable Rules regarding costs, which order is unreasonable and based on an incorrect assessment of the facts. The Respondents were in default of 3 Court Orders and continued to be even at the motion on October 29, 2021, the Respondents escalated costs by filing inadmissible evidence from Lynda Karim, a legal assistant, [T.S.] and Lynda Karim failed to comply with undertakings given at this cross-examination related to [Bank of Nova Scotia]’s policies which were irrelevant and a distraction.
40Again, there is no merit to these grounds. As set out above, the Plaintiffs have not established any palpable and overriding error of fact or mixed fact and law. With respect to the Plaintiffs’ complaint that the reasons do not contain any reference to the applicable Rules of Civil Procedure regarding costs, an associate judge is presumed to know the law and is not required to demonstrate their knowledge of legal principles that are not controversial before them: see G.F. at para. 74. This is particularly true with respect to rules and legal principles regarding the awarding of costs, with which associate judges work day in and day out.
41The other factors raised by the Plaintiffs were all known by the Associate Judge and are not determinative. Further, I reject the suggestion that the costs of the motion were escalated by the Defendants. To the contrary, as found by the Associate Judge, the record supports the conclusion that it is the Plaintiffs’ approach to the motion that significantly escalated costs.
42Thus, I conclude that leave to appeal the Associate Judge’s order as to costs should be denied.
IV. CONCLUSION
43The Plaintiffs’ appeal is dismissed and leave to appeal the Associate Judge’s order as to costs is denied.
44If costs cannot be agreed upon, the Defendants shall deliver submissions of not more than three pages (double-spaced), excluding the costs outline, within 14 days of the date of this decision. The Plaintiffs shall deliver their responding submissions (with the same page limit) within 14 days of their receipt of the Defendants’ submissions. The submissions of all parties shall also be sent to my assistant by e-mail and uploaded onto CaseLines.
Vermette J.
Date: August 31, 2022
Footnotes
- In their oral argument, the Plaintiffs argued that considerations of proportionality only applied to the person in breach and “should not be held against the Plaintiffs”. This is clearly not the case.
- The issues regarding Yogi & Associates relate mainly to the financial statements of SBI as all existing tax returns have been provided, i.e. the Canada Revenue Agency has confirmed that SBI did not file tax returns for the years 2009-2018. I note that the undertakings chart attached to the Fresh as Amended Notice of Motion states that P.S.’s Undertaking 7 remains outstanding only with respect to tax returns for the period 2009 to date. The Plaintiffs do not take the position in the undertakings chart that Undertaking 7 remains outstanding with respect to SBI’s financial statements. This is likely why the issue of the financial statements was not addressed in P.S.’s initial affidavit. This shows, again, the Plaintiffs’ propensity to constantly expand issues.