2023 ONSC 721, 2023 ONSC 721

CITATION : 5 Star Dealers Inc. et al. v. Dabaja et al., 2023 ONSC 721 COURT FILE NO.: 2154/19 DATE: 2023/01/30 SUPERIOR COURT OF JUSTICE - ONTARIO RE: 5 STAR DEALERS INC. and 1231525 ONTARIO LIMITED operating as Oxford Motors, Plaintiffs AND: HUSSEIN DABAJA, HAITHAM DABAJA and 1945465 ONTARIO INC. operating as HD Auto Sales, Defendants BEFORE: Justice I.F. Leach COUNSEL: A. Serter and A. Rady, for the Plaintiffs M.A. Stroh and A.L. Mercer, for the Defendant Hussein Dabaja G. Morga for the Defendants Haitham Dabaja and 1945465 Ontario Inc.

HEARD: January 23, 2023 ENDORSEMENT General background [ 1 ] This endorsement provides my reasons for adjourning a number of motions that came before me during a special appointment hearing scheduled for January 23, 2023. [ 2 ] By way of general background, outlining the context for my adjournment decision and corresponding further directions: a. The plaintiff corporations operate used car dealerships here in London, Ontario. b. The corporate defendant is a numbered corporation which operates as HD Auto Sales, and is based in Windsor, Ontario. c.

The precise roles of the defendant individuals in relation to that corporate defendant are matters in dispute. However, at the very least, it seems undisputed that the defendant Haitham Dabaja was identified by corporate filings as the sole owner and officer of the corporate defendant, and that the defendant Hussein Dabaja is the father of Haitham Dabaja. d.

The plaintiffs in this action allege, inter alia , that the defendants to the proceeding engaged in a civil conspiracy to defraud the plaintiffs; e.g., through a scheme involving the promised delivery of vehicles for which the plaintiffs have paid, but for which the defendants never paid and/or never owned, and which the plaintiffs in any event have failed to receive pursuant to a contract or contracts of purchase and sale.

Without limiting the generality of the foregoing, and at the risk of over-simplification, the plaintiffs say: i. that in or around 2010, they were first contacted by the defendant Hussein Dabaja, who held himself out as a registered wholesaler with the Ontario Motor Vehicle Industry Council, (“the OMVIC”), and offered to assist the plaintiffs with the purchase of used automobiles for the purpose of resale; ii. that from 2010 to 2016, the plaintiffs purchased numerous vehicles through Hussein Dabaja, who failed to inform the plaintiffs that his registration with the OMVIC had been revoked in 2006 for acts that included the writing of various cheques for motor vehicles that had never cleared, and were characterized by the 2006 Licence Appeal Tribunal as “dishonest” and conduct which “showed a complete lack of integrity”; iii. that Hussein Dabaja also failed to inform the plaintiffs that, in 2013, he had been incarcerated for 30 days for acting as a dealer without OMVIC registration; iv. that Hussein Dabaja informed the plaintiffs in or around the summer of 2016 that he had created a company called HD Auto Sales to operate as a wholesale car dealership and that all future transactions with the plaintiffs would be restructured to flow through that corporation, such that all future cheques from the plaintiffs would be directed not to Hussein Dabaja but to his new corporation HD Auto Sales; v. that the plaintiffs continued to deal exclusively with Hussein Dabaja from 2016 to 2019, (e.g., receiving telephone calls and texts directly from Hussein Dabaja regarding vehicles he had sourced, and in respect of which he was providing wholesale information and prices), with the plaintiffs continuing to purchase and entirely pay for vehicles sold to them by HD Auto Sales; vi. that in 2019, Hussein Dabaja introduced the plaintiffs to his teenage son, Haitham Dabaja, as someone who was helping with his father’s business, (e.g., by driving purchased vehicle to the plaintiffs’ dealerships, and occasionally providing wholesale vehicle information and prices to the plaintiffs), while the plaintiffs’ primary contact with HD Auto Sales continued to be Hussein Dabaja;

vii. that the plaintiffs intentionally reduced their dealings with HD Auto Sales in 2019, owing to frustration with late deliveries and misrepresentations, (e.g., about the condition of vehicles being purchased by the plaintiffs), but were actively persuaded by Hussein Dabaja to resume their previous purchase of a large volume of vehicles from HD Auto Sales; viii. that between June of 2019 and September of 2019, the plaintiffs purchased 19 vehicles from HD Auto Sales, making full payment of $503,598.00 in relation to the stated purchase price of those vehicles; ix. that those 19 vehicles were never delivered to the plaintiffs; x. that further investigation by the plaintiffs revealed that HD Auto Sales was never the registered owner of 10 of those 19 vehicles, (despite providing the plaintiffs with bills of sale for all of them), and that, in relation to the other nine vehicles, HD Auto Sales had received unexecuted bills of sale after successfully bidding for the vehicles at auction, which were then taken to Service Ontario to register ownership of the vehicles under HD Auto Sales even though HD Auto Sales in fact had never executed the relevant bills of sale by paying the required purchase price to the vendor; xi. that Hussein Dabaja and Haitham Dabaja continued to communicate with the plaintiffs, repeatedly asserting that they were making efforts to address unspecified complications relating to purchase of the promised 19 vehicles for which the plaintiffs had paid, and promising reimbursement of the sums paid by the plaintiffs; and xii. that despite such assertions and promises, the plaintiffs have never received the promised 19 vehicles or reimbursement of the $503,589.00 paid for those vehicles. e.

The plaintiffs have brought a motion for

summary judgment, seeking a judgment vis-à-vis all three defendants that would require them to repay the $503,589.00 in purchase money paid by the plaintiffs, together with appropriate prejudgment and postjudgment interest.

In that regard, the plaintiffs rely on evidence which, in their submission, makes it clear that the defendants acted in concert to issue false bills of sale to the plaintiffs; e.g., with the defendant corporation, (in respect of which Hussein Dabaja’s teenage son Haitham Dabaja was formally identified as the sole officer and owner, despite apparently having no experience in the car industry, and in respect of which Hussein Dabaja is said to have remained the controlling mind and de facto principal), being used deliberately by the defendant individuals as an instrument of fraud. f.

At the risk of further over-simplification, all three of the defendants, in formally defending the action and opposing the plaintiffs’ motion for

summary judgment, have denied the plaintiffs’ allegations, have asserted that Hussein Dabaja was not involved in the alleged transactions involving the plaintiffs’ asserted purchase of the relevant 19 automobiles, and further claim that the relevant 19 vehicles were not delivered to the plaintiffs for reasons that include the plaintiffs’ alleged owing of money to HD Auto Sales; an allegation which the plaintiffs deny, and say there is no documentary evidence whatsoever to support.

The defendant individuals also take the position that there is nothing in the circumstances or evidence to justify the plaintiffs’ request for “piercing of the corporate veil”, so as to hold Hussein Dabaja and/or Haitham Dabaja personally responsible for any obligations of the defendant corporation. History of

summary judgment motion [ 3 ] Not all of the procedural developments relating to progress of the plaintiffs’

summary judgment motion towards hearing were available to me on Caselines or the court’s relevant OneDrive folder for this matter. [ 4 ] However, even the material available to me was sufficient to indicate that the road to hearing of that motion has been long and somewhat complicated. Among the developments in that regard, (which I summarize here primarily for the benefit of judges dealing with the matter hereafter), were the following: a. The plaintiffs’ commenced their motion almost three years ago, by way of an initial notice of motion dated March 13, 2020.

Their initial two volume motion record apparently followed shortly thereafter, on or about March 16, 2020. b. Those initial filings by the plaintiffs were followed by the delivery of supplemental motion records on or about January 13, 2020, and July 13, 2020. c. In the meantime, the matter had come before Justice Grace on June 25, 2020, by way of a telephone conference, for the setting of a formal timetable leading to hearing of the plaintiffs’

summary judgment motion. By the time of that hearing, counsel for the parties had negotiated a mutually agreed draft Order establishing that contemplated timetable.

The subsequently finalized and signed Order unfortunately is not available to me on Caselines or the court’s relevant OneDrive folder, but as per the regional policy demanding provision of a Certificate of Readiness of Special Appointment before the reservation of special appointment hearing time, (a policy which Justice Grace diligently has enforced on countless occasions in his capacity as the Local Administrative Judge for London), that finalized and signed Order no doubt would have included dates for the delivery of any further material and responding material, the conduct of any cross-examinations on that material, and the delivery of facta and books of authorities. d.

The aforesaid endorsement of Justice Grace does not in itself indicate when the matter would next be before the court, undoubtedly because that would have been a matter addressed by the provisions of the Order signed that day by Justice Grace – and again, a copy of that finalized and signed Order is not available to me. However, the matter came before the court again on March 11, 2022, at which point Justice Gorman confirmed that the plaintiffs’ motion would be proceeding to a special appointment hearing on September 16, 2022, with an allocated hearing time of six hours. e.

Two weeks later, (i.e., on March 25, 2022), the matter nevertheless was back before the court again, apparently because of further complications relating to the representation of Hussein Dabaja. In particular, Mr Atkin, (Hussein Dabaja’s second lawyer of record), was indicating an intention to bring a formal motion asking that he be formally removed as Hussein Dabaja’s counsel of record. The matter was adjourned to April 22, 2022, to be spoken to, with Justice McArthur nevertheless noting that the special appointment hearing of the plaintiffs’

summary judgment motion, scheduled for September 26, 2022, had been confirmed.

f. There is no endorsement available to me indicating what happened when the matter was back before the court on April 22, 2022. However, the matter apparently was adjourned for one week to April 29, 2022, at which time the Hussein Dabaja’s lawyer moved successfully for an Order, granted by Justice Tranquilli, to have himself removed as counsel of record for Hussein Dabaja. Hussein Dabaja did not appear on the motion, but subsequently filed a Notice of Intention to Act in Person on or about June 3, 2022. g. When the matter came back before the court on Thursday, September 22, 2022, for the scheduled special appointment hearing of the plaintiffs’ motion for

summary judgment, there nevertheless apparently had been further intervening complications and/or developments which prevented the motion from being heard, and resulted in that reserved day of special appointment hearing time being wasted. While the details of all those developments are not immediately available from the material available to me, the endorsement made that day by Justice McArthur includes the following indications: i.

Just the Friday before, (i.e., on September 16, 2022), representation of the defendant Hussein Dabaja apparently had changed yet again, with the retention of his current lawyers Mr Stroh and Mr Mercer. ii. A related criminal proceeding apparently had been commenced involving Hussein Dabaja, and it seems his new counsel had raised the possibility of bringing a motion, pursuant to

section 106 of the Courts of Justice Act , R.S.O. 1990, c.C.43 as amended, to stay this civil proceeding until the criminal proceeding had run its course. [1] iii. At the time, Hussein Dabaja also apparently had not yet paid the costs he was to have paid pursuant to a number of earlier Orders made in relation to other interlocutory proceedings in this litigation, the details of which are not indicated in the material available to me. iv.

It seems the representation of the defendant Haitham Dabaja also had changed, with his new lawyer of record, Mr Morga, indicating that efforts to obtain material from the previous lawyer of record for Haitham Dabaja had not yet been entirely successful. [2] v. Having regard to the above, the defendants were seeking an adjournment of the special appointment hearing to address the plaintiffs’ motion for

summary judgment. That adjournment request was not opposed by the plaintiffs, who also had changed their legal representation since bringing the motion. vi. In the circumstances, Justice McArthur found it necessary and appropriate to adjourn the matter, and proceeded to set and order a revised timetable whereby: 1.

Hussein Dabaja was to pay all outstanding cost awards in full on or before November 4, 2022; 2. any motion by Hussein Dabaja to stay this civil proceeding because of the ongoing related criminal proceeding was to be brought and argued for no more than an hour on or before November 4, 2022; 3. the defendants were to serve and file any responding motion materials on or before November 4, 2022; 4. any reply motion material from the plaintiffs was to be served and filed on or before December 16, 2022; and 5. the special appointment hearing was adjourned to January 23, 2023, albeit with a reduced hearing time of four hours. h.

The litigation developments between September 22, 2022, and January 23, 2023, are not entirely clear from the material available to me, but apparently included the following: i. responding motion material was delivered by the defendant Haitham Dabaja and the defendant corporation; ii. responding motion material was delivered by the defendant Hussein Dabaja, who apparently did not bring any motion to stay this proceeding; iii. the plaintiffs delivered further material in reply, in respect of which the plaintiffs also brought a formal motion pursuant to Rules 1.04(1) and 39.02(2) of the Rules of Civil Procedure , (a motion opposed by the defendants), seeking leave to file further affidavit evidence in relation to the motion after having cross-examined on an affidavit delivered by an adverse party; and iv. the defendant Hussein Dabaja brought a motion, (opposed by the plaintiffs), to strike various portions of the motion material filed by the plaintiffs.

Proceedings on January 23, 2023 [ 5 ] When the matter came before me on Monday, January 23, 2023, I indicated to counsel that, in my view, it was not possible or appropriate for the scheduled special appointment hearing to proceed that day. [ 6 ] In particular, although I had spent a good deal of time the day before reviewing material available to me on Caselines and the court’s relevant OneDrive folder, in my view effective and proper judicial preparation for the hearing had been rendered impossible by numerous apparent failures to comply with the Consolidated Practice Direction for the Southwest Region effective as of August 1, 2016, applicable provisions of the Rules of Civil Procedure , and the “Notice to the Profession, Parties, Public and Media” issued by the Chief Justice and effective as of August 2, 2022.

In that regard, I noted and note the following: a. The material filed on Caselines in relation to this matter was quite substantial. In particular, the moving plaintiffs apparently had uploaded 3091 pages of material, Hussein Dabaja had uploaded 219 pages of material, and the defendants Haitham Dabaja and the corporate defendant had uploaded 164 pages of material – with the latter material incorrectly uploaded and incorporated into the

designated Caselines filings of Hussein Dabaja. b. None of the above filings uploaded to Caselines had been segregated into any bundle specifically associated with the special appointment hearing for January 23, 2023, and it was not clear from a cursory review of that material whether all of it, or what portions of it, was/were relevant to the matters to be argued on that date. c. Contrary to the provisions of Rule 4.05(3).3 of the Rules of Civil Procedure and

Section II(2) of the aforesaid “Notice to the Profession, Parties, Public and the Media”, none of the five parties participating in the special appointment hearing had prepared, filed and uploaded to Caselines a compendium containing the key materials that each would be referring to in oral argument, thereby effectively directing the court’s attention to a focused segment or subsection of the otherwise very substantial material to review in advance of the hearing. d. The formal confirmations filed (and not filed) in relation to the special appointment hearing were less than adequate. In particular: i.

Only the moving plaintiffs had filed confirmations in relation to the special appointment hearing, (i.e., one relating to the plaintiffs’ motion for

summary judgment, and another relating to the plaintiffs’ motion for leave to file further affidavit evidence following cross-examination on an adversary’s affidavit material), as required by Rule 37.10.1 of the Rules of Civil Procedure . It seemed that none of the defendants had filed any confirmations of their own.

That included Hussein Dabaja’s apparent failure to file any confirmation in relation to his own motion to strike portions of the evidence filed by the plaintiffs; a motion apparently supported by the remaining defendants, although there was nothing in the material uploaded to Caselines or the court’s relevant OneDrive folder to indicate that was the case. ii. The confirmations served and filed by plaintiff counsel were not helpful in providing the court with much alternative direction and guidance, as required by Rule 37.10.1(1)(

a) and Form 37B, in terms of indicating the specific material or portions thereof to which the court would be referred during the course of the special appointment hearing.

Without limiting the generality of the foregoing, the confirmations filed by the plaintiffs made broad reference only to material relied upon by the plaintiffs, (i.e., without any mention of material that might be relied upon by the defendants in opposing the plaintiffs’ motions), and also referred only to particular components of the plaintiffs’ material as a whole, (including the voluminous motion records and affidavit of documents material uploaded to Caselines by the plaintiffs), without more specific indications of the portions thereof upon which the court should focus. [3] Moreover, the filed confirmations’ indications of plaintiff material to which the court would be referred apparently were also incomplete; e.g., insofar as the confirmations made no reference to any of the transcripts that had been uploaded to Caselines, but the facta filed by the plaintiffs made reference to testimony provided on cross-examination. e.

Not every party participating in the special appointment hearing had filed a factum, as required by

Part I,

section C.12, of the Consolidated Practice Direction for the Southwest Region. In particular, no factum whatsoever had been prepared, served and filed by the defendants Haitham Dabaja and 1945465 Ontario Inc., operating as HD Auto Sales. f. Contrary to

Section II(4) of the aforesaid “Notice to the Profession, Parties, Public and the Media”, the facta filed by the plaintiffs contained no hyperlinks whatsoever to the authorities referred to therein, and the plaintiffs had provided the court with no other book of authorities or abbreviated book of authorities in any form. While the facta filed on behalf of Hussein Dabaja incorporated some hyperlinks, that was not done for all of the authorities referred to therein, and no book of authorities or abbreviated book of authorities had been provided to the court in any form. g.

In the result, the court had been provided with a very substantial amount of electronically filed material, without any corresponding clear indication from the parties as to the specific portions of that material the court really needed to review to prepare for the special appointment hearing, and with that material being incomplete in any event having regard to the parties’ failure to provide the court with ready access to all of the authorities upon which they apparently intended to rely. [ 7 ] In the recently reported of decision of Lepp v.

The Regional Municipality of York , 2022 ONSC 6978 , Justice Edwards gave voice to the mounting frustration of the judiciary caused by the ever-increasing volume of material that has followed in the wake of our court’s transition to electronic filing and use of Caselines, and the ongoing failure of counsel: a. to reflect on why they are filing materials that are hundreds if not thousands of pages long; b. to abide by the Rules of Civil Procedure and the aforesaid “Notice to the Profession, Parties, Public and the Media”, both of which were designed, in part, to make review of such motion material manageable by presiding judges with increasingly limited time for review of such material; and c. to recognize the practical realities underlying the administration of justice in this province. [ 8 ] On the latter point, Justice Edwards made the following remarks in particular, which I repeat here in full, in the hope that counsel in this case and others will begin to register the message therein and act accordingly: In the world we now live in, the Bar needs to appreciate that, apart from the requirements imposed by the Notice and the Rules of Civil Procedure , judges are human beings.

We simply do not have the time to read the volume of material that we are often confronted with.

The Bar would be well advised to read the Notice and The Rules to ensure they have complied with the minimum filing requirements for the hearing of a motion or a pretrial. [ 9 ] Beyond those important points and remarks, which I noted and emphasized to counsel in this matter, I will simply add, (as I did during the hearing before me on January 23, 2023), that litigants in this court presumably want proper hearings and informed decisions made by properly prepared judges, and judges of our court want to provide litigants with both. [ 10 ] For us to do that, however, litigants and their counsel must do their part to help judges make efficient use of the limited preparation time we routinely are given.

In doing so, they hopefully will bear in mind that, while the parties and their counsel may have

been focused on the minutia of a dispute for weeks, months or years, judges frequently will be approaching a matter for the first time, and we receive and are required to digest substantial motion material only a day or two before a hearing, usually while we are fully occupied with the hearing of other matters. [ 11 ] Help us to help you; i.e., by taking the steps necessary to ensure that we are able to focus readily and easily on the material essential to proper and realistic preparation for the hearing of your matter. [ 12 ] In the case before him, Justice Edwards addressed the situation by adjourning the relevant motion to a date to be arranged through the trial co-ordinator, with the express admonition that the motion nevertheless would be heard only if all parties had adhered to the applicable filing requirements emphasized in his decision. [ 13 ] I indicated to counsel that I intended to make the same direction in this case, for the reasons outlined herein. [ 14 ] In particular, I did not think it appropriate to simply overlook the numerous identified failures to comply with the applicable consolidated regional practice direction, Rules of Civil Procedure , and notice issued by the Chief Justice, and attempt to proceed with a hearing of the various motions despite such failures and non-compliance.

We promote what we permit. [ 15 ] Counsel for the defendants then advised that they had intended to request a further adjournment of the plaintiffs’ motion for

summary judgment in any event, so that the motions seeking to expand or reduce the evidentiary record underlying the plaintiffs’

summary judgment motion could be argued and decided as a preliminary matter; i.e., to ensure that all concerned would know, before making submissions, the record on which the motion for

summary judgment was to be argued. [ 16 ] Plaintiff counsel indicated in response that they were content to proceed with arguments in a global or comprehensive fashion, (i.e., arguing all of the motions at the same time with the court then making a decision based on a record to be formally and finally determined by the court), but also conceded the merits of counsel being able to argue the

summary judgment motion based on a definite/certain evidentiary record, especially if the motion for

summary judgment was going to be adjourned in any event to address the other concerns I independently had raised. [ 17 ] I agree that the motions to determine the proper evidentiary record underlying the plaintiffs’

summary judgment motion should be argued and determined first, as a preliminary matter. [ 18 ] In that regard, I would only add that, apart from the need for parties to comply with the formal requirements of the Rules of Civil Procedure and the Consolidated Practice Directi on of the Southwest Region relating to the timely service and filing of accurate confirmations, it would have been extremely helpful and much appreciated if, prior to my embarking on any review of the very extensive material the parties had uploaded to Caselines, counsel had ensured that the presiding judge had been provided with an advance indication that the scheduled special appointment hearing was to be the subject of an adjournment request for the reasons I have outlined. [4] [ 19 ] In the result, the substantial and precious special appointment hearing time reserved for this matter on January 23, 2023, unfortunately was wasted.

Direction [ 20 ] After receiving further submissions from counsel, I have made the following directions: a.

The plaintiffs’ motion seeking leave to deliver further affidavit evidence after conducting cross-examination on an affidavit delivered by an adversary, and the defendant Hussein Dabaja’s motion to strike evidence filed by the plaintiffs, (apparently supported by the remaining defendants), are both adjourned to a special appointment hearing of three hours duration, to be scheduled in consultation with the London trial co-ordinator but only after the parties have filed a Certificate of Readiness of Special Appointment as required by

Part I,

section C.11, of the Consolidated Practice Direction for the Southwest Region. The motions nevertheless will be heard on the scheduled date only if the parties have adhered to the filing and confirmation requirements outlined in the Rules of Civil Procedure , the “Notice to the Profession, Public and the Media” referred to above, and the Consolidated Practice Direction for the Southwest Region. b. The plaintiffs’ motion for

summary judgment is adjourned to a further special appointment hearing to follow after the two motions noted in the preceding sub-paragraph have been heard and decided, and to be scheduled in consultation with the London trial co- ordinator, but only after the parties have filed a further Certificate of Readiness of Special Appointment as required by the same

section of the Consolidated Practice Direction for the Southwest Region. The duration of that further special appointment hearing should be determined and indicated by counsel having regard to the outcome of the two motions noted in the preceding sub-paragraph, and a further review of the material uploaded to Caselines to determine what portion of that material is really necessary and appropriate for the parties to rely upon and the presiding judge to review in advance of the hearing.

The motion nevertheless will be heard on the scheduled date only if the parties have adhered to the filing and confirmation requirements outlined in the Rules of Civil Procedure , the “Notice to the Profession, Public and the Media” referred to above, and the Consolidated Practice Direction for the Southwest Region. c.

As the volume of material to be reviewed by the judge presiding over the second special appointment hearing is likely to be quite substantial in any event, that presiding judge should be provided with access to the relevant material at least one week in advance; e.g., to ensure that he or she has an intervening week-end capable of being used to locate, review and digest the relevant material. d.

While I certainly am willing to hear any of the above motions, it should be noted and emphasized that I am not seized of this matter, any more than Justice McArthur became seized of this matter when he unfortunately was required to adjourn the same matter when it previously came before him for a scheduled special appointment hearing. [5]

Justice I.F. Leach Date: January 30, 2023