



COURT OF APPEAL FOR ONTARIO

CITATION: 2089322 Ontario Corporation v. Des Roches, 2019
    ONCA 355

DATE: 20190502

DOCKET: C66238

Doherty, Paciocco and Zarnett JJ.A.

BETWEEN

2089322 Ontario Corporation

Applicant (Respondent in Appeal)

and

Luc W. Des Roches
,
    Nicole L. Des Roches and
Rezmart Gas and Tobacco

Respondents (
Appellants in Appeal
)

Christopher J. Sparling, for the appellant, Luc W. Des
    Roches and Rezmart Gas and Tobacco

Warren S. Rapoport and Nicholas Macos, for the
    respondent

Heard: April 16, 2019

On appeal from the order of Justice Edward J. Koke of the
    Superior Court of Justice, dated October 9, 2018 with reasons reported at 2018
    ONSC 5972.

REASONS FOR DECISION


[1]

In 2006, the appellant, Luc Des Roches (Mr. Des Roches), and the
    respondent, 2089322 Ontario Corporation (208 Ontario), entered into an
    agreement which provided that Mr. Des Roches would operate a convenience store
    and gas bar (Rezmart) on Wasauksing First Nation (WFN). 208 Ontario is
    wholly owned by Wasauksing Lands Inc. (WLI), a not-for-profit economic
    development corporation incorporated to promote the interests of WFN. 208
    Ontario provided funding and oversight.

[2]

The venture did not go well almost from the beginning. In August 2007,
    208 Ontario brought an application for a determination of the parties rights
    under the agreement. 208 Ontario alleged that Mr. Des Roches was operating
    Rezmart without regard to either his obligations under the agreement or 208 Ontarios
    rights under the agreement. That application remained before the courts for
    many years.

[3]

Ultimately, in early 2018, 208 Ontario sought an order enforcing the terms
    of the agreement and an order finding Mr. Des Roches in civil contempt for
    breaching three prior court orders made in the course of the application. Those
    orders related to the preservation and production of documents relating to the
    business operation of Rezmart.
[1]

[4]

At the hearing in April 2018, the motion judge concluded that Mr. Des Roches
    was bound by the agreement with 208 Ontario in respect of the operation of
    Rezmart. The motion judge also found that Mr. Des Roches was in breach of
    several terms of that agreement and had been for many years. The motion judge
    made an order declaring that the agreement was enforceable against Mr. Des
    Roches. He placed 208 Ontario in complete control of the Rezmart business
    operation and the premises. The motion judge also ordered Mr. Des Roches to
    fully cooperate in the transfer of the business premises and assets to 208
    Ontario.

[5]

The motion judge further ordered:

This application is adjourned until October 1, 2018 at which
    time the parties are to appear before me for the continuation of the
    application and to discuss and determine the ultimate relief which should be
    granted by this court.

[6]

The motion judge also addressed the contempt allegations in his reasons.
    He found that Mr. Des Roches was in contempt of prior orders and that his
    non-compliance of those orders was wilful and deliberate. The motion judge
    indicated that a short prison sentence would be appropriate. However, he
    declined to make any order in respect of the contempt and adjourned that matter
    to the October 1 date as well. The motion judge indicated that the adjournment
    of the sentencing on the contempt would give Mr. Des Roches a chance to
    rectify his breach by demonstrating he is prepared to follow court orders.

[7]

Mr. Des Roches was self-represented at the April proceedings.

[8]

Neither party appealed the April order.

The October 1, 2018 Proceedings

[9]

On the return of the motion, 208 Ontario sought an order winding up the
    affairs of Rezmart or an order allowing 208 Ontario to sell the assets of
    Rezmart. Mr. Des Roches, who was represented by counsel at this time, brought a
    preliminary motion asking the court to suspend its determination that the
    agreement was enforceable against Mr. Des Roches pending a forensic examination
    of the document that the motion judge had found to be the joint venture
    agreement (the February 3
rd
agreement) in the April proceeding. Mr.
    Des Roches proposed to have that document and two others examined by a forensic
    document examiner.

[10]

The
    motion judge, following the approach taken by counsel for Mr. Des Roches,
    treated the motion as one brought under rule 59.06(2) for an order setting
    aside a prior order on the basis of fresh evidence showing that the order was
    obtained by fraud. In our view, this was a mischaracterization of the request.
    The order made in April concerning the enforceability of the agreement against
    Mr. Des Roches, when considered in the context of the rest of the order,
    applied pending the return of the motion in October. In our view, it was open
    to Mr. Des Roches to raise arguments pertaining to the enforceability of the
    agreement at the October proceeding.

[11]

The
    motion judge declined to allow Mr. Des Roches to explore the legitimacy of the
    document, concluding that there was no merit to the suggestion that the
    agreement had been fraudulently altered and somehow signed without Mr. Des
    Roches knowledge or consent. In coming to that conclusion, the motion judge
    relied on the following:

·

The provenance of the document, dated February 3, 2006, had been
    established by the representations of counsel for 208 Ontario when he tendered
    the document in the April proceedings;

·

Mr. Des Roches did not expressly challenge the
bona fides
of the February 3
rd
document in the April proceedings.

·

Mr. Des Roches suggestion that the agreement had been altered
    and his signature forged was inconsistent with the position he took in April.
    At that time, he claimed he acted under duress;

·

Mr. Des Roches conduct subsequent to February 2006 confirmed
    that he had acted in accordance with the terms and conditions of the agreement
    in many respects; and

·

Mr. Des Roches conduct, most notably his repeated contempts,
    raised serious concerns about his credibility and good faith.

[12]

The
    motion judge dismissed the appellants preliminary motion. He then went on to
    hold that 208 Ontario could either windup the business of Rezmart or sell it as
    it saw fit. The motion judge also ordered Mr. Des Roches to pay fines totalling
    $6,000 for his three prior contempts.

The Merits of the Appeal

[13]

Mr.
    Des Roches appeals from the October order. The appeal focusses on the motion
    judges dismissal of Mr. Des Roches preliminary motion seeking an opportunity
    to challenge the
bona fides
of the February 3, 2006 agreement. Mr. Des
    Roches does not appeal the other aspects of the October order. Most notably, he
    does not challenge the penalties imposed as a consequence of the contempt
    findings. Nothing said in these reasons affects the enforceability of those
    penalties.

[14]

We
    are satisfied that the appeal must be allowed. First, as indicated above, the
    motion judge mischaracterized the nature of the preliminary motion. The motion
    did not suggest that the April order was obtained by fraud. The motion was
    premised on the contention that Mr. Des Roches could question the
bona
    fides
of the document said to represent the agreement. The April proceeding
    had determined that issue, but only for the purpose of the operation of the
    business pending the October proceeding. Mr. Des Roches sought to pursue that
    issue by way of forensic examination of certain documents.

[15]

The
    motion judge also made two material factual errors in considering Mr. Des
    Roches motion. First, he indicated that Mr. Des Roches had advanced a duress
    defence in response to the February 3
rd
document at the April
    hearing. The motion judge indicated that a duress defence was entirely
    inconsistent with Mr. Des Roches claim that the document was forged.

[16]

Mr.
    Des Roches was not represented by counsel in the April proceeding. In the
    course of his dialogue with the motion judge, Mr. Des Roches did indicate that
    he felt at various times that he had little choice in the course of the
    negotiations. He did not, however, suggest that he signed any document under
    duress. In his discussions with the motion judge, Mr. Des Roches purported to
    have little or no recollection of the February 3
rd
document, how it
    came to be in the condition it was in at the time of the motion, or how he came
    to sign it. Mr. Des Roches position in the April proceeding was essentially
    that he believed the negotiations were ongoing and that a finalized agreement
    had not been reached.

[17]

The
    motion judge also wrongly relied on the fact that the February 3
rd
document had been produced in court by counsel for 208 Ontario, as affording support
    for the authenticity of the document. No one suggests that counsel for 208
    Ontario had any reason to believe that the document was anything other than
    what it appeared to be, or that he was in anyway misleading the court about
    where the document came from. However, the issue was not what counsel for 208
    Ontario believed or where counsel got the document. The issue was whether the
    document was genuine. The manner in which it came before the court did not
    assist in determining its genuineness. In fact, a stronger case for its
    genuineness could have been made had the document, as normally occurs, come
    before the court through a witness with firsthand knowledge of the document.

[18]

Mr.
    Des Roches should have an opportunity to present his case for challenging the
    authenticity of the February 3
rd
document. At the same time, the
    manner in which Mr. Des Roches has conducted himself throughout these
    proceedings gives real cause to doubt the
bona fides
of any position
    he advances. Mr. Des Roches should have 30 days from the release of these
    reasons to bring a motion in the Superior Court seeking the order concerning
    the examination of the relevant documents. If no such motion is brought, 208
    Ontario may move for whatever relief it deems appropriate in the application.

[19]

To
    facilitate the bringing of the motion by Mr. Des Roches, but also to preserve
    the
status quo
as it relates to the business, we make the following
    order:

·

paragraphs 1, 2, 3 and 4 of the October 9, 2018 order are set
    aside; and

·

pending any further order of the Superior Court, paras. 2, 3, 4,
    5, 6, 7, 8, 9, 10 and 11 of the April 27, 2018 order are reinstated.

[20]

To
    be clear, it is our intention to emulate the April 27, 2018 order insofar as the
    control of the business and business premises are concerned. 208 Ontario shall
    have possession and control of the business premises and assets of Rezmart
    pending any further order of the Superior Court.

[21]

One
    final point. The appellant has also raised the question of the enforceability
    of the agreement in light of the terms of s. 28 of the
Indian Act
,
    R.S.C. 1985, c. I.5. This argument was raised in Mr. Des Roches affidavit
    filed prior to the April 2018 hearing. The argument was not addressed insofar
    as we can tell in the course of either the April or October hearing.

[22]

Counsel
    for the appellant and 208 Ontario in this court made brief submissions on the
    effect of s. 28 of the
Indian Act
on the agreement. They disagree. As
    we are satisfied that the appeal must be allowed to the extent outlined above,
    we think it appropriate that Mr. Des Roches raise any issue concerning the
    impact of the
Indian Act
when he brings his motion in respect of the
bona
    fides
of the February 3
rd
agreement. Both parties will have a
    full opportunity at that time to put their positions forward.

Costs

[23]

Although we
    have allowed the appeal, 208 Ontario should still have its costs on the motion
    as ordered by the application judge in para. 7 of the October 9, 2018 order.
    208 Ontario had to bring the matter back before the application judge. Mr. Des
    Roches had not purged his contempts or cooperated in any way with 208 Ontario in
    respect of the concerns raised in the April proceedings. Mr. Des Roches
    conduct precipitated the October proceedings.

[24]

We make no
    order as to costs on the appeal.

[25]

Any amount held
    as security for costs of the appeal should be paid to 208 Ontario to go towards
    the $6,000 costs awarded by the application judge.

Doherty J.A.

D.M. Paciocco J.A.

B. Zarnett J.A.





[1]

The application was also brought against Nicole Des Roches,
    Mr. Des Roches sister. The motion judge determined that she was not a party to
    the business arrangement between Mr. Des Roches and 208 Ontario and dismissed
    the application against her. There is no appeal from that part of the order and
    she is not a party to this appeal. Nothing said here affects the dismissal of
    the application as against her.


