Court File and Parties

Court File No.: CV-23-00000247-0000
Date: 2025-03-04
Court: Superior Court of Justice - Ontario

Between:
Royal Bank of Canada, Plaintiff
and
Hussein El Hossaini, Canadian Fine Auto Limited, Fine Auto Export Inc., Defendants
H & M Flooring Inc., Garnishee

Before: Kurz J.

Counsel: Gregory W. Bowden, for the Plaintiff

Heard: January 22, 2025, by Videoconference

Endorsement

Introduction

[1] On March 15, 2023, the Plaintiff (“RBC”) obtained judgment against the Defendant, Hussein El Hossaini (the “Debtor”) for $238,545.03, including interest (the “Judgment”). RBC then served a Notice of Garnishment on the Garnishee, H & M Flooring Inc. When the Garnishee failed to serve and file a Garnishee’s Statement, RBC moved for an order requiring the Garnishee to pay it the full amount of the Judgment.

[2] The Garnishee has failed to respond to this motion. Nonetheless, for the reasons set out below, I dismiss this motion without prejudice to the right to bring it again upon better materials.

Background

[3] The Judgment is based on an unpaid debt that the Debtor owes to RBC. On August 8, 2023, RBC issued the Notice of Garnishment which commenced this proceeding. On August 10, 2023 it was served on the Garnishee, along with a Garnishee’s Statement, by regular mail. On November 13, 2023, counsel for RBC again wrote to the Garnishee, enclosing a copy of his previous letter and requesting a response. He received no response. On April 2, 2024, counsel for RBC served his client’s first motion record for this motion on both the Garnishee and the Debtor by ordinary mail pursuant to r. 60.08(8).

[4] This motion was originally heard by Brown A.J. on September 12, 2024. He found that RBC had not proven the amount owing by the Garnishee to the Debtor or the relationship between the two. He cited r. 60.08(17) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which reads as follows:

Enforcement against Garnishee

(17) Where the garnishee does not pay to the sheriff the amount set out in the notice of garnishment as owing by the garnishee to the debtor and does not serve and file a garnishee’s statement, the creditor is entitled on motion to the court, on notice to the garnishee, to an order against the garnishee for payment of the amount that the court finds is payable to the debtor by the garnishee, or the amount set out in the notice, whichever is less.

[Emphasis and underlining added.]

[5] Rather than dismiss the motion, Brown A.J. adjourned this motion to January 22, 2025, before a judge. He did so to allow RBC to provide further evidence of the amount that the Garnishee owes to the Debtor and proof of the relationship between the two.

Evidence of RBC

[6] RBC’s evidence comes in the form of affidavits prepared by a person variously described as the legal assistant to RBC counsel, Mr. Bowden, or a law clerk in his firm (the “Clerk”). In her affidavit of September 23, 2024, the Clerk exhibited both a corporate profile report of the Garnishee and a skip trace report regarding the Debtor.

[7] The corporate profile report named what appear to be two directors of the Garnishee but no officers. The report actually named four directors but three of them appear to be the same person, the Debtor, with slightly varied spellings of his name. The other director is named as Ali Al-Husseinie (“Ali”). The registered head office of the Garnishee matches the listed address of Ali; an apartment or condominium unit in Toronto (“Unit 1503”).

[8] The skip trace report stated:

The subject [i.e. the Debtor] is currently out of the country, is expected to return, however, no current date. The subject’s brother owns H & M Flooring Inc. [phone number redacted] and will work for him when he returns. Indications the subject travels out of the country frequently. May only come to Canada to help brother.

[9] RBC counsel relies on this skip trace report to support the claim that Ali is the “owner” of the Garnishee and that he is the brother of the Debtor.

[10] When I pointed out to RBC counsel during the hearing of this motion that the skip trace report also says that the Debtor is out of town and only intermittently employed by the Garnishee, counsel responded that the statement in the report is hearsay. So too is the statement about the Debtor being the brother of the owner of the Garnishee and being employed by it.

[11] In RBC’s second supplementary motion record, RBC requests a garnishment order against Fine Auto Export Inc. But at the hearing before me, RBC counsel withdrew that request because Fine Auto Export Inc. is already a Defendant in this action and RBC has already obtained judgment against it.

[12] Brown A.J.’s endorsement required RBC to serve its original motion record and any supplementary motion record upon the Garnishee by courier. RBC’s second supplementary record contains an affidavit of the Clerk, which deposes that the courier was unable to serve RBC’s motion materials at the Garnishee’s registered head office (Unit 1503), as “the occupant denied that the documents belonged to him”. However, copies of those documents were also served by ordinary mail at that same address, also pursuant to Brown A.J.’s endorsement.

[13] On November 5, 2024, RBC purported to serve a Summons to Witness to a pending motion under r. 39.03 on Ali, as a director of the Garnishee. RBC contends that Ali is the brother of the Debtor and the “owner” of the Garnishee. Ali never attended the examination, which had been scheduled for November 28, 2024, by Zoom.

[14] In his affidavit of service, RBC’s process server deposed as follows. He was advised by the adult who answered the door of Unit 1503 that he had the wrong address. The process server then checked the tenant registry of the building and located a listing for an “Al Hussaini” at another unit. He helpfully photographed that listing. As set out below, the spelling of that surname differs from the spelling of Ali’s surname. Further, the process server’s affidavit of service incorrectly spells Ali’s surname (as set out in his photograph of the tenant register) as “Al-Hussainie”, rather than the correct surname, Al-Husseinie.

[15] The process server spoke to the occupant of the Al Hussaini unit, whom the process server claims to have “identified himself”. The process server further deposes that “Ali Al-Husseinie” was then served with the notice of examination and conduct money.

[16] I note at this point that three different spellings have been offered for Ali’s purported surname:

a. “Al-Husseinie” as set out in the Garnishee’s corporate profile;
b. “Al Hussaini”, as set out in the tenant register photograph taken by the process server;
c. “Al-Hussainie” as apparently misspelled in the affidavit of service.

[17] That being said, according to the affidavit of the Clerk, on November 13, 2024, RBC counsel, Mr. Bowden, received a phone call from the property manager of the building where service had been performed. He told Mr. Bowden, in the words of his assistant, “that the occupant that accepted the Summons to Witness and conduct money advised that the documents do not belong to him”.

[18] Ordinarily such evidence is inadmissible as “it is improper for the deponent of an affidavit to act as counsel and rely on his or her affidavit” and “[a]n advocate cannot avoid the rule that he or she cannot be a witness and advocate through the device of having someone else swear the affidavit based on information and belief from the lawyer”: Gutierrez v. Watchtower Bible and Tract Society of Canada, 2019 ONSC 3069, at para. 37. However, RBC counsel does not rely on the statement for its truth; quite to the contrary. He argues that the property manager was not telling him the truth. But based on a close examination of the affidavit of service, I cannot accept that contention.

[19] As set out above, the process server’s photograph of the tenant register by which he claims to have identified Ali refers to an “S. Al Hussaini” rather than an A. or Ali Al-Husseinie. Both the first initial or name as well as the spelling of the surname set out above are different.

[20] It is quite possible that the wrong person was unwittingly served. Because the two surnames sound similar and because the process server would have only verbally requested that he identify himself, it is possible that Mr. Al Hussaini did not realize that he was the wrong person until he reviewed the documents served on him.

[21] Accordingly, I place no weight on Ali’s failure to attend at the r. 39.03 examination.

[22] In her third supplementary affidavit, the same Clerk stated broadly and without offering a ground for saying so, that: “I have been advised and verily believe that the Debtor is employed with the garnishee”. That statement violates r. 39.01(5) as it fails to offer the source of the knowledge. Accordingly, I give that statement no weight either.

Authorities

[23] RBC relies on the following statement by Zarnett J.A., writing for the Court of Appeal for Ontario in Benzacar v. Terk, 2023 ONCA 773, at para. 4, as to the effect of a Garnishee’s failure to serve a garnishee’s statement:

A garnishee who wishes to dispute the garnishment in whole or in part must serve a garnishee's statement in a prescribed form within 10 days after service of the notice of garnishment. The form requires the garnishee to acknowledge what debts are or will be owing, or to explain why there are and will be none. Where a garnishee fails to serve a statement, the creditor is entitled to an order for payment of the amount the court finds is payable by the debtor to the garnishee, or the amount in the notice, whichever is less. A court may treat a garnishee's statement that is materially false without reasonable justification as the equivalent of no statement at all.

[24] That being said, the court did not determine that a failure to serve a garnishee statement amounts to a shortcut to an order that the garnishee pay the full amount claimed in a notice of garnishment. The point is made at para. 37 of the decision where Zarnett J.A. writes:

If no statement has been served and filed, the court's second task is to determine the amount payable by the garnishee to the debtor, another question of mixed fact and law. The court's third task is, as a matter of law, to give effect to the creditor's entitlement to an order in the lesser of the amount payable by the garnishee to the debtor or the amount in the notice.

[25] In that case, the court ordered that the full amount claimed in the notice of garnishment be paid. But the Court had evidence of the quantum that the garnishee owed to the debtor and found that it exceeded the amount claimed in the notice of garnishment before it. See: para. 56.

[26] In a second case relied upon by RBC, Couper v. Vitaquest International LLC, 2017 ONSC 7679, paras 9-10, Master Jolley, as she then was titled, also spoke of the consequences of a garnishee’s failure to serve a garnishee’s statement. She wrote at paras. 9-10:

9 Where a garnishee has been given fair warning of the possible consequences of failing to pay funds owing into court or to file a garnishee's statement and where the garnishee has been unresponsive, it may [be] appropriate that the creditor obtain an order against the garnishee for the outstanding amount of the judgment. Here not only have the garnishees not complied with the Rules they have actively attempted to evade service.

10 While they had notice of this motion, they did not file a garnishee's statement in the face of it. Nor did they file responding materials in this court providing some evidence that they are not indebted to the debtor.

[27] RBC counsel argues that the situation before the court here is analogous to the one before Master Jolley, who granted a judgment for the full amount claimed in the notice of garnishment. But like Zarnett J.A. and the court in Benzacar, Master Jolley had sufficient evidence before her of the amounts that the garnishee regularly purchased from the debtor and paid for. Over a few months, that amount exceeded the amount claimed in the notice of garnishment.

Analysis

[28] RBC’s counsel frankly admitted that he could cite no case in which a garnishment order was made in the absence of proof of the amount, if any, that was owed by a garnishee to a debtor. Nonetheless he argued that I should draw an adverse inference against the Garnishee, that it owes the Debtor the full $238,545.03 claimed in the Notice of Garnishment, and thus must pay that full amount to RBC.

[29] Counsel asks me to draw that inference based on the failure of the Garnishee to respond to this motion, Ali’s failure to attend at his examination and the claim that he is the brother of the Debtor. I cannot accept that submission.

[30] The same unsourced hearsay evidence that RBC relies upon to say that Ali is the Debtor’s brother also says that the Debtor is out of the country and only works intermittently for his brother when needed. Further, I cannot ignore the fact that the spelling of the surnames of the Debtor, “El Hossaini”, and his alleged brother, “Al-Husseinie”, are not even the same. Further, as set out above, I place no weight on the fact that Ali did not attend at the r. 39.03 examination as I am not satisfied that he was properly served with the Summons to Witness.

[31] The Rules of Civil Procedure do not call for a presumption that a failure to respond to a garnishment notice means that the full amount claimed is owed by the garnishee to the debtor. Rather, the court must still determine the amount owed in order to decide whether it is more, less, or the same as the amount claimed in the notice of garnishment.

[32] Whatever inference may conceivably be drawn from the failure to respond to a garnishment notice, I cannot draw so broad an inference as to say that the Garnishee owes $238,545.03 to the Debtor. The evidentiary basis provided by RBC in this motion is far too narrow to make so broad a leap. Ultimately, I have no reliable evidence that the Garnishee owes anything to the Debtor at this time.

[33] If I had better evidence before me, I would be in a better position to make a determination of the amount, if any, owing by the Garnishee to the Debtor. As it stands, I do not feel that I can make a finding that any amount is owed by the Garnishee to the Debtor, let alone the quantum of that debt sufficient to make a garnishment order.

[34] This motion is dismissed without prejudice to the right to bring it again on better evidence.

Kurz J.
Date: March 4, 2025