Royal Bank of Canada v. Futurecom Inc. et al., 2010 ONCA 63

• Judge: Cronk, Blair and Rouleau, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: November 03, 2009
• Jurisdiction: Ontario
• Citations: 2010 ONCA 63;(2010), 264 O.A.C. 355 (CA)

Royal Bk. v. Futurecom Inc. (2010), 264 O.A.C. 355 (CA)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. AU.065

Royal Bank of Canada (plaintiff/respondent) v. Futurecom Inc., Ian Korman aka Ian Israel Korman and Jeffrey Essebag (defendants/appellant)

(C50433; 2010 ONCA 63)

Indexed As: Royal Bank of Canada v. Futurecom Inc. et al.

Ontario Court of Appeal

Cronk, Blair and Rouleau, JJ.A.

January 27, 2010.

Summary:

A bank obtained a default judgment against Korman based on his personal guarantee of a corporation's debt. The bank became aware that some statements in Korman's personal statement of affairs were false. The bank sought an order under rule 59.06(2)(a) to amend the judgment by, inter alia, adding declarations that the judgment and subsequent costs order were sums owing in fraud. Korman's solicitor, who did not notice that the bank sought declarations of fraud, advised Korman to consent to the motion. The motion was granted. Subsequently, Korman moved under rule 59.06 to amend or set aside the consent order, asserting that there had been no fraud, that fraud had not been pled by the bank in the original claim and that his consent had been given erroneously.

The Ontario Superior Court, in a decision reported at [2009] O.T.C. Uned. 829, denied the motion. Korman appealed.

The Ontario Court of Appeal allowed Korman's appeal.

Practice - Topic 6107

Judgments and orders - Amendment, rescission and variation of judgments and orders - Amendment or variation - Circumstances permitting - A bank obtained a default judgment against Korman based on his personal guarantee of a corporation's debt - The bank became aware that some statements in Korman's personal statement of affairs were false - The bank sought an order under rule 59.06(2)(a) to amend the judgment by, inter alia, adding declarations that the judgment and subsequent costs order were sums owing in fraud - Korman's solicitor, who did not notice that the bank sought declarations of fraud, advised Korman to consent to the motion - The motion was granted - Subsequently, Korman moved under rule 59.06 to amend or set aside the consent order, asserting that there had been no fraud, that fraud had not been pled by the bank in the original claim and that his consent had been given erroneously - The motion was denied - The Ontario Court of Appeal allowed Korman's appeal - Rule 59.06(2)(a) allowed for the amendment, setting aside or varying of orders "on the ground of fraud or of facts arising or discovered after it was made" - There were two bases for applying the rule - The first was fraud perpetrated in the way that the judgment or order was obtained - That had not occurred here - The second basis allowed the court to take into account facts that arose or were discovered after the order was obtained - However, the rule did not contemplate altering a judgment or order to provide for relief never sought in the moving party's pleading - To come within the rule, the motion had to be one brought "in the proceeding" in that, even before judgment, it was available - Here, a motion for judgment declaring the sums to be owing in fraud could not have been brought based on the pleadings - The fact that Korman consented to the order based on mistaken advice did not preclude him from setting it aside - As it was neither just nor equitable to allow the order to stand, the court set it aside - See paragraphs 17 to 27.

Practice - Topic 6252

Judgments and orders - Setting aside orders - Grounds for - [See Practice - Topic 6107 ].

Practice - Topic 6255

Judgments and orders - Setting aside orders - Consent orders - [See Practice - Topic 6107 ].

Cases Noticed:

Kalkinis et al. v. Allstate Insurance Co. of Canada (1998), 117 O.A.C. 193; 41 O.R.(3d) 528 (C.A.), refd to. [para. 24].

Statutes Noticed:

Civil Procedure Rules (Ont.) - see Rules of Civil Procedure (Ont.).

Rules of Civil Procedure (Ont.), rule 59.06 [para. 17].

Counsel:

Avrum D. Slodovnick, for the appellant, Ian Korman;

Shawna M. Sosnovich, for the respondent.

This appeal was heard on November 3, 2009, by Cronk, Blair and Rouleau, JJ.A., of the Ontario Court of Appeal. On January 27, 2010, Rouleau, J.A., delivered the following judgment for the court.