) ) THE ATTORNEY GENERAL OF ONTARIO Plaintiff/Respondent – v. –, 2023 ONSC 1961

CITATION : Attorney General of Ontario v. Hazout, 2023 ONSC 1961 COURT FILE NO.: 039/23 DATE: 20230327 ONTARIO SUPERIOR COURT OF JUSTICE Divisional Court BETWEEN: ) ) THE ATTORNEY GENERAL OF ONTARIO Plaintiff/Respondent – and – MARC HAZOUT Defendant/Moving Party ) ) ) ) ) ) ) ))) Laura K. Daly, for the Plaintiff/Respondent Allan Rouben, for the Defendant/Appellant ) ) HEARD: March 17, 2023 schabas j. REASONS ON MOTION TO EXTEND TIME TO APPEAL Overview [ 1 ] The moving party, Marc Hazout, seeks an order extending the time to appeal decisions of the Small Claims Court dated May 24, 2022 and September 9, 2022.

For the reasons that follow, the motion is granted. Background [ 2 ] On May 24, 2022, following a trial held on March 30, 2022, Deputy Judge Bay of the Toronto Small Claims Court found Hazout liable to the Ministry of the Attorney General for a $15,000 business loan extended in 1996 and on which he had defaulted in 1997 (“the Merits decision”). The loan was made by the Bank of Montreal to Hazout under an economic development programme of the Ontario government known as the New Ventures Programme.

The loan was guaranteed by the Government of Ontario which, when Hazout defaulted, repaid the loan to the Bank and the Bank then assigned Hazout’s debt to Ontario. [ 3 ] By 2005, when Ontario stopped adding interest, the debt was $23,052.41. [ 4 ] Apparently over many years Ontario attempted to recover the money, assigning the matter to four different credit agencies. Eventually, in 2019, Ontario sued for recovery in Small Claims Court. At trial, Ontario was represented by a paralegal and Hazout represented himself.

The amount was not disputed, and the Deputy Judge rejected a range of defences raised by Hazout in his judgment released on May 24, 2022. Submissions on costs were invited by the Deputy Judge and on September 9, 2022 he awarded Ontario costs of $6,966.87, including disbursements (“the Costs decision”). Unsuccessful resolution discussions followed until approximately January 12, 2023. [ 5 ] Eventually, by notice of motion dated January 19, 2023, Hazout, now represented by counsel, sought leave to extend time in which to appeal.

The test for extending time to appeal [ 6 ] The test on a motion to extend time is well-settled and was recently summarized by Simmons J.A. in Sheth v. Randhawa , 2022 ONCA 89 , at para. 15 : The test on a motion of this kind is well-established. The ultimate question is whether the justice of the case warrants the order requested. Factors to be considered in making the decision are: (

i) whether the appellant formed an intention to appeal within the appeal period; (ii) the length of the delay; (iii) the explanation for the delay; (iv) the merits of the proposed appeal; and (

v) prejudice to the

responding parties. [7] Despite this apparent multi-factor test to assist in determining whether the justice of the case warrants an extension, theCourt of Appeal has also recently stated that “even where it is difficult to see the merits of the proposed appeal, a party should not bedeprived of their right of appeal when there is no real prejudice to the other side”: Correct Building Corporation v. Lehman, 2022 ONCA723 at para. 15, citing 40 Park Lane Circle v. Aiello, 2019 ONCA 451 at para. 8.

Application of the test [8] I conclude that Hazout has not met the first three prongs of the test for an extension. [9] Hazout has failed to satisfy me that he had an intention to appeal within 30 days of either the Merits decision or the Costsdecision. Hazout’s affidavit says he always had the intention to appeal, but there is no evidence supporting that assertion prior to October28, 2022, when he told Ontario’s paralegal he would appeal if they could not settle. But even this occurred outside the deadline for filingan appeal of the Costs decision, and was five months after the Merits decision.

Despite Hazout’s reference to many emails between theparties following the Costs decision, I must conclude that there was no mention of an intention to appeal within 30 days of eitherdecision, otherwise Hazout would have produced it. [10] The delay here is significant. Almost eight months elapsed from the Merits decision until this motion was commenced. Fourmonths passed since the Costs decision. [11] I do not accept Hazout’s bald assertion that he was unaware of the timelines to file an appeal.

Ontario has filed evidenceshowing that Hazout has considerable experience in the courts and before tribunals, as a litigant in several civil matters, a defendant in atleast two criminal prosecutions, and as an applicant for a liquor licence which was hotly contested. Hazout would have been aware thatthe court had time limits to appeal and there is no evidence that he took any steps to find out what they were or to meet them.

Hisexplanation for the delay is unsatisfactory and I reject it. [12] However, the final two parts of the test favour Hazout. [13] Counsel for Hazout submits that the appeal has merit as there are at least arguable errors in the Merits decision. One assertederror is the Deputy Judge’s rejection of the application of the Limitations Act 2002, S.O. 2002, c. 24, or its predecessor, the LimitationsAct, R.S.O. 1990, c. L.15, to bar the action.

This action would have been statute-barred for being out of time if it had been brought by theBank of Montreal; however, the debt was assigned to the Crown which was not subject to the limitation period in s. 45(1)(

g) of the oldLimitations Act: Attorney-General for Ontario v. Watkins, (ON CA). Similarly, as the Deputy Judge found in this case,s. 16 of the current legislation, which came into force in 2004, exempts the Crown from limitation periods in claims relating to “theadministration of social, health or economic programs” which include the recovery of “economic development loans.” [14] A fundamental maxim of the law relating to assignments is that “you cannot assign what you do not have”: First City CapitalLtd. v.

Petrosar Ltd.,; Casselman Financial Underwriters Ltd. et al., Third Parties, (ON SC), 1987, 61 O.R. (2d) 193(H.C.) In the context of arbitration clauses, this Court has stated that “a party seeking to enforce assigned rights under an agreement canonly do so subject to the terms and conditions embodied therein”, citing a long line of authority: ABN Ambro Bank Canada v. Krupp MakMaschihnenbau GmbH, 1996, 135 D.R.L. (4th) 130 (Div. Ct.).

I have not been provided with any authority that addresses whether theCrown, as an assignee of a debt, may then avoid the limitation period that otherwise would have applied to a private lender. Thus, Iconclude that there is at least one arguable issue and therefore Hazout has satisfied me that the appeal has merit. [15] There is also no significant prejudice to the Crown arising from the delay.

Ontario waited 23 years to commence proceedingsto collect on the debt and it cannot, and has not, seriously asserted it will be prejudiced by the delay in Hazout’s appeal. [16] An application of the factors makes this a close call. Unlike the facts of 40 Park Lane Circle and Correct Building, where thedelay was minimal and reasonably explained, the delay here is much greater and the explanation for the delay is weak. However, therecent emphasis placed by the Court of Appeal on the presence of any possible merit to an appeal appears to compel an order grantingthe extension.

As stated in Correct Building at para. 11: Traditionally, the merits factor will be used to support granting an extension when the other factors do not favour the applicant, butbecause there may be some potential merit to the case, it is still in the interests of justice that the applicant's right of appeal not beremoved, just because of lateness: see e.g ., Howard v. Martin, 2014 ONCA 309, 42 R.F.L. (7th) 47, at para. 36; Derakhshan v. Narula,2018 ONCA 658, 142 O.R. (3d) 535, at para. 22. More recently, in 40 Park Lane Circle v.

Aiello, 2019 ONCA 451, at para. 8, vanRensburg J.A, sitting as a motion 2022 ONCA 723 judge, stated: Turning to the merits of the proposed appeal, the question is only whether there is "so little merit in the proposed appeal that theappellant should be denied [his] important right of appeal": Duca Community Credit Union Ltd. v. Giovannoli (2001), (ON CA), 142 O.A.C. 146 (C.A.), at para. 14.

Even where it is difficult to see the merits of a proposed appeal, a party is entitledto appeal and should not be deprived of that entitlement where there is no real prejudice to the other side: Denomme, at para. 10; Auciellov. Mahadeo, 2016 ONCA 414, at para. 14. Conclusion [17] The motion is granted. Hazout shall have until Tuesday, April 4, 2023 to commence his appeal to this Court of the Merits andCosts decisions. He shall also be required to perfect his appeal by no later than June 30, 2023. I make no order as to costs.

Paul B. Schabas J. Released: March 27, 2023 CITATION : Attorney General of Ontario v. Hazout, 2023 ONSC 1961 COURT FILE NO.: 039/23 DATE: 20230327 ONTARIO SUPERIOR COURT OF JUSTICE Divisional Court THE ATTORNEY GENERAL OF ONTARIO Plaintiff/Respondent – and – MARC HAZOUT Defendant/Moving Party reasons on motion to extend time to appeal Schabas J. Released: March 27, 2023