



COURT OF APPEAL FOR ONTARIO

CITATION: Chaba v. Khan, 2020 ONCA 643

DATE: 20201016

DOCKET: C67094

Doherty, Hoy and Jamal JJ.A.

BETWEEN

Sam Chaba

Plaintiff (Respondent)

and

Muhammad Aslam Khan

Defendant (Appellant)

AND BETWEEN

Swat Emeraldmine and Marketing
    Inc.

Plaintiff by Counterclaim (Appellant)

and

Surinder Chaba a.k.a. Sam
    Chaba
, Monica Goyal and Jonathan MacKenzie

Defendants to the Counterclaim (
Respondent
)

Muhammad Aslam Khan, for the appellants

Richard H. Parker, Q.C., for the
    respondent

Heard: In writing

On appeal from the judgment of Justice Grant
    R. Dow of the Superior Court of Justice, dated May 22, 2019, with reasons reported
    at 2019 ONSC 2093, and from the costs order, dated January 16, 2020, with
    reasons reported at 2020 ONSC 154.

REASONS FOR DECISION

[1]

The appellants  Muhammad Khan (Khan), a
    lawyer, and Swat Emeraldmine and Marketing Inc., a corporation to which Khan assigned
    his interest in this litigation  appeal from the order of the trial judge
    dismissing Khans counterclaim against the respondent, Sam Chaba (Chaba). The
    counterclaim sought damages for fraudulent misrepresentation and inducing
    breach of contract arising from refinancing a residential property owned by
    Nicanor and Irene Posadas (the Posadas). The appellants also seek leave to
    appeal the trial judges costs order.

[2]

For the reasons that follow, the appeal is dismissed.
    Leave to appeal costs is granted but the costs appeal is dismissed.

Background

[3]

In 2012, the Posadas bought a house, financed
    partly with an $80,000 loan from Khan. Because the Posadas did not make their
    monthly payments on the loan, their debt to Khan grew with interest to over
    $100,000. Khan registered the debt as a charge on the property and later obtained
    an order for possession. A notice of sale was issued to be effective June 24,
    2014, but the sale was stayed on a temporary basis by order of Mew J. on June
    23, 2014. Chaba, a mortgage broker, became involved and tried to arrange for
    mortgage financing for the Posadas, whose debt to Khan had now grown to about
    $160,000. Khan and the Posadas agreed to settle the debt (the first
    settlement) on the basis that the Posadas would pay Khan $115,000, with costs
    of the motion to stay the sale proceedings to be fixed or assessed by the
    court.

[4]

In a schedule to the settlement agreement for
    the first settlement, dated August 28, 2014, the Posadas signed a promissory
    note for $115,000 in favour of Khan. Chaba also signed the promissory note as guarantor.

[5]

The trial judge rejected Chabas evidence that Khan
    told him he was signing only as a witness and not as guarantor. He found Chaba
    admitted that it was my mistake he did not read what he signed before
    signing.

[6]

On August 29, 2014, Khan and the Posadas
    appeared before Perell J. and advised that they had reached a settlement.
    Accordingly, Perell J. dismissed the Posadas pending motion to stay the sale
    proceedings and ordered the Posadas to pay $9,000 in costs as contemplated
    under the first settlement.

[7]

Chaba continued to seek financing for the Posadas,
    but disputed his role as guarantor and the costs award. He and the Posadas sued
    Khan for fraudulent misrepresentation, claiming $2 million and $1 million
    respectively. Khan and the Posadas ultimately agreed to settle the actions
on the basis that
the Posadas would pay Khan $140,000
    (the second settlement). Khan also offered to settle with Chaba on the basis
    that he would be relieved of his obligations as guarantor, though Chaba claims he
    was not aware of this offer at the time. Khan counterclaimed against Chaba,
    alleging that Chabas fraudulent misrepresentation induced him to enter into first
    settlement with the Posadas, and alleging that Chaba later induced breach of
    contract by undermining that settlement.

[8]

Chaba and the appellants each moved for summary
    judgment. At the hearing, Chaba acknowledged he had suffered no damages and that
    Khan had settled his claims with the Posadas, rendering the guarantee issue
    moot. Chabas claim against Khan was thus dismissed. However, the court found
    Chaba raised genuine issues requiring a trial regarding Khans counterclaim and
    ordered those claims to proceed to trial. The costs of Chabas dismissed action
    were reserved to the trial judge hearing Khans counterclaim.

The trial judges decisions

[9]

The trial judge dismissed Khans counterclaim
    against Chaba. He concluded Khan had not established Chaba was liable for either
    fraudulent misrepresentation or inducing breach of contract. He also held
    Khans second settlement with the Posadas relieved Chaba of any obligation as
    guarantor for the Posadas debt.

[10]

The trial judge ordered Chaba to pay Khan costs for
    the main action of $20,000, and ordered Khan to pay Chaba costs for the
    counterclaim of $18,000, for net costs to Khan of $2,000.

[11]

The appellants now appeal the order dismissing
    the counterclaim and seek leave to appeal the costs order.

Discussion

[12]

The appellants raise at least 14 grounds of
    appeal, some of which contain multiple issues.

[13]

In our view, the trial judge made no error of
    law, and his findings after the three-day trial of the counterclaim must be
    accorded
appellate deference
.

[14]

The grounds of appeal can be addressed under six
    topics.

[15]

First, the trial judge made no error in
    dismissing the claim for fraudulent misrepresentation. He correctly cited the elements
    of fraudulent misrepresentation from
Mariani v. Lemstra
(2004), 246
    D.L.R. (4th) 489 (Ont. C.A.), at para. 12, leave to appeal refused, [2004]
    S.C.C.A. No. 355:

(1) that the
    defendant made a false representation of fact; (2) that the
defendant
knew the statement was
    false or was reckless as to its truth; (3) that the defendant made the
representation
with the intention that it would be acted upon by the
    plaintiff; (4) that the plaintiff relied upon the statement; and (5) that the
    plaintiff suffered damage as a result.

[16]

The trial judge was entitled to conclude on the
    evidence before him that the appellants failed to establish that Chaba made any
    false or reckless representation inducing Khan to enter the first settlement
    with the Posadas. The trial judge stated that he heard no evidence from either
    Mr. Khan or Mr. Chaba that would satisfy this tort. He also concluded that the
    terms of the Settlement Agreement vitiates any tangible claim that Mr. Chaba
    represented anything to Mr. Khan that Mr. Chaba knew to be false or
    reckless and that Mr. Khan would rely on or act on to his detriment. These
    findings were all open to the trial judge on the evidence before him. There is
    no basis for this court to intervene.

[17]

Second, the trial judge made no error in
    dismissing the claim for inducing breach of contract. He correctly noted that
    to succeed on this claim, Khan had to establish the four elements identified by
    this court in
Drouillard v. Cogeco Cable Inc.
, 2007 ONCA 322, 86 O.R.
    (3d) 431, at para. 26: (1) Khan had a valid and enforceable contract with the
    Posadas; (2) Chaba was aware of the existence of this contract; (3) Chaba
    intended to and did procure the breach of the contract; and (4) because of the
    breach, Khan suffered damages.

[18]

The trial judge stated there was no dispute
    about the first two elements. The dispute related to the third element, which
    the trial judge found Khan had failed to establish:

At issue is whether Mr. Chaba intended to
    procure the breach of [the first settlement]. It was in Mr. Chabas best
    interest (a payment of the commission associated with the refinancing) to have
    the Settlement Agreement fulfilled. There was no evidence from the most likely
    source to indicate the contrary, being the Posadas, that Mr. Chaba said or did
    anything to undermine or deter payment of the agreed upon amount to Mr. Khan.
    Again, one would have expected if that were so, it would have been dealt with
    in the settlement achieved with the Posadas or Mr. Khan in June, 2016 and
presented at this trial
.

[19]

The trial judge was entitled to make these
    findings and draw these inferences based on the evidence before him. This court
    has no basis to intervene.

[20]

After discussing the damages Khan alleged he
    suffered as a result of Chabas action, the trial judge remarked that the real
    source of Khans woes was that his intended source of funds for his loan to the
    Posadas did not clear his bank, as a result of which Khan used funds from his
    trust account, which he later repaid, to make the loan to the Posadas. The
    trial judge wrote, [Khan] failed to ensure the funds to cover the $80,000.00
    were either certified before it was deposited or cleared before the $80,000.00
    was forwarded to the Posadas. This simple, logical safeguard to the source of
    Mr. Khans problem undermines any legal wrong having been committed against him
    by Mr. Chaba. However, the trial judge did not rely on Khans failure to
    employ [t]his simple, logical safeguard in dismissing Khans counterclaim
    against Chaba. As we have discussed, he concluded that Khan had not established
    Chaba was liable for either fraudulent misrepresentation or inducing breach of
    contract, and there is no basis to intervene with those conclusions.

[21]

Third, the trial judge made no error in
    dismissing the claim to enforce Chabas guarantee. He accepted that a lender
    may have separate claims against both the borrower and their guarantor, but found
    it was not a term of Khans settlement with the Posadas
that
he could pursue Chaba. The trial judge concluded that
    payment of the debt in its entirety was agreed upon. He found Khan agreed to
    accept $140,000.00 (presumably) in full satisfaction of the debt owed to him by
    the Posadas.

[22]

These conclusions of the trial judge  which arose
    from his interpretation of the guarantee within the context of the first and
    second settlements and the other evidence before the court 
are all entitled to appellate deference
. Again, this
    court has no basis to intervene.

[23]

Fourth, there is no merit to the appellants assertion
    that the trial approached the evidence unfairly by applying differential
    standards of scrutiny. As noted in
R. v. Sahdev
, 2017 ONCA 900, 356
    C.C.C. (3d) 137, at para. 59, which the appellants cite, [t]he argument usually
    fails. This is because
credibility findings are the
    province of the trial judge and attract a very high degree of deference on
    appeal; and appellate courts invariably view this argument with skepticism,
    seeing it as a veiled invitation to reassess the trial judge's credibility
    determinations: at para. 59, citing
R. v. Aird
, 2013 ONCA 447, 307 O.A.C. 183, at para. 39. To succeed, the
    appellants must identify something clear in the trial judges reasons or the
    record indicating that a different standard of scrutiny was applied and
    something sufficiently significant to displace the deference due to a trial
    judges credibility assessments:
R. v. Gravesande
, 2015 ONCA 774, 128 O.R. (3d) 111, at para. 19.

[24]

Here, the appellants have not met this standard.
    The trial judge conducted a fair trial and approached the evidence in a
    balanced way, accepting the appellants evidence on some points but rejecting
    it on others.

[25]

Fifth, there is no merit to the appellants contention
    that the trial judges interventions gave rise to a reasonable apprehension of
    bias. The appellants assert that the trial judge intervened with massive
    questions (204) during final submissions of Appellants [trial] counsel that
    made him nervous and unable to properly represent. He could not follow his
    script and cover all the issues before the court. However, the trial judges
    questions involved nothing more than the usual back-and-forth between the court
    and trial counsel. The trial judge advised the appellants trial counsel (not
    Khan) of his concerns as the argument unfolded, and trial counsel attempted to
    address them. A few examples suffice. At one point, trial counsel stated: Your
    Honour  your question is really pertinent and Im relishing them. During
    another exchange, trial counsel remarked: Your Honours observations are
    exactly on point. Towards the close of trial counsels submissions, the trial
    judge asked him how much more time he needed, to which he responded: Your
    Honour, about 10 minutes but I have totally enjoyed your questioning. Trial counsel
    then summed up and told the court that he relied on the relevant evidence and his
    factum. He concluded: Thank you very much for Your Honours observations and
    all of which is respectfully submitted.

[26]

Nothing in the trial judges questions or comments
    give rise to a reasonable apprehension of bias, assessed from the perspective
    of a reasonable observer present throughout the trial: see
R. v. Ibrahim
, 2019 ONCA 631, 147 O.R.
    (3d) 272, at paras. 96-98.

[27]

Finally, we see no basis to interfere with the
    trial judges costs ruling. The trial judge fixed Khans substantial indemnity costs
    for the summary judgment motion at $20,000. He also fixed Chabas partial
    indemnity costs for the counterclaim at $18,000. Setting off these amounts
    against each other, the trial judge awarded Khan net costs of $2,000.

[28]

Because the respondent consents to leave to
    appeal from the costs order, we would grant leave to appeal. However, we do not
    disturb the costs order.

[29]

A costs award should be set aside on appeal
    only if the trial judge has made an error in principle or if the costs award
    is plainly wrong:
Hamilton v. Open Window Bakery Ltd.
, 2004 SCC 9, [2004]
    1 S.C.R. 303, at para. 27.

[30]

The appellants have not met this stringent test.
    The appellants say the trial judge erred in principle by reducing the 122 docketed
    hours (including over 50 by Khan) by 25% and by setting the value of Khans docketed
    time to $50 per hour for representing himself. They note the Law Societys fee
    schedule for a lawyer of 12-20 years experience is $325 per hour. However, in
    fixing costs the trial judge did not apply an arithmetical formula of
    multiplying an hourly rate by the number of hours. Instead, he exercised
    discretion under s. 131 of the
Courts of Justice Act
to fix an amount
    that was fair and reasonable for the unsuccessful party to pay, citing
Boucher
    v. Public Accountants Council for Province of Ontario
(2004), 71 O.R. (3d)
    291 (C.A.), at para. 26. The appellants have shown no error in this exercise of
    discretion. We see no basis to intervene.

Disposition

[31]

The appeal is dismissed. Leave to appeal costs
    is granted but the costs appeal is dismissed.

[32]

If the parties cannot resolve
the issue of
costs of the appeal, the respondent may
    file a bill of costs and up to three pages of written submissions within 10 days
    of this decision, and the appellants may file a bill of costs and up to three
    pages of written submissions within 15 days of this decision.

Doherty
    J.A.

Alexandra
    Hoy J.A.

M.
    Jamal
J.A.



