



COURT OF APPEAL FOR ONTARIO

CITATION: Landmark Vehicle Leasing Corporation v. Mister
    Twister Inc., 2015 ONCA 545

DATE: 20150722

DOCKET: C58753

Doherty, Pepall and Huscroft JJ.A.

BETWEEN

Landmark Vehicle Leasing Corporation

Plaintiff (Respondent)

and

Mister
    Twister Inc., Amadeus Blazys a.k.a. Amadeus Amo Blazys

a.k.a.
    Amadeus A. Blazys and Luisa M. Blazys a.k.a. Luisa Blazys

Defendants (Appellants)

Charles Wagman, for the appellants

David Winer, for the respondent

Heard: June 30, 2015

On appeal from the judgment of Justice C.J. Brown of the
    Superior Court of Justice, dated March 26, 2014.

By the Court:


I



[1]

The appellants, Amadeus Blazys and Luisa Blazys, are husband and wife. Mister
    Twister Inc. is Mr. Blazys company. The respondent, Landmark Vehicle Leasing
    Corp. (Landmark), alleged that one or more of the appellants leased three
    vehicles from Ross Wemp Leasing Inc. (Ross Wemp Leasing) and that Ross Wemp
    Leasing subsequently assigned the leases to Landmark. Landmark successfully
    sued for arrears owing under each of the leases. The appellants appeal from that
    judgment.

[2]

The appellants raise many grounds of appeal. However, in oral argument,
    the appellants focused on the submission that because the appellants did not
    receive written notice of the lease assignments, Landmark should have named
    Ross Wemp Leasing as a party in the action. According to the appellants,
    Landmarks failure to name Ross Wemp Leasing as a party should have led to a dismissal
    of Landmarks action.

[3]

The other grounds of appeal involve alleged errors by the trial judge in
    assessing credibility, and allegations of procedural failings and pleading inadequacies
    that the appellants contend prejudiced their ability to present their case at
    trial.

[4]

For the reasons that follow, we would dismiss the appeal.


II



[5]

The leases related to three vehicles, a
1999 Mercedes-Benz, a Dodge Ram truck, and a GMC
    truck. The Mercedes-Benz vehicle was eventually returned and sold by Landmark to
    a wholesaler for $9,000.  This was very close to the stipulated depreciated
    residual value agreed to in the lease.  Landmark claimed the difference between
    the amount owing on the lease and the amount recovered on the sale. Landmark
    alleged, and the trial judge found, that the appellants did not return either
    the Dodge Ram or the GMC. Landmark successfully claimed for the full amounts
    owing under those leases.

[6]

Mr. and Mrs.
    Blazys testified. Mrs. Blazys acknowledged that she drove the Mercedes-Benz for
    years, but testified that she knew nothing about the lease and was not a party
    to the lease. She said the signature on the lease was not hers.

[7]

Mr. Blazys
    acknowledged entering into the three leases, but testified that he had returned
    all three vehicles. He also alleged that Landmark sold the Mercedes-Benz at a
    price well below a commercially reasonable price.

[8]

Faced with
    irreconcilable versions of the important events, the trial judge had to assess
    credibility. The trial judge did not believe Mr. and Mrs. Blazys. She made the
    following findings of fact:

·

Both Mr. and
    Mrs. Blazys leased the Mercedes-Benz;

·

Mr. Blazys leased the Dodge Ram and the GMC;

·

Mister Twister Inc. was on the GMC lease;

·

The Mercedes-Benz was returned to Landmark and sold for $9,000, a
    reasonable wholesale price;

·

Neither the Dodge Ram nor the GMC was returned;

·

An employee at Ross Wemp Leasing spoke to Mr. Blazys in November
    2007, the month after the assignment to Landmark, and advised him of the
    changes, the merger and the new Landmark address;

·

Mr. Blazys returned the Mercedes-Benz to Landmarks location on
    January 10, 2008;

·

Landmark had correctly calculated the amounts owing under the
    leases;

·

Various documents were sent to all the lessee customers of Ross
    Wemp Leasing advising them of the asset purchase by Landmark and of the consequential
    changes in vehicle ownership and insurance. There was no specific evidence that
    these documents were sent to or received by the appellants; and

·

Mr. Blazys received notice of the lease assignments.


III



THE FAILURE TO GIVE WRITTEN NOTICE OF THE ASSIGNMENT

[9]

The
Conveyancing and Law of Property Act
, R.S.O. 1990, c. C.34,
    applies to the lease assignments. Section 53(1) reads in part:

Any absolute assignment made on or after the 31st day of
    December, 1897, by writing under the hand of the assignor,  of any debt or
    other legal chose in action
of which express notice in writing has been
    given to the debtor
is effectual in law, subject to all equities that
    would have been entitled to priority over the right of the assignee if this
    section had not been enacted, to pass and transfer the legal right to such debt
    or chose in action from the date of such notice, and all legal and other
    remedies for the same, and the power to give a good discharge for the same
    without the concurrence of the assignor. [Emphasis added.]

[10]

Section
    53(1) requires express notice in writing to the debtor.  Although there is
    some ambiguity in her reasons, it would appear that the trial judge found that Mr.
    Blazys had express notice of the assignment, but not notice in writing. Ross
    Wemp Leasing therefore did not assign the leases to Landmark in law: see
80
    Mornelle Properties Inc. v. Malla Properties Ltd.
, 2010 ONCA 850, 327
    D.L.R. (4th) 361, at para. 22. Ross Wemp Leasing did, however, assign the
    leases to Landmark in equity. An equitable assignment does not require any
    notice, let alone written notice:
Bercovitz Estate v. Avigdor
, [1961]
    O.J. No. 20 (C.A.), at paras. 16, 25.

[11]

The
    appellants, relying on
DiGuilo v. Boland
, [1958] O.R. 384 (C.A.),
    affd, [1961] S.C.C.A. vii, argue that as the appellants did not have written
    notice of the assignment, Landmark could not sue on its own. Instead, Landmark
    had to join Ross Wemp Leasing in the action. The appellants argue that the
    failure to join Ross Wemp Leasing requires that the judgment below be set
    aside.

[12]

DiGuilo
does in fact require that the assignor of a chose in action be joined in the
    assignees claim against the debtor when the debtor has not received written
    notice of the assignment. The holding in
DiGuilo
tracks rule 5.03(3)
    of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194
:

In a proceeding by the assignee of a debt or other chose in
    action, the assignor shall be joined as a party unless,

(a) the assignment is absolute and
    not by way of charge only; and

(b)
notice in writing has been
    given to the person liable in respect of the debt
or chose in action that
    it has been assigned to the assignee. [Emphasis added.]

[13]

Yet
    the assignees failure to join the assignor does not affect the validity of the
    assignment or necessarily vitiate a judgment obtained by the assignee against
    the debtor. Rule 5.03(6) reads:

The court may by order relieve against the requirement of
    joinder under this rule.

[14]

The
    joinder requirement is intended to guard the debtor against a possible second
    action by the assignor and to permit the debtor to pursue any remedies it may
    have against the assignor without initiating another action:
DiGuilo
,
    at p. 395. Where the assignees failure to join the assignor does not prejudice
    the debtor, the court may grant the relief in rule 5.03(6): see
Gentra
    Canada Investments Inc. v. Lipson
, 2011 ONCA 331, 106 O.R. (3d) 261, at
    paras. 59-65, leave to appeal refused, [2011] S.C.C.A. No. 327.

[15]

In
    this case, the trial judge found that Mr. Blazys, and effectively all of the
    appellants, gained actual notice of the lease assignments very shortly after
    the assignments were made and well before Landmark sued. Armed with actual,
    albeit not written, notice of the assignment, the appellants could fully
    protect themselves against any prejudice from Landmarks failure to join Ross
    Wemp Leasing. Had the appellants seen any advantage in joining Ross Wemp
    Leasing, either to defend against Landmarks claim or to advance a claim
    against Ross Wemp Leasing, the appellants could have moved for joinder under rule
    5.03(4). The appellants failure to bring a motion to add Ross Wemp Leasing
    speaks loudly to the absence of any prejudice caused by Landmarks failure to
    join the assignor.

[16]

Ross
    Wemp Leasing perhaps should have been a party to the proceeding. Landmarks
    failure to join Ross Wemp Leasing, however, did not prejudice the appellants
    and should have had no impact on the trial judgment. If requested, this court
    will make a
nunc pro tunc
order relieving Landmark from the requirement
    of joining Ross Wemp Leasing in the action.


IV



the other grounds of appeal

(i)

The alleged violations of the collateral fact rule

[17]

Landmarks
    counsel asked Mr. Blazys if he had lied under oath at a prior proceeding. He said
    no. Counsel, over objection from Mr. Blazys counsel, proceeded to
    cross-examine Mr. Blazys on documents relating to that prior proceeding. Counsel
    suggested to Mr. Blazys that these documents demonstrated that he had lied
    under oath in the prior proceeding.

[18]

On
    appeal, the appellants argue that the question put to Mr. Blazys on a prior lie
    under oath went only to his credibility. Therefore, the appellants say, the
    collateral fact rule precluded further cross-examination of Mr. Blazys on any
    alleged lie after he denied lying under oath.

[19]

A
    party triggers the collateral fact rule when, after closing its own case, it
    seeks to call rebuttal evidence to contradict a witness testimony on a
    collateral matter: see
R. v. Krause
, [1986] 2 S.C.R. 466, at pp.
    474-75. Cross-examination on a collateral matter does not trigger the rule.

[20]

Counsel
    is entitled to challenge a witness credibility in cross-examination. The scope
    of that cross-examination is limited by the requirements of relevance and other
    rules applicable to cross-examination. For example, the cross-examination
    cannot be abusive or overly repetitive. The collateral fact rule has nothing to
    do with the scope of the cross-examination. Similarly, documents may be put to
    a witness during cross-examination for the purposes of impeachment. The
    admissibility of those documents is subject to various evidentiary rules, such
    as relevance, but the collateral fact rule is not one of them: see S.C. Hill,
    D.M. Tanovich & L.P. Strezos,
McWilliams Canadian Criminal Evidence
,
    loose-leaf, 5th ed. (Toronto: Thomson Reuters, 2015), at c. 6. The cross-examination
    of Mr. Blazys in respect of his alleged prior lies under oath did not offend
    the collateral fact rule.

[21]

The
    appellants argue that the collateral fact rule also foreclosed
    cross-examination of Mr. Blazys to demonstrate that he had previously given conflicting
    evidence on the identity of Mister Twister Inc.s directors. That argument
    reveals the same misunderstanding of the collateral fact rule. Furthermore, the
    cross-examination on the conflict played a potentially important role in establishing
    Mr. Blazys credibility. The trial judge did not err in finding that Mr.
    Blazys inability to explain the conflict undermined his credibility.

(ii)

The alleged errors undermining the credibility findings

[22]

Counsel
    submits that the trial judge took into account a negative credibility
    assessment of Mr. Blazys made by another tribunal in a prior proceeding. The
    appellant correctly submits that a credibility assessment by another tribunal
    in an unrelated matter based on entirely different evidence does not speak to
    Mr. Blazys credibility in this case. The trial judges reasons do not suggest
    that she considered the prior tribunals finding in assessing Mr. Blazys
    credibility. The trial judge gave many reasons for disbelieving Mr. Blazys. The
    prior tribunals credibility assessment was not one of them.

[23]

Counsel
    submits that the trial judge erred in failing to draw negative inferences from
    Landmarks failure to call certain witnesses and failure to produce certain
    documents, and that she further erred in the manner in which she assessed
    conflicting evidence. These arguments invite the court to retry the case. We
    cannot and do not do that.

(iii)

The
    procedural irregularities

[24]

The appellants next submit that Landmarks late delivery of many
    relevant documents, its failure to fulfill at least one undertaking, and the
    various factual errors in its Statement of Claim combined to produce a chaotic
    and unfair trial.

[25]

There
    is no merit to this submission. A review of the trial record reveals no chaos. The
    appellants show no prejudice from any of the alleged irregularities. For
    example, the appellants complain about Landmarks failure to complete an
    undertaking to produce the Black Book, a book apparently containing vehicle
    valuations. In fact, Landmark did respond to the undertaking, indicating that
    it could not locate its copy of the Black Book. Moreover, the book is
    published and available to the public. The appellants could have obtained a Black
    Book of their own had they seen any value in doing so.

(iv)

The finding that the Mercedes-Benz was sold at a commercially reasonable
    price

[26]

The
    appellants also challenge the trial judges finding that there was no evidence
    Landmark sold the Mercedes-Benz at less than a commercially reasonable price.
    The only evidence suggesting the $9,000 sale price was less than a commercially
    reasonable price came from Mr. Blazys. He testified that he had placed an
    advertisement for the Mercedes-Benz in a magazine and received an offer of
    $15,000. According to Mr. Blazys, he referred the purchaser to Landmark and was
    later told by the purchaser that Landmark had refused to sell the vehicle for
    $15,000. Mr. Blazys could not recall the name of this third party or offer any
    information that might assist in identifying the third party. Nor could he
    offer any evidence to support his assertion that he had placed an advertisement
    for the Mercedes-Benz in a magazine. Not surprisingly, the trial judge found
    this part of Mr. Blazys evidence incapable of belief.

[27]

Setting
    aside Mr. Blazys rejected evidence, there was no evidence that $9,000 was not
    a commercially reasonable price for the Mercedes-Benz. Landmark also points out
    that under the terms of the lease, it was entitled to sell the vehicle at a wholesale
    price. Landmark was not obligated to sell the vehicle at a retail price.


V



conclusion

[28]

The
    appeal is dismissed. Costs of the appeal to Landmark in the amount of $10,000,
    inclusive of disbursements and all applicable taxes.

RELEASED: DD  JUL 22 2015

Doherty J.A.

Sarah Pepall J.A.

Grant Huscroft J.A.




