Kumra v. Luthra, 2011 ABQB 366

Court of Queen ’ s Bench of Alberta Citation: Kumra v. Luthra, 2011 ABQB 366 Date: 20110607 Docket: 9703 10692 Registry: Edmonton Between: Usha Kumra Applicant - and - Romesh Luthra and Ancieta Luthra Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Donald Lee _______________________________________________________ [ 1 ] I last dealt with this matter in written Reasons for Judgment dated December 3, 2010 now reported at 201 ABQB 772.

This matter has a very lengthy history dating back to 1996 when the Applicant Usha Kumra was approached by Romesh Luthra and Kul Bhatia to work in a restaurant called the Sirloiner Restaurant. Ms. Kumra agreed to do so as they had promised to pay her more then the $11.00 she was making at her then job in a nursing home. A few months later Romesh Luthra asked to borrow $10,000 from Ms. Kumra, and Kul Bhatia also asked for $25,000 loan, which loan requests were apparently complied with by Ms. Kumra. As part of the process of funding this money in August 1996, Romesh Luthra took Ms.

Kumra to sign some papers at Harjit Judge’s legal agent office. [ 2 ] The end result was that the restaurant business was unsuccessful and ended up being shut down as a result of a number of

problems shortly thereafter. Ms. Kumra did receive the shares that she had purchased in 1996. As apparent consideration for the purchase of those shares, Ms. Kumra had purported to transfer to the Defendants Luthra a property municipally described as 4808 - 17 Avenue, Edmonton, Alberta (the “Revenue Property”), but due to a mistake allegedly made by Ms. Kumra’s agent, Ms. Kumra’s residence municipally described as 2009 - 86 Street, Edmonton, Alberta (the “Residence”) was transferred to the Defendant Ancieta Luthra. Ancieta Luthra transferred back the Residence, and Ms.

Kumra has since refused allegedly to rectify or allow the mistake to be rectified with the resulting effect that while she received the shares she purchased, she did not transfer the Revenue Property, which she has had since 1997 and continued to receive rents and enjoy the use of. [ 3 ] The Plaintiff/Applicant Ms. Kumra began her action in 1997. The Applicant Usha Kumra applies to stay paragraph 4 of an Order I granted on December 3, 2010 pending the trial of this action, which paragraph reads as follows:– 4. Pursuant to section 13(2) of the Judicature Act , R.S.A. 2000, c.

J-2, and Rule 6.47 of the Alberta Rules of Court , A/R 124/2010, Shackleton Realty Inc. operating as MacDonald Realty Edmonton East is hereby appointed the Receiver-Manager, subject to the following terms: I. The Receiver-Manager is hereby empowered and authorized, but not obligated, to act at one in respect of the Property and, without in any way limiting the generality of the foregoing, the Receiver-Manager is hereby expressly empowered and authorized to do any fo the following where the Receiver-Manager considers it necessary or desirable: (

a) to take possession and control of the Property and any and all proceeds, receipts and disbursements arising out of or from the Property; (

b) to receive, preserve, protect and maintain control of the Property, or any part or parts thereof, including, but not limited to, the changing of locks and security codes, the taking of physical inventories and the placement of such insurance coverage as may be necessary or desirable; (

c) to determine appropriate amounts, receive and collect all monies and rents now owed or hereafter owing in connection with the Property and to exercise all remedies of the Respondent in collecting such monies, including, without limitation, to enforce any action with regards to the Property; (

d) to execute, assign, issue and endorse documents of whatever nature in respect of any of the Property, whether in the Receiver- Manager’s name or in the name and on behalf of the Respondent, for any purpose pursuant to this Order; (

e) to initiate, prosecute and continue the prosecution of any and all proceedings and to defend all proceedings hereafter instituted with respect to the Receiver-Managership, and to settle or compromise any such proceedings; (

f) to market the rental capacity of the Property, including advertising and soliciting offers in respect of the Property or any part or parts thereof and negotiating such terms and conditions of rental as the Receiver-Manager in its discretion may deem appropriate; (

g) to report to, meet with and discuss with such affected Persons (as defined below) as the Receiver-Manager deems appropriate all matters relating to the Property and the management of the Property; and to share information, subject to such terms as to confidentiality as the Receiver-Manager deems advisable; (

h) to register a copy of this Order and any other Orders in respect of the Property against title to any of the Property; (

i) to apply for any permits, licences, approvals or permissions as may be required by any governmental authority and any renewals thereof and on behalf of and, if thought desirable by the Receiver-Manager, in the name of the Owner; (

j) to take any steps reasonably incidental to the exercise of these powers; and

(

k) in each case where the Receiver-Manager takes any such actions or steps, it shall be exclusively authorized and empowered to do so, to the exclusion of all other Persons (as defined below), including the Owner, and without interference from any other Person. II. (

i) The Owner, (ii) agents, accountants, legal counsel and shareholders, and all other persons acting on her instructions or behalf, and (iii) all other individuals, firms, corporations, governmental bodies or agencies, or other entities having notice of this Order (all of the foregoing, collectively, being “Persons” and each being a “Person”) shall forthwith provide the Receiver-Manager with all such assistance in gaining immediate access to any information that the Receiver-Manager may in its discretion, identify. III.

No proceeding or enforcement process in any court or tribunal (each, a “Proceeding”), shall be commenced or continued against the Receiver-Manager except with the written consent of the Receiver-Manager or with leave of this Court. IV.

All funds, monies, cheques, instruments, and other forms of payments received or collected by the Receiver-Manager from and after the making of this Order from any source whatsoever, including without limitation the rental of any portion of or all of the Property and the collection of any accounts receivable in whole or in part, shall be deposited into this Court in accordance with the terms of th is Order or any further order of this Court. V. Pass accounts annually - within 120 days of year end and upon termination or the Order by this Court. VI.

The Receiver-Manager shall render accounts from time to time to this Honourable Court and to the parties and in accordance with current industry terms for Property Management (the “Terms”). VII.

Any expenditure or liability which shall properly be made or incurred by the Receiver-Manager, including the fees of the Receiver-Manager, incurred at the standard rates and charges of the Receiver-Manager, shall be allowed to it in rendering its accounts and shall form a first charge on the Property in priority to all security interests, trusts, liens, charges and encumbrances, statutory or otherwise, in favour of any Person. VIII.

Prior to passing of the accounts, the Receiver-Manager shall be at liberty from time to time to apply reasonable amounts, out of the monies in its hands, against its fees and disbursements, incurred at the normal rates and charges of the Receiver-Manager, and such amounts shall constitute advances against its remuneration and disbursements when and as approved by this Court at the annual passing of the accounts or upon termination. IX. The Terms shall, to the extent of its consistency with the terms of this Order and any applicable laws, govern the Receiver- Managership. X.

The Receiver-Manager may from time to time apply to this Court for advice and directions in the discharge of its powers and duties hereunder. [ 4 ] The stay application is made pursuant to the authority given in paragraph 5 of the Order which reads: – 5.

Any interested party may apply to this Court to vary or amend this Order on not less than 7 days’ notice to the Receiver-Manager and to any other party likely to be affected by the order sought or upon such other notice, if any, as this Court may order. [ 5 ] The amendment sought is in effect to stay the Receivership provisions in paragraph 4 until the trial has been heard in this matter. The application also seeks to set the matter down for trial as soon as possible.

[ 6 ] The application is precipitated by the Receiver setting rent at $1,650, which Ms. Kumra evidently cannot afford to pay as she is a 63 year old widow earning $11.50 an hour, working 24 to 28 hours per week as a product demonstrator at Costco. She deposes that she pays direct expenses of $672 a month on the property for utilities, insurance, property tax and a mortgage loan, which she submits should be deducted in any event from the $1,650 rental payment determined by the Receiver.

She submits that the total rent payable under the Order from January 2011 until the matter could be heard at trial in September 2011 is $14,339, from which should be deducted approximately $6,048 ($672 a month) in direct expenses that Ms. Kumra is currently paying on the property, leaving a net amount owing of approximately $8,291. Ms. Kumra submits that there is more than sufficient equity built up by her in the property to compensate the Luthras should they be awarded the property at trial. [ 7 ] On the other hand Ms.

Kumra would not be able to afford to pay $1,650 per month, and faces the prospect of eviction from her own home it submitted with nowhere to go. On a balance of convenience, it is submitted that the negative consequences of being forced to pay rent are far more severe to her then to the Luthras. Accordingly the equitable solution according to Ms. Kumra is to stay the Receivership portion of the Order and set the matter down for trial in September 2011. [ 8 ] This application is opposed by the Luthras who argue that Ms.

Kumra has at each opportunity sought to interfere with and disregard the Receiver Manager’s attempt to carry out his duties pursuant to the Order. Such interference includes, but not limited to:– (

a) Failure to comply with reasonable requests of the Receiver Manager for information; (

b) Failure to comply with reasonable requests of the Receiver Manager for keys/access and interfering with the Receiver Manager’s access to the Revenue Property; (

c) Failure to pay amount of rent as requested by the Receiver Manager; (

d) Obstructing the Receiver Manager’s duties to obtain reasonable income on the two suites on the Revenue Property; (

e) Interfering with the Receiver Manager’s attempts to carry out duties by making a false harassment complaint regarding the Receiver Manager to the City of Edmonton Police; and (

f) Failure to communicate directly with the Receiver Manager and interposing her counsel as a shield (more on the obvious costs of this later). [ 9 ] The Luthra’s counsel also points out that on or about March 20, 2011, Ms. Kumra was served with an appointment for questioning, and on or about April 1, 2011 Ms. Kumra was questioned on her Affidavits. The Luthras supplied a Court approved interpreter, although Ms. Kumra did not require the services of that interpreter and was apparently able to respond and understand the questions posed to her in English. At the questioning, Ms.

Kumra allegedly refused to provide documents and answer questions which would corroborate or contradict her claim of impecuniosity and amongst other things refused to answer questions related to her employment income, and the income derived from the sale of Residence. Conclusion [ 10 ] This is a very long standing matter with a lengthy legal history. The Applicant’s submission that this matter can proceed to trial in September 2011 is in my respectful opinion unrealistic given the relative lack of progress that has taken place to date.

I am prepared to assist the parties to rectify this great lack of progress in proceeding to trial by appointing myself as the Case Manager, and by making certain specific directions and deadlines, but notwithstanding these deadlines and this assistance, I do not believe these parties will be ready for trial anytime soon.

[11] Accordingly the calculations submitted by counsel for Ms. Kumra which assumes a trial in September 2011 are not helpful,and the risks to the Luthra’s position if a stay of my Receivership Order were to be granted are much more substantial then thatsubmitted by Ms. Kumra’s counsel. Given the delay in this matter since the action was filed by Ms. Kumra in 1997, any open endedfurther stay of the Receivership Order would further provide or constitute no incentive to Ms. Kumra to proceed to trial.

The Luthrasallege that they have been deprived of their indirect use and enjoyment of the Revenue Property since 1996, and it was this situation thatled them to bring their application November 30, 2010 for the appointment of a Receiver Manager to preserve the Revenue Property. [12] Ms. Kumra’s present application also cannot be a backdoor attempt to re-argue the matters that I previously decided.

Whileparagraph 5 of my Order allows for amendments and variations, notice is to be given as well to the Receiver Manager because it is theintention of my December 3, 2010 Order overall that the Property be preserved and that neither party gain any undue advantage over theother such that that outcome of the lawsuit(

s) would not become negatory or compromised by the course of time. In this regard it is evenmore important that Ms. Kumra be seen to be in compliance with the terms of my previous Order, rather than simply ignoring the termsof my previous Order where it benefits her. [13] The Luthras allege that Ms. Kumra is in blatant disobedience of my previous December 3, 2010 Order, and as such noapplication to the Court by such a person should be entertained until she has purged herself of her contempt. This is a concept that I agreewith as sound at law.

The position of the courts regarding blatant disobedience of an order of a Court is stated in the general rule asdiscussed by Lord Cottenham L.C. in Chuck v. Cremer:– It is the plain and unqualified obligation of every person against, or in respect of whom, an order is made by a court of competentjurisdiction, to obey it unless and until that order is discharged.

The uncompromising nature of this obligation is shown by the fact that itextends even to cases where the persona affected by an order believes it to be irregular or even void. “A party who knows of an order,whether null and void, regular, or irregular, cannot be permitted to disobey it.” Hadkinson v. Hadkinson, [1952] 2T.L.R. 416, page 285 at page 288. [14] The Court then goes on to discuss the consequences of a breach of the obligation:– Such being the nature of th is obligation, two consequences will, in general, follow from its breach.

The first is that anyone who disobeysan order of the court (and I am not now considering disobedience of orders relating merely to matters of procedure) is in contempt andmay be punished by committal or attachment or otherwise. The second is that no application to the court by such a person will beentertained until he has purged himself of his contempt. It is the second of these consequences which is of immediate relevance to thisappeal. The rule, in its general form, cannot be open to question. There are many reported cases in which the rule has been recognizedand applied, and I need refer only to Garstin v.

Garstin and Gordon v. Gordon . . . Disregard of an order of the court is a matter ofsufficient gravity, whatever the order may be. Hadkinson v. Hadkinson, [1952] 2T.L.R. 416, page 288 - 289 and 292. [15] Numerous Canadian cases have stayed true to the general rule. For instance, in Phillips v. Phillips, 2005 ABCA 405 atparagraph 14 Justice O’Leary stated that:– 14 . . . I question whether a person who is in contempt of court for failure to obey specific orders of the Court of Queen's Bench isentitled to the assistance of this Court.

The orders she has failed to obey are those under appeal and it is suggested she may succeed in herappeals and the contempt will then cease. I do not agree with that suggestion. Unless the applicant has complied with the orders and thuspurged her contempt, or has been specifically excused from compliance, she remains in contempt. [16] Ontario (Attorney General) v.

Paul Magder Furs Ltd., 1991 CarswellOnt 730; (ON SC), 5 O.R. (3d) 560,especially at paragraph 17 is authority for the proposition that a Court will not assist a person in contempt of its orders. [17] However I am not in a position at this time to determine whether or not Ms. Kumra is in contempt of my previous Order.Nevertheless I believe that Ms. Kumra has not obeyed certain portions of that Order in terms of her providing full cooperation, which hasfrustrated some aspects of the work of the Receiver Manager. Therefore I am adjourning Ms.

Kumra’s application for a stay pendingsuch time as she complies in full with the Receiver Manager’s requests and directions as reported to the Court by the Receiver Manager.

[ 18 ] Furthermore Ms. Kumra’s application for a stay will not be dealt with until she provides documents and answers questions from the Examination on her Affidavit with respect to her impecuniosity plea, specifically answering questions related to her employment income and come from sale of her Residence. [ 19 ] One of the advantages of appointing myself Case Manager in this matter, which clearly necessary in the circumstances if these parties are ever going to get to trial in an efficient manner, is that I will be able to continue to monitor the progress of the lawsuits as well as Ms.

Kumra’s actions vis a vie the Receiver. [ 20 ] Finally I direct that all examinations that are outstanding in this matter be arranged and scheduled no later than the end of June 2011, that such examinations take place no later than the end of July 2011, and that all outstanding answers to undertakings and questions be supplied no later then the end of August 2011. [ 21 ] I will deal with costs of this application at a future date. Heard on the 2 nd day of June, 2011. Dated at the City of Edmonton, Alberta this 7 th day of June, 2011. Donald Lee J.C.Q.B.A.

Appearances: Nestor Makuch Wheatley Sadownik for the Applicant P. Daryl Wilson, Q.C. and Omolara Oladipo Fraser Milner Casgrain LLP for the Respondents