COURT FILE NO.: 21-00673745-0000

DATE: 2022 02 15

SUPERIOR COURT OF JUSTICE – ONTARIO

DOMINIC JASON LADYSHEWSKY

and

DIESEL PRO SERVICES INC., JOHN SPEZZANO

Applicant

also known as GIOVANNI SPEZZANO, and LUCY SPEZZANO

Respondents

BEFORE: Associate Justice Ilchenko

COUNSEL:

Urgent Motion in Writing brought ex parte by the Applicant, represented by Ruzbeh Hosseini and Salma Kebeich, Cambridge, LLP

READ: February 14, 2022

E N D O R S E M E N T

I) Context in which the Motion is Brought

[1] The Applicant issued this Application in Toronto on December 15, 2021 for the following substantive relief:

a) a declaration that the seizure by the Respondents of the vehicle described as 2017 black Ford 250, License plate AV58821, VIN # 1FT7W2BT1HEE59522 of the Applicant was carried out in violation of the provisions of the Repair and Storage Liens Act, 1990 e. R.25 as amended, and that by failing to comply with the requirements of the Repair and Storage Liens Act, 1990 c. R.25 as amended, the Respondents have no right to sell or interfere with the Applicant's property;

b) a declaration that the transfer of ownership of the vehicle described as 2017 black Ford 250, License plate AV58821, VIN # 1FT7W2BT1HEE59522 to the Respondent, Diesel Pro Services Inc. was carried out in violation of the Repair and Storage Liens Act. 1990

e. R.25 as amended, and was transfer [sic] constitutes the conversion of the Property;

c) An order requiring the respondents to compensate the Applicant for all losses arising from the improper seizure of the Applicant’s property;

d) an interim and interlocutory order that the Applicant recover the possession of the vehicle described as 2017 black Ford 250, License plate AV58821, VIN # 1FT7W2BT1HEE59522 and an order that the sum of $18,834.99 paid by the Applicant into court in court file number SC-21-9002-00RS be held as security for the debt claimed by the Respondents;

e) an order that the lien registered as 202111008165717933621 be discharged as against the vehicle described as 2017 black Ford 250, License plate AV58821, VIN # 1FT7W2BT1HEE59522;

f) in the alternative, an interim and interlocutory order for the preservation of property and an order that the Respondents are restrained from directly or indirectly, selling, removing, dissipating, transferring. assigning. encumbering or similarly dealing with the vehicle described as 2017 black Ford 250, License plate·AV58821, VIN# 1FT7W2BT1HEE59522;

g) in the further alternative, damages for conversion. in the amount of $93,000.00;

h) such other order as may be required for determination of the rights of the parties under the Repair and Storage Liens Act, 1990 c. R.25 as amended;

[2] The Amended Motion before me as an Urgent Motion in Writing appears to result from the endorsement of Myers, J. dated February 11, 2022 which states:

“There is no evidence of an impending sale apart from the applicant asking the respondent if they will be selling the car. The motion under r. 44 is properly made to an Associate Justice as required by s. 11 of the Consolidated Practice Direction for Civil Actions, Applications, Motions and Procedural Matters in the Toronto Region. It should be sent to the Associate Justice who triages urgent claims.

Thanks

F Myers J”

[3] The relief being sought before me is with respect to the relief at (d) and (f) above for recovery of possession or interim preservation of the 2017 black Ford 250, License plate·AV58821, VIN# 1FT7W2BT1HEE59522 (the “Vehicle”) in the possession of the Respondents, as a result of the tangled fact situation I will set out below, as well as an order that if the Vehicle is sold that the specific funds from the sale be paid into court or otherwise secured on such terms as are just.

[4] The materials filed by the Applicant are voluminous, exceeding 333 pages for the Amended Motion Record and a 75 page + Factum/Book of Authorities, and describe an

acrimonious factual situation swirling around the Vehicle which pushes the envelope of what can be dealt with by a Court in writing, ex parte, under R.37.12.1 and R.37.07(2) and (3).

[5] However from the Motion Materials filed by the Applicant there appears to be real urgency for the request for the relief sought on this Motion, so despite the procedural irregularity of this motion being routed to me as an Urgent Motion in writing, rather than an urgent Oral Motion, under my discretion under R.1.04, I will determine it.

II) The Evidence of the Applicant

[6] The Motion Record of the Applicant consists of the Affidavit (the “Applicant Affidavit”) of Dominic Jason Ladyshewsky (the “Applicant”) and the Affidavit of Nanda Singh a law clerk in the office of the Applicant’s Counsel (the “Singh Affidavit”) .

[7] This Motion Record and the Factum were not served on the Respondents, so there is no evidence presented to the contrary. However it is evident from the exhibits to the Applicant Affidavit and the Singh Affidavit, that many of the assertions made by the Applicant have been hotly contested by the Respondents in correspondence or by their conduct and activity.

[8] An overview of the facts as set out in the Applicant Affidavit and the Singh Affidavit is necessary to determine this Motion.

The Vehicle and the Parties

[9] The Applicant was the registered owner of the Vehicle which has value of the Vehicle is approximately $93,000. The registration for the Vehicle at Exhibit 1 to the Applicant Affidavit is in the name of the Applicant “Dominic Jason Ladyshewsky” as registration J8715257.

[10] The Respondent, Diesel Pro Services Inc. (“Diesel Pro”) is an OBCA corporation and is allegedly owned and controlled by the Respondent, John Spezzano also known as Giovanni Spezzano (“John”) and the Respondent, Lucy Spezzano (“Lucy”) is an officer of Diesel Pro who described herself in email signature lines as “CFO-Chief of Operations/Bookeeper/Legal Assistant/Sales & Marketing Dept.”

Overview of work done

[11] On July 5, 2021, the Applicant dropped off the Vehicle at Diesel Pro’s shop for the installation of spare parts.

[12] The Applicant alleges that some of the work was prior repair work that Diesel Pro carried out in 2020 on the instructions of the Applicant’s insurer Echelon Insurance (“Echelon”) to make repairs to the Vehicle that resulted from an accident.

[13] As well, the Applicant alleges he bought spare parts including shock absorbers, a suspension lift kit, a Tesla Tablet and cosmetic enhancements for the Vehicle and provided them to the Respondents for installation on the Vehicle by Diesel Pro (the “Spare Parts”).

Loans by Applicant to Respondents

[14] The Applicant also alleges that the Respondents advised him that in January 2020 they were having financial issues and that as a result he made two loans of $5000 and $13,000 memorialized by a handwritten agreement signed by Lucy (the “Lucy Loan”) and the second printed agreement signed by “John Spezzano and Diesel Pro” (the “John and Diesel Pro Loan”) (collectively, the “Applicant Loans”).

[15] In this context of the installation of these Spare Parts on the Vehicle the Applicant states at paragraph 18 of his affidavit:

18. John and Lucy were grateful that I helped them with their business, Diesel Pro. In exchange for my loan to John and Lucy, John stated that Diesel Pro would perform work on the Vehicle for free. In other words, John indicated that Diesel Pro would not charge me for labour.”

[16] The Respondents, based on their conduct and correspondence, as will be described below, apparently vehemently disagree.

[17] It is also the evidence of the Applicant that the Respondents did not use the Spare Parts provided, but installed different parts on the Vehicle, which rendered the Vehicle unsafe to drive. The Respondents disagree in their correspondence attached as exhibits to the Applicant Affidavit.

[18] On August 27, 2021, the Applicant states that the Respondents gave up the possession of the Vehicle to the Applicant, thus giving up their possessory lien under the Repair and Storage Liens Act, R.S.O. 1990, c.R.25 (the “RSLA”).

Claims under the Applicant Loans

[19] On September 22, 2021, the Applicant alleges that Lucy, John and “Diesel Pro” had defaulted under terms of the Applicant Loans and he:

i) issued a Plaintiff’s Claim against Lucy in the Small Claims Court at Richmond Hill for repayment of the amounts outstanding under the Lucy Loan in the amount of $5,000 against Lucy (the “Lucy Claim”)

ii) issued a Plaintiff’s Claim against John and Diesel Pro in the Small Claims Court at Brampton for repayment of the amounts outstanding under the John and Diesel Pro Loan in the amount of $12,000 against John and Diesel Pro (the “John and Diesel Pro Claim”).

Registration of RSLA Lien and Repossession Vehicle

[20] Shortly afterward, on October 10, 2021 Diesel Pro registered a non-possessory lien against the Vehicle under the RSLA with Reference file number 777195603 as registration

20211008 1657 1793 3621 in the amount of $31,000 and referencing the VIN number of the Vehicle for:

“service, parts, repairs, maintenance, custom work, powder coating, diagnostic and electrical installation”.

(the “Diesel Pro RSLA Lien”). The Lien is claimed against the Applicant as well as “OPC Group Inc.” and Lisa M Walsh, who are not currently parties to this Application. The Diesel Pro RSLA Lien is exhibit 6 to the Applicant Affidavit.

[21] On October 27, 2021, the Applicant states that upon the direction of the Respondents, a private bailiff, Terry A. Robertson of “Bailiff Office Central Ontario Inc.” (the “Bailiff”) repossessed the Vehicle, purportedly under the RSLA. The Bailiff apparently indicated in correspondence that the repossession of the Vehicle was, inter alia, based on:

a. work order number 069721 issued by Diesel Pro in the amount of $1,220.40 dated October 22, 2020 (“WO#069721”).

b. Work order number 0697544 issued by Diesel Pro in the amount of $15,365.11 dated July 5, 2021 (“WO#0697544”); and

c. invoice number 235 issued by Diesel Pro in the amount of $15,365.11 dated August 9, 2021 (“Invoice# 235”).

[22] In the (undated) Bailiff Warrant under the RSLA (at Exhibit 9 to the Applicant Affidavit) (the “Bailiff Warrant”), apparently signed by the “Finance Controller” of Diesel Pro (likely Lucy), the Bailiff states that the “Amount Owing” is $20,038.61 and not the $31,000 in the Diesel Pro RSLA Lien, and lists only “Work Order #235” which is apparently only in the amount of $15,365.11.

Issues with Diesel Pro invoices

[23] Generally, in the Applicant Affidavit the Applicant takes the position that the Respondents did not provide the Applicant with a written estimate for any of the work required to be performed by Diesel Pro and that the Respondents failed to provide the Applicant with a statement of account or invoices for the work performed by Diesel Pro.

[24] Specifically, with respect to the work orders and invoices relating to the Diesel Pro RSLA Lien and the Bailiff Warrant, it is the evidence of the Applicant that:

a) WO#069721

i) The Applicant admits he signed WO#069721 to authorize Diesel Pro to perform repair work on the Vehicle, but at the time of signature, WO#069721 did not indicate the amount payable to Diesel Pro, because this repair work was being done as a result of a collision, and Diesel Pro was directly communicating with the Applicant’s insurer Echelon regarding the scope and cost of the repairs required for the Vehicle.

ii) The Applicant states that Echelon advised him that they had paid Diesel Pro all invoices related to the repairs, other than storage fees that Diesel Pro claimed from November 7 to November 24, 2020 in the amount of $1,220.40.

iii) The Applicant states that at no time did Diesel Pro ask the Applicant to pay the storage fee as indicated in WO#069721, nor did he agree to pay storage fees to Diesel Pro, nor does the Applicant believe that Echelon agreed to do so on his behalf.

b) WO#069754 and c) and Invoice #235

i) It is the Applicant’s testimony that this Work Order relates to the installation of the Spare Parts, and that as per paragraph 18 of the Applicant Affidavit quoted above, that:

a) John agreed to install the Spare Parts and not charge labour,

b) Diesel Pro never gave him a written estimate of the work to be performed on the Vehicle,

c) he never signed WO#0697544 or saw WO#0697544 before October 27, 2021 when the Bailiff repossessed the Vehicle;

ii) In addition, the Applicant states that:

a) he denies authorizing the powder coating by Diesel Pro described in WO#0697544 and Invoice #235,

b) Diesel Pro did not do any powder coating itself, but subcontracted that work,

c) no estimate for powder coating was provided or outside work authorized,

d) the invoice is falsely dated August 9, 2021 because the powder coating work had been completed after August 9, 2021 by a different shop, as supported by text messages at Exhibit 23 to the Applicant Affidavit;

iii) The Applicant testifies that he also paid the amount of $2,689.49 for new tires as requested by Diesel Pro, listed on these invoices.

Allegation of Unsafe work and use of defective parts

[25] The Applicant states that on August 25, 2021, Diesel Pro released the Vehicle to him but did not provide him with any invoices for the alleged work performed on the Vehicle and that he had never seen Invoice# 235 before October 27, 2021, the date on which the Vehicle was repossessed by the Bailiff.

[26] On September 2, 2021, he alleges he lost control over the Vehicle on the highway and it was no longer safe to drive the Vehicle.

[27] After taking the Vehicle to another repair shop for inspection and repair on September 21, 2021 the Applicant states he discovered that Diesel Pro did not install the Spare Parts he had provided to Diesel Pro as agreed and that it appeared that Diesel Pro substituted the Spare Parts that he had purchased and provided to Diesel Pro with other defective parts that they installed on the Vehicle.

[28] The Applicant claims that as a result of these further required repairs he had to pay

$5,437.92 in further repair costs and had to rent a replacement vehicle for further expense.

[29] It appears at this point from the chronology that the Applicant commenced the Lucy Claim and the John and Diesel Pro Claim the next day on September 22, 2021, and the Respondents appeared to retaliate by proceeding with the repossession of the Vehicle by the Bailiff.

Fraudulent Invoice Claim:

[30] The Applicant takes the position that WO#0697544 is fraudulent and that his signature was added to the invoice by the Respondents.

[31] The Applicant states that on October 27, 2021 he filed a complaint with the Toronto Police Department regarding the alleged forged signature on WO#0697544 and that the complaint is under investigation by the Toronto Police Service Fraud Unit.

[32] The response by the Respondents to correspondence from counsel for the Applicant demanding proof of his signature on this invoice was in an emailed letter dated October 27, 2021 (at Exhibit 34 to the Applicant Affidavit):

“Thank you for your letter dated October 27, 2021.

Diesel Pro Services Inc. vehemently denies any and all accusations of fraud in respect to the repairs and enhancements to this vehicle, and any documentation supporting said repairs and enhancements. Further, we put your client to the proof thereof immediately.

We confirm that we enforced our repossession rights that are available to us under the provisions of the R.S.L.A, (Repair and Storage Liens Act), R.S.O., 1990.

Your client authorized all of the work performed and has failed in his obligation to pay us for such.

We demand payment is made in full, including all repossession costs and fees, to our office no later Friday October 29th, 2021.”

Notice of Intent to Sell under RSLA

[33] The Applicant states that on November 3, 2021, Diesel Pro served a Notice of Intent to Sell under the RSLA dated November 1, 2021 regarding the Vehicle upon the Applicant (the “Notice of Intent to Sell”) (attached at Exhibit “36” to the Applicant Affidavit).

[34] The Notice of Intent to Sell indicated that the amount claimed by Diesel Pro is

$18,834.99, an amount that differs from the $31,000 amount stated in the Diesel Pro RSLA Lien, and the $20,038.61 amount stated in the Bailiff Warrant, each prepared or signed by the Respondents.

[35] From the calculation in the Notice of Intent to Sell the amount claimed appears to relate to solely WO#0697544 with the $15,365.11 invoice amount, prior to Diesel Pro tacking on administrative charges, interest on that invoice but also other invoices, storage costs, postage, search fees, registration fees for the RSLA liens, “registered letters” and taxes.

[36] It should be noted that the Notice of Intent to Sell sets the redemption date of November 16, 2021, rather than taking into account the provisions of s.27(3) of the RSLA that generally requires the adding of an additional 10 days notice for notices sent by Registered Mail, which given the registered mail receipts attached to the Notice of Intent to Sell, appear to have been sent on November 1, 2021. This could make the redemption date under s.15(2) of the RSLA, at minimum, November 26, 2021.

[37] To add further complexity to this dispute, the Respondents served the Notice of Intent to Sell on Ford Credit Canada Company, the financier of the Vehicle with a registered PPSA security interest with respect to the Vehicle (“Ford Credit”). The Applicant indicates in the Applicant Affidavit that he is continuing to pay monthly payments to Ford Credit and paying to maintain insurance on the Vehicle.

Payment into Court by Applicant and service of Initial s.24 Certificate under RSLA

[38] In correspondence to the Respondents, counsel for the Applicant on November 15, 2021 objected to the sale of the Vehicle until the parties’ rights are determined by a Court. They received a response on November 19, 2021 from a paralegal named Michael Pilieci (“Pilieci”) who advised that he was representing the Respondents.

[39] On December 1, 2021 Pilieci wrote to counsel for the Applicant:

“…Please be advised that this is our final attempt in order to resolve this file before we proceed with the sale of the vehicle. Please note that your client, Ford Credit, has been served with a Notice of Intention to Sell and nothing to date has been done.

In the alternative, within the next few days, the vehicle will be sold to the highest bidder and we will advise you of when such takes place….”

[40] On December 3, 2021, Counsel for the Applicant then proceeded to deposit with the Toronto Small Claims Court the amount claimed by Diesel Pro, being $18,834.99 under s. 24 of the RSLA and obtained an Initial Certificate from the Court under s.24(5) and (6) of the RSLA (the “Initial s.24 Certificate”).

[41] Section 24(6) of the RSLA states: Release on interim certificate

(6) The applicant shall give the initial certificate to the respondent who, within three days of receiving the initial certificate, shall release the article described therein to the applicant unless, within the three day period, the respondent files with the court a notice of objection in the prescribed form. R.S.O. 1990, c. R.25, s. 24 (6); 1998, c. 18, Sched. E, s. 266 (3); 2017, c. 20, Sched. 11, s. 32 (3).(emphasis added)

[42] On December 3, 2021 Pilieci advised counsel for the Applicant in response to correspondence sent to him that attached the Initial s.24 Certificate and notified Pilieci that the monies to redeem the amount claimed by Diesel Pro under the Notice of Intent to Sell had been paid into Court:

“Please note you must serve this document to them directly. I will have to seek instructions however to respond however I believe the vehicle has already been transferred, as per the Notice of intent to sell.

Why was this not done a months ago? Once you serve them directly, send me a copy of the certificate of service. I will also advise that the $18,000 was not the correct amount as per your notice and either way notice of object will have to be filled if the vehicle is not already sold.” [multiple sic left in]

[43] Counsel for the Applicant wrote back the same day:

“This contradicts your email dated December 1, 2021, in which you indicated: “the vehicle will be sold to the highest bidder and we will advise you of when such takes place”. We have not been advised of the time or place of the sale of the vehicle. Are you suggesting that when you made that statement, you were not acting based on the instructions of your client?

Your client shall not transfer the ownership of the vehicle to itself unless it gives a written notice of a proposal to retain the vehicle in satisfaction of the amount of the lien claimed in lieu of selling it as per section 17 of the Repairs and Storage Liens Act . Your client did not give such notice.

The Notice of Intent to Sell indicates that the claimed amount is $18,834.99. The Application for Initial Certificate was filed on that basis. Are you suggesting that your client did not indicate the correct amount in the Notice of Intent to Sell?

On December 1, 2021, I asked that you provide a detailed accounting for claimed repair charges on the vehicle. You did not respond.” [multiple sic left in]

[44] It is the Applicant’s evidence that on December 6, 2021 the Initial s.24 Certificate was personally served on Diesel Pro, after a prior attempt at personal service of the Initial s.24 Certificate on December 3, 2021, and having the Initial s.24 Certificate sent to the Respondents and Pilieci by email on December 3, 2021.

Transfer of Registration of Vehicle from Applicant to Diesel Pro

[45] After this personal service of the Initial s.24 Certificate on Diesel Pro on December 6, 2021, Pilieci advised counsel for the Applicant:

“Good Afternoon,

Take your clients instructions. It does seem to be a common occurrence that your client never signs/sees/acknowledges anything yet the vehicles seem to end up at this mechanic shop for repairs.

At this time, the vehicle (Ford 2017 TRUCK) is already transferred and therefore your Section 24 is not going to be granted. The vehicle will not be released because your client no longer owns the vehicle. I understand that you dispute the transferring of the vehicle and this matter will be decided by a judge. However, in the interim, both our clients are going to be experiencing very high litigation costs and the truck is going to stay in my clients possession until everything is sorted out. This is now cause more issues as my client will have to hold onto a depreciating vehicle until the court is able to sort everything out – and with COVID restrictions still in place – who knows how long this will take.” [multiple sic left in]

[46] On December 4, 2021 the Applicant obtained a VIN search for the Vehicle that indicated that Diesel Pro had transferred title to the Vehicle to itself on December 4, 2021. Counsel for the Applicant confronted Pilieci with this information on December 8, 2021 stating:

“Yesterday, we discovered that Diesel Pro transferred ownership of the Vehicle to itself on December 4, 2021. Contrary to your representation, Diesel Pro transferred ownership of the Vehicle after it had been provided with the Initial Certificate.

Diesel Pro transferred the Vehicle to evade enforcement under s. 24 of the Repair and Storage Liens Act. Diesel Pro’s conduct is an abuse of process. If Diesel Pro does not remedy its unlawful transfer of the Vehicle and release the Vehicle by Thursday, December 9, 2021, we will commence an action against Diesel Pro and seek damages.”

[47] Pilieci responded the same day: “Good Afternoon,

If you have confirmed that the vehicle has been transferred after you have served them on Decemeber 3rd, 2021, then I will speak with my clients in that regards. Please note my intentions were never to mislead anyparty in anyway, as my repuation is a lot more valuable than a client. I have expressed this to you via phone conversation that at times my own clients don’t accept my recommendations. As for the sale and transfer of the vehicle I have attached an affadavit on November 19,2021, indicating the transfer. I stated I believe this to be true on my December 3,2021 as this was what I was relying on.

I am now in a position that if I was lied to then I should remove myself as respresentative.”

[multiple sic left in]

[48] The Affidavit of Lucy that Pilieci attached to his email appears to be sworn on November 19, 2021 (the “Lucy Affidavit”) and Lucy states:

[49] This affidavit appears to conflate the retention of collateral (foreclosure) remedy under

s.17 of the RSLA, and the s.15 RSLA sale remedy that Diesel Pro appeared to be employing under the Notice of Intent to Sell, and appears to be sworn within the redemption period, including the required deemed service period by registered mail under s.27(3) of the RSLA.

[50] It is the Applicant’s evidence that the Respondents failed to release the Vehicle to him within three days as required under section 24 of the RSLA and the Respondents failed to file a Notice of Objection within three days as required under section 24 of the RSLA.

Writ of Seizure issued under RSLA

[51] After this exchange of correspondence with Pilieci on December 10, 2021 the Applicant obtained a Writ of Seizure directing the Sheriff of the Regional Municipality of Peel to seize the Vehicle under the provisions of s.24(9) of the RSLA (the “Writ of Seizure”).

[52] The Writ of Seizure was filed with the Sheriff of the Regional Municipality of Peel on December 15, 2021, but counsel for the Applicant was advised by the Peel Sheriff on February 4, 2021 that:

“…the writ of seizure issued against Diesel Pro had not been processed yet.”

Threats of Sale of Vehicle

[53] From December 10^th, 2021 with the exit of Pilieci, to the date of this Motion it does not appear any progress has been made as it appears that the Respondents dispute the proper service of the Notice of Application and advise that they are seeking to obtain counsel. But on January

17, 2022 Diesel Pro served a Notice of Appearance on the Application, although with no counsel appointed for the corporate Respondent.

[54] It should be noted that the correspondence attached from counsel for the Applicant in response to correspondence from Lucy does not attach that correspondence, as Lucy allegedly places “Without Prejudice” on each piece of Lucy correspondence, and therefore counsel for the Applicant does not include it.

[55] The only exception is an email dated February 3, 2022 which is exhibit 2 to the Singh Affidavit from Lucy to counsel for the Applicant, which is totally redacted by the Applicant, except for the following statement:

“We are prepared to move forward on this matter, thus we are declining your offer, unless the terms of our counter offer set out herein are met and agreed upon by your client, Dominic J. Ladyshewsky by the end of the business day on Friday February 04, 2022. Your client has placed us in financial hardship; thus we will NO longer delay this matter and the sale of this truck.”

[56] Having regard to 725952 Ontario Ltd. v. Desuri Homes Inc., 1995 CarswellOnt 2764, I find that this wording in this email fits within the statement:

“…when the letter embodies threats if the offer should be not accepted it is in the interest of justice that such tactics should be exposed and no privilege protects…”

this statement by Lucy.

III) Law and Analysis

1. Motion for Recovery of Property R.45.03:

[57] As a preliminary matter, from the wording of the Amended Notice of Motion of the Applicant, it is not clear to me that this motion under R.45.03 is amongst the grounds for relief requested in the Amended Notice of Motion before me, although it is in the Amended Factum.

[58] Even if it is a ground of relief that is being sought on this motion before me I cannot hear this motion on an in-writing, ex-parte basis.

[59] R.45.03 reads:

Recovery of Personal Property Held as Security

45.03 (1) Where in a proceeding a party from whom the recovery of personal property is claimed does not dispute the title of the party making the claim, but claims the right to retain the property as security for a debt, the court may order the party claiming recovery of the property to pay into court or otherwise give security for the debt and such further sum, if any, for interest and costs as the court directs. R.R.O. 1990, Reg. 194, r. 45.03 (1).

(2) The affidavit in support of a motion under subrule (1) shall disclose the name of

every person asserting a claim to possession of the property of whom the party claiming recovery has knowledge and every such person shall be served with notice of the motion. R.R.O. 1990, Reg. 194, r. 45.03 (2).

(3) On compliance with an order under subrule (1), the property shall be given to the party claiming recovery and the money in court or the security shall await the outcome

of the proceeding. R.R.O. 1990, Reg. 194, r. 45.03 (3).

[60] In this case, as this is an ex parte in writing motion, by definition, no party that may assert a claim to possession of the Vehicle has been served with this Motion, including Diesel Pro which is currently purporting to be the actual registered owner of the Vehicle, as stated in the Lucy Affidavit, and as the Applicant has testified to in the Applicant Affidavit, so there appears that even on these ex parte materials that Respondents do in fact “…dispute the title of the party making the claim”.

[61] I cannot on an ex parte in-writing basis determine whether they are actually making such a dispute, or whether that dispute is in any way legitimate for the purposes of R.45.03. For that matter Ford Credit, which may have a valid PPSA security interest over the Vehicle, may also voice such a dispute.

[62] Whether ultimately on proper service of the Motion Materials on Diesel Pro and Ford Credit, and the filing of responding materials, a court determines that the registration of the Vehicle in the name of Diesel Pro was an abuse of process by Diesel Pro to circumvent the dispute resolution and sale provisions of the RSLA, as alleged by the Applicant, that legal issue cannot be decided on this ex parte in writing motion, on the materials before me, where there is sufficient evidence before me that the Respondents are disputing the Applicants title. Accordingly, I cannot exercise my discretion to hear this motion in this format.

[63] Accordingly I decline to exercise my discretion to hear the Applicant’s motion for relief under R.45.03 in writing, ex parte, under R.37.12.1 and R.37.07(2) and (3) and R.1.02 and adjourn this motion for relief under R45.03 sine die, to be scheduled for an oral hearing after proper service of the Motion Materials on the Respondents and Ford Credit.

2) Motion for Recovery of Possession of Property: s.104 and R.44.01:

[64] Section 104 of the Courts of Justice Act, RSO, c.43 (the “CJA”) states:

104 (1) In an action in which the recovery of possession of personal property is claimed and it is alleged that the property,

(a) was unlawfully taken from the possession of the plaintiff; or

(b) is unlawfully detained by the defendant,

the court, on motion, may make an interim order for recovery of possession of the property.

Damages

(2) A person who obtains possession of personal property by obtaining or setting aside an interim order under subsection (1) is liable for any loss suffered by the person ultimately found to be entitled to possession of the property. R.S.O. 1990, c. C.43, s. 104.

[65] Rule 44.01 sets out the requirements for a Motion under s.104 of the CJA:

44.01 (1) An interim order under section 104 of the Courts of Justice Act for recovery of possession of personal property may be obtained on motion by the plaintiff, supported by an affidavit setting out,

(a) a description of the property sufficient to make it readily identifiable;

(b) the value of the property;

(c) that the plaintiff is the owner or lawfully entitled to possession of the property;

(d) that the property was unlawfully taken from the possession of the plaintiff or is unlawfully detained by the defendant; and

(e) the facts and circumstances giving rise to the unlawful taking or detention.

R.R.O. 1990, Reg. 194, r. 44.01 (1).

(2) The notice of motion shall be served on the defendant unless the court is satisfied that there is reason to believe that the defendant may improperly attempt to prevent recovery of possession of the property or that, for any other sufficient reason, the order should be made without notice. R.R.O. 1990, Reg. 194, r. 44.01 (2).

[66] Rule 44.03 (2) states:

44.03(2) On a motion for an interim order for the recovery of possession of personal property made without notice to the defendant, the court may,

(a) order the plaintiff to pay into court as security twice the value of the property as stated in the order, or such other amount as the court directs, or to give the appropriate sheriff security in such form and amount as the court approves, and direct the sheriff to take and detain the property for a period of ten days after service of the interim order on the defendant before giving it to the plaintiff; or

(b) make such other order as is just.

[67] The test for Rule 44 is whether there are “substantial grounds” for the plaintiff’s/applicants’ allegations. The Applicant cites the following test in Dhillon v. Move Me Again Transportation Inc., 2021 ONSC 5042 which the summarized the applicable principles, including the “substantial grounds” test as follows:

• it is not contemplated that the Court at this stage should embark upon a trial of the issues raised but only require the plaintiff to show the facts upon which it bases its claim, and if these facts afford substantial grounds for the plaintiff's claim, then the order should be granted;

• the enquiry is limited to determining whether there are substantial grounds for the plaintiff's allegations, which if proved, bring the case within the statute;

• in terms of showing substantial grounds, since the order is only for interim recovery pending trial, the degree of proof is less than would be required on a motion for summary judgment. No final disposition of rights is being made;

• the plaintiff must show more than a probability of success at trial or simply that the plaintiff is more likely to succeed than the defendant. The test is substantial grounds, not reasonable grounds or probable grounds;

• As the order is more in the nature of a mandatory injunction and is a greater interference with responding parties' rights than a prohibitive injunction, the substantial grounds test for interim recovery of property requires a high degree of assurance that the plaintiff will be successful at trial.

[68] That case from AJ Frank cites this test as flowing from the decision of AJ Josefo in Gignac v. Move Me Again Transportation Inc, 2021 ONSC 3374. In each case, the motions were heard on notice and the opposing parties were present and made arguments. In each case the respondents raised issues regarding the applicability of R.44 in a RSLA context, albeit relating to the “storer” sections of the RSLA in a moving company context.

[69] On an evidentiary basis, it appears, although it is not certain from the form of the Notice of Intent to Sell, that the entirety of the debt for which it was issued relates solely to WO#0697544 with the $15,365.11 invoice amount prior to tacking on of administrative charges,

interest on that invoice but also other invoices, storage costs, postage, search fees, registration fees for the RSLA liens, “registered letters” and taxes.

[70] An obvious factual dispute may then arise relating to the contention by the Applicant in paragraph 18 of the Applicant Affidavit where the Applicant states the following relating to the amounts at issue under that particular WO#0697544:

“18. John and Lucy were grateful that I helped them with their business, Diesel Pro. In exchange for my loan to John and Lucy, John stated that Diesel Pro would perform work on the Vehicle for free. In other words, John indicated that Diesel Pro would not charge me for labour.”

[71] There is an obvious issue of credibility regarding this statement that could arise in an opposed motion context where the Respondents have an opportunity to respond, given that even from unsworn correspondence and the conduct of the Respondent, and the Lucy Affidavit, it appears that the Respondents dispute this statement.

[72] Similar issues may arise with the Applicant’s evidence in a opposed motion context on the issues of whether estimates were ever given by the Respondents, whether the Applicant had seen the invoices, whether he had signed the invoice or whether the Respondents forged his signature on this invoice, as alleged, and issue of the insufficiency of the evidence before me now to prove the test under R.44.01(2).

[73] These and other issues are critical to determining the Respondents:

1. entitlement to a RSLA lien;

2. the ability to enforce the RSLA lien;

3. propriety of the enforcement steps taken; and

4. depending on the answers to 1-3, whether the current possession of the Vehicle by Diesel Pro is as a result of actions that would lead to a legal conclusion “that the property was unlawfully taken from the possession of the plaintiff or is unlawfully detained by the defendant”

[74] As I noted above with respect to my adjournment of the relief requested under R.45.03, and mindful of the test under R.44.01(3), the legal issues I raised above (which are not exhaustive on my part as I had many questions) are issues that cannot be decided on an ex parte in writing motion, on these materials, that would allow the Applicant to pass the “substantial grounds” test for interim recovery of property under the R44.01, that requires a “high degree of assurance that the Applicant will be successful at trial”, per the Dhillon test cited.

[75] Accordingly I decline to exercise my discretion to hear the Applicant’s motion for relief under s.104 of the CJA and R.44.01 in writing, ex parte, under R.37.12.1 and R.37.07(2) and (3) and R.1.02 and adjourn this motion under s.104 of the CJA and R.44.01 sine die, to be scheduled

for an oral hearing after proper service of the Motion Materials on the Respondents and Ford Credit, which appears to have a registered PPSA security interest in the Vehicle as well.

3) Motion for Interim Preservation of Property: R.45.01:

[76] The Applicant has also requested as alternative relief an interim order for custody and preservation of the Vehicle under Rule 45.01 allows the court to make an interim order for the custody or preservation of any property in question in a proceeding. The Rule reads:

Interim Order for Preservation or Sale

45.01 (1) The court may make an interim order for the custody or preservation of any property in question in a proceeding or relevant to an issue in a proceeding, and for that purpose may authorize entry on or into any property in the possession of a party or of a person not a party. R.R.O. 1990, Reg. 194, r. 45.01 (1).

(2) Where the property is of a perishable nature or likely to deteriorate or for any other reason ought to be sold, the court may order its sale in such manner and on such terms as are just. R.R.O. 1990, Reg. 194, r. 45.01 (2).

[77] The Applicants cites the following test for an order for the preservation of property from the decision of Sachs, J. in Taribo Holdings Ltd. v. Storage Access Technologies 27

C.P.C. (5^th) 194 (“Taribo”):

• the asset sought to be preserved is the very subject of the dispute;

• there is a serious issue to be tried regarding the Applicant’s claim to the asset; and

• the balance of convenience favours granting the relief sought by the applicant or moving party.

Asset to be preserved

[78] Based on the evidence before me, I find that the Vehicle is certainly the “very subject matter of this dispute”, as are any proceeds of sale generated from a sale of the Vehicle.

There is a serious issue to be tried regarding the Applicant’s claim to the Vehicle

[79] The analysis by Sachs, J. in Taribo, requires me to consider the strength of the Applicants' case and whether there is a serious issue to be tried with respect to the Applicant’s claim to the Vehicle.

[80] The Applicant bases his case on the provisions of the RSLA. From the ex parte evidence provided by the Applicant, it appears that there have been many irregularities in the attempted enforcement by the Respondents of the provisions of the RSLA:

i) The Applicant was the registered owner of the Vehicle at the time the work was done on the vehicle alleged in the invoices rendered by the Respondents;

ii) The evidence of the Applicant is that there were no estimates of work provided that may be a violation of s.56, 57, 58(1) and 59 of the Consumer Protection Act, 2002;

iii) It is the evidence of the Applicant that certain of the labour charged on invoice WO#0697544 should not have been charged;

iv) The Applicant alleges that WO#0697544 and Invoice #235 were falsified and that his signature was forged and that the Respondents have not produced documentation to the Applicant that substantiates the authenticity of the signatures;

v) The Applicant denies that signed acknowledgements of the debt were obtained by the Respondents and denies that he had been provided Invoice #235 prior to the Vehicle being seized, and that Invoice #235 was falsely dated;

vi) The amount which the Respondents claim is secured under the RSLA is $31,000 in the Diesel Pro RSLA Lien, $20,038.61 in the Bailiff Warrant and $18,834.99 in the Notice of Intent to Sell, all documents created or signed by the Respondents;

vii) The Notice of Intent to Sell appears to only refer to the amounts owing under the WO#0697544, but also adds charges that may not be valid charges under the RSLA;

viii) The redemption date under the RSLA stated in the Notice of Intent to Sell appears not to be calculated properly, giving rise to the issue as to whether the Notice of Intent to Sell was valid and effective;

ix) From the evidence of the Applicant, it appears that the Respondents, with the possible witting or unwitting assistance of Pilieci, may have attempted to frustrate the ability of the Applicants to utilize s.24 of the RSLA;

x) The transfer of the registration of the Vehicle to Diesel Pro, based on the evidence in the Lucy Affidavit, may be invalid, as the facts in the Lucy Affidavit on which the Ministry transferred the Vehicle may be incorrect and the registration transfer was based on incorrect legal assertions under the RSLA by Lucy;

xi) From the date of the Lucy Affidavit it appears that it had been sworn within the redemption period under s.15(2) of the RSLA, due to the deemed notice period in s.27(3) of the RSLA, raising further issues of the validity and effectiveness of the Notice of Intent to Sell;

xii) The transfer of the registration of the Vehicle under the premise that there had been a retention of the Vehicle under s.17 of the RSLA may be invalid as it appears from the Notice of Intent to Sell that there was no such intention, that no notice of that intention under s.17 of the RSLA was ever properly served, and that the Respondents appear to be improperly conflating two different remedies under the RSLA, sale and retention (foreclosure) of collateral, to obtain title to the Vehicle;

xiii) There is no evidence that the Respondents or Pilieci ever served a Notice of Objection under s.24 of the RSLA, and also failed to return the Vehicle under to the Applicant after being personally served with the Initial s.24 Certificate.

[81] Given the tangled factual background, the ultimate determination as to which Party’s position will prevail is something that will have to be determined at a trial, with proper assessments of the credibility of the witnesses.

[82] However, what can be stated for the purposes of this Motion is that the Applicants have definitely met the threshold required for the second aspect of the test under Rule 45. They have raised many serious issues to be tried regarding the Applicant’s claim and the Respondents’ claim to the Vehicle that must be tried.

The balance of convenience favours granting the relief sought by the Applicant

[83] The key evidence in favour of the granting of the Order requested under R.45 is the monies that have already been paid into Court by the Applicant to pay in full the amount of

$18,834.99 claimed by Diesel Pro under the Notice of Intent to Sell and have obtained the Initial

s.24 Certificate.

[84] In addition, the Respondents:

i) still have the vehicle in their possession pending further motion(s) and the Application by the Applicant before the Court, and

ii) if they are successful in proving that their lien under the RSLA is valid, and

iii) has been properly enforced under the RSLA, and

vi) has priority

could have the right to sell the Vehicle. A preservatory order will not prejudice those rights and the Respondents possession of the Vehicle.

[85] I note that with respect to the various threats of sale by the Respondent, whether or not they form part of “without prejudice” settlement communications or not, the same threats were made in December by Pilieci, where no such “without prejudice” was claimed, and in the Lucy Affidavit Lucy swore that:

“I respectfully request from the Ministry of Transportation proper ownership to the above said vehicle on Diesel Pro Services behalf so that they may dispose of the above said vehicle however they may see fit, free from the rights and interests of all interested/secured parties…”

[86] That affidavit in no way can be termed covered by any alleged Settlement Privilege, given that it was apparently provided to the Ministry of Transport to effect the transfer of the Vehicle registration to Diesel Pro.

[87] This leads to the question of the interests of Ford Credit, not represented here to date, which if the Applicant is correct that the RSLA lien registered by the Respondents is not valid, and the Notice of Intent to Sell was improperly drafted and improperly served, may be the secured creditor with priority to the Vehicle and its proceeds. I must also consider the interests of Ford Credit as a secured creditor in balancing the interests of the parties.

[88] The Applicant has also allegedly incurred costs to improve this particular vehicle, and to repair the vehicle after it was allegedly rendered unsafe by the Respondents.

[89] I cannot assess the credit-worthiness of the Respondents on the evidence before me.

[90] Taking all of these considerations into account, and on my review of all of the evidence before me, and in utilizing my discretion under R.1.02 to achieve the just result in the circumstances for all of the parties, including the to-date non-party Ford Credit, it is my view that the balance of convenience does favour the granting of an order under Rule 45, to preserve the status quo between the Parties, as well as Ford Credit, pending the determination of the legal issues and the adjourned motions in the Application, as well as the Lucy Claim in Richmond Hill Small Claims Court, the John and Diesel Pro Claim in the Brampton Small Claims Court, and the current RSLA proceedings in the Toronto Small Claims Court, which may all require consolidation into the Application.

[91] I also note that the provisions of Section 28 (6) of the RSLA state:

(6) Where the lien claimant uses or deals with an article in a manner not authorized by this Act, the lien claimant is liable for any loss or damage caused by that use or dealing and may be restrained by an injunction.

[92] The Respondents should carefully consider their options, on advice of legal counsel, in complying with the terms of this Order, as their liability for non-compliance with the RSLA may extend to not only damages incurred by the Applicant, but also incurred by Ford Credit.

IV) Terms of Order

[93] I have granted the preservation Order requested by the Applicant on the following terms and have sign the draft Order provided:

1. THIS COURT ORDERS THAT the Respondents are restrained from directly or indirectly, selling, removing, dissipating, transferring, assigning, encumbering or similarly dealing with the vehicle described as 2017 black Ford 250, License plate - AV58821, VIN # 1FT7W2BT1HEE59522.

2. THIS COURT ORDERS THAT that the sum of $18,834.99 paid by the Applicant into court in court file number SC-21-9002-00RS be held as security for the debt claimed by the Respondents.

3. THIS COURT ORDERS THAT in the event that the vehicle described as 2017 black Ford 250, License plate - AV58821, VIN # 1FT7W2BT1HEE59522 is sold by the Respondents, the specific funds from the sale held by the Respondents be paid into court.

4. THIS COURT ORDERS THAT anyone served with or notified of this Order may apply to the Court any time to vary or discharge this order, on a (7) days’ notice to the Applicant.

[94] I order that this endorsement and the Order are also to be served on Ford Credit at the Notice Address in their PPSA registration, or in the security documentation signed by the Applicant, as Ford Credit clearly has an interest to be protected in this proceeding, perhaps having a security interest with priority over those of the Applicant and the Respondents.

[95] As I am the Bankruptcy Registrar sitting intermittently in Civil Court to assist the Civil Associate Justices, I will not remain seized of this motion, the adjourned motions and the Application.

COSTS

[96] If the parties cannot agree on the disposition of the costs of the motion, they may make written submissions, not exceeding three pages each, the Applicant within 20 days and Respondents within 40 days.

Superior Court of Justice

Released: February 15, 2022