



COURT OF APPEAL FOR ONTARIO

CITATION: Thompson v. Casey, 2020 ONCA 5

DATE: 20200107

DOCKET: C67032

Brown, Huscroft and Trotter JJ.A.

BETWEEN

Brian Thompson

Applicant (Appellant)

and

Mary Eileen Casey, Ronald Albert Ornsby, Jennifer
    Matthews and 1007937 Ontario Inc.

Respondents (Respondents)

Christopher Salazar, for the appellant

K. Jay Ralston, for the respondent Mary Eileen Casey

Heard: December 17, 2019

On appeal from the
    order of Justice Mary E. Vallee of the Superior Court of Justice dated May 2,
    2019, with reasons reported at 2019 ONSC 2760.

REASONS FOR DECISION

[1]

The sale of a modest-sized business completed on
    September 20, 2010 has spawned three related proceedings that have not yet reached
    definitive, final determinations on their merits.

[2]

The vendor of the business, 1007937 Ontario Inc.
    (the Corporation), of which Ronald Ornsby is the principal, sold its
    Fendleys Flowers operation to Jennifer Matthews for $165,000. In partial
    payment of the purchase price, Matthews executed a promissory note in the
    amount of $130,000 in
favour
of 1007937 Ontario. The
    Corporation, at the direction of Ornsby, immediately assigned the note to its accountant
    and Ornsbys friend, the appellant Brian Thompson, who had lent money to
    Ornsby, but not to the Corporation.

[3]

The Corporations bank  and secured creditor to
    the tune of approximately $250,000  had refused to provide a comfort letter
    requested by the Corporation to enable the sale transaction to proceed. Nevertheless,
    it appears that Ornsby sold, and Matthews bought, the business in the face of
    that refusal. When the bank found out what had happened, it called its loan and
    gave notice of its intention to realize on its security.

[4]

Ornsbys common-law spouse for several years, the
    respondent Mary Eileen Casey, had guaranteed the Corporations debt. The bank
    looked to her for payment. She paid the bank and received an assignment of the
    banks security over the assets of the Corporation.

[5]

Three proceedings ensued:

(i) On
    March 23, 2011, Casey sued the Corporation (Barrie Superior Court file 11-0291),
    seeking indemnity for the amount she paid to the bank in respect of the
    Corporations indebtedness;

(ii) On
    June 21, 2012, Casey sued Ornsby and Matthews (Barrie Superior Court file
    12-0720) seeking payment under the security agreement assigned to her by the
    bank and damages against Ornsby for oppressive conduct in respect of the
    Corporations indebtedness to the bank; and

(iii) On
    October 4, 2018, the appellant, Thompson, commenced this application against
    Casey, Ornsby, the Corporation, and Matthews seeking various forms of relief
    that, taken together, would require Matthews to pay the balance due under the
    promissory note to Thompson. The application appears to have been prompted by
    two events: (i) Matthews had stopped making monthly payments to Thompson on the
    note, and (ii) Caseys two proceedings had not yet gone to trial, despite the
    extensive passage of time.

[6]

The application judge dismissed Thompsons
    application, but on a without-prejudice basis.

[7]

We see no error in the application judges conclusion
    that in order to determine the claim of priority asserted by Thompson to the
    proceeds of Matthews promissory note, Thompson first had to demonstrate the validity
    of the assignment of the note from the Corporation. At para. 41 of her reasons,
    the application judge explained why, on the evidence filed and legal
    submissions made before her, she was not able to determine the issue of the
    validity of the assignment of the promissory note.

[8]

Yet, the application judge went on to state that
    she was available to the parties to further consider the issue. In the result, although
    she dismissed Thompsons application, she did so without prejudice to Mr.
    Thompsons bringing further proceedings to prove the validity of the assignment
    because he did not address that issue in this application. If he does bring
    further proceedings, given the complexity of this matter[,] I will remain
    seized: at para. 42.

[9]

Thompson submits that the application judge
    erred in making that disposition because, on any view of the facts, Casey was
    out of time to challenge his claim to priority to the proceeds from the
    promissory note. In our view, that is far from clear given the matters put in
    issue by Casey in the pleadings in her two actions, which she started within
    two years of the sale transaction.

[10]

However, for other reasons we conclude that the
    application judge erred in her disposition of this proceeding. While an
    application judge has broad discretion under r. 38.10(1) of the
Rules
    of Civil Procedure

in deciding how to dispose of an
    application, to which this court must accord deference, the application judge
    erred in principle in making the specific disposition that she did. She
    identified an issue that required further consideration on the merits but
    dismissed the application on a without-prejudice basis, thereby deferring the determination
    of that issue to a new proceeding, of which she seized herself. By proceeding
    in that fashion, the application judges disposition ran counter to: (i) the principle
    expressed by s. 138 of the
Courts of Justice Act
, R.S.O. 1990, c. C.43, to avoid, as far as possible, the
    multiplicity of proceedings; and (ii) the related principle found in r.
    1.04(1.1) that the court shall make orders that are proportionate to the
    importance and complexity of the issues. Instead of dismissing the application
    on a without-prejudice basis and putting the parties to the expense of yet
    another proceeding, the application judge should have directed the trial of an
    issue, or the whole application, pursuant to r. 38.10(1)(b) and remained seized
    of the matter.

[11]

We allow the appeal to the extent of setting
    aside the Order and remit the application to the Superior Court of Justice for
    further direction and determination.

[12]

When the legal expenses incurred to date just in
    this application are compared to the modest amounts in dispute in this
    proceeding and the two Casey actions, these cases cry out for combined management
    and disposition, preceded by a vigorous pre-trial conference in the very near
    future. Almost a decade has elapsed since the events that spawned these
    proceedings. The time has come to determine them on their merits.

[13]

We leave the issue of the costs incurred below
    up until the date of the Order to the final disposition of the application. Given
    the mixed success of the parties on this appeal, we make no order as to the
    costs of the appeal.

David
    Brown J.A.

Grant
    Huscroft J.A.

Gary
    Trotter J.A.


