Aly v. Nader Halal Meat Inc., 2010 ONSC 4781 (CanLII)

CITATION:  Aly v. Nader Halal Meat Inc., 2010 ONSC 4781

COURT FILE NO.:  CV-10-0138-00

DATE:  20100907

 

SUPERIOR COURT OF JUSTICE – ONTARIO

 

 

RE:            NASHAAT ALY and TAGHREED ALY

Plaintiffs

 

v.

 

NADER HALAL MEAT INC., TAMER INVESTMENT INC., ADEL ELTOHAMY ALSO KNOWN AS ADEL EL TOHAMY ALSO KNOWN AS ADEL TOHAMY, NADER ADEL TOHAMY ALSO KNOWN AS ADEL TOHAMY and TAMER TOHAMY ALSO KNOWN AS TAMER EL TOHAMY ALSO KNOWN AS TAMER ELTOHAMY

Defendants

 

BEFORE:   SPROAT J.

 

COUNSEL:  Rosemary A. Fisher, for the Plaintiffs

 

Anser Farooq, for the Defendants

 

HEARD:     August 30, 2010

 

 

E N D O R S E M E N T

 

Introduction

[1]       On November 13, 2008 Borkovich J. granted the plaintiffs a Certificate of Pending Litigation.  The defendants now apply to set aside the certificate.

[2]       This motion originally came before Seppi J.  She adjourned the motion to August 30, 2010 indicating that the first aspect of the motion to be addressed should be whether the certificate should be set aside on the basis of material non-disclosure by the plaintiffs.  Her endorsement anticipated that if the time available on August 30 did not permit the further arguments of the defendants to set aside the certificate to be advanced, the balance of the motion would be adjourned to a later date.

[3]       Rule 39.01(6) provides that:

Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.

 

Alleged Non-Disclosure

[4]       I note at the outset that the defendants’ motion is supported by a five paragraph affidavit of a law clerk which appends a number of documents which confirm aspects of the chronology of events.  Specifically, as to the argument of material non-disclosures, there is no evidence on behalf of the defendants with respect to information which the plaintiffs or their witnesses had as to facts that might favour the defence position or positions taken by the defendants.  I now address the non-disclosures alleged by the defendants.

The plaintiff failed to highlight for the court the fact that the plaintiffs relied upon oral representations as there is only one express reference to the oral nature of the agreement in the plaintiff’s motion materials

[5]       I do not accept this argument.  This statement of claim and the other materials make it clear that the plaintiff Nashaat Aly and the defendant Adel Eltohamy are brothers (in the materials, and in their submissions, counsel referred to parties by their first names and for ease of reference I will do the same) and that the plaintiffs moved to Canada based upon representations that they would have an ownership interest in Nader Inc.   There is no suggestion of any written agreement.

[6]       Further, there is a heading in the Statement of Claim entitled “Representations” which pleads repeated representations by Adel which in context must have been oral.  The plaintiffs also claim a constructive trust and allege unjust enrichment which claims are obviously based on there being no written agreement.  At paragraph 36 the plaintiffs complain of an oral promise later being arbitrarily changed.  Further, a pleading based upon a written agreement invariably pleads the date of the agreement and often quotes important provisions. I think it was quite clear to Borkovich J. that the plaintiffs were not relying upon a written agreement.

The plaintiffs failed to disclose that Adel had, or might have had, alternative sources of income which may have funded the acquisition of the property against which the certificate is registered. 

[7]       The evidence of the plaintiffs was that Nader Halal Meat Inc. (“Nader Inc.”), and the plaza property against which the certificate is registered, are the only business interests of Adel.  Nader Inc. began in 1991.  The defendants, however, point to the fact that when Nashaat was cross-examined he said that when he came to Canada in 1991 he understood that Adel was a successful engineer and among the top five percent of income earners in Canada.  The suggestion seems to be that the plaintiffs should have highlighted for the judge the possibility that Adel funded the 2003 acquisition of the plaza, at a purchase price of $5,750,000, from income and assets prior to 1991.

[8]       This suggestion is in the context that the plaintiff’s evidence is that for the years 2002-2007 the gross profit of Nader Inc. was approximately $700,000 per annum.  The plaintiff’s evidence, not contradicted, is that Nader Inc. was logically the source of the funds given its substantial earnings from 1991-2003.  I do not regard any vague knowledge that Nashaat had concerning Adel’s pre-1991 earnings as a material non-disclosure.

Nashaat “lied” to the court in paragraph 28 of his affidavit stating that “Adel does not deny our claim to an ownership interest in Nader Inc. but rather disputes the quantum at which said interest ought to be valued”

[9]       I do not accept this argument.  In my opinion the defendants take this paragraph out of context.  The context is that in his affidavit Nashaat relates a history in which Adel promised an interest in the business, then fluctuated as to the percentage interest and later refused to recognize or honour any agreement.   Then, after the intervention of friends of the family, Adel tendered five cheques dated April – August 2008 totalling $500,000 as payment for Nashaat’s interest in the business.  Nashaat declined the payment on the basis that it was insufficient.  It was in this context that Nashaat, referring to the latest position taken by Adel, then made the statement that Adel did not dispute the ownership interest but only quantum.

The plaintiffs presented the issue as a straightforward business matter and not as part of a bitter ongoing familial dispute 

[10]      The defendants analogized to, and adopt this submission from, J.D.M. Developments Inc. v. J. Stollar Construction Ltd., [2004] CanLii 35004 (Ont. S.C.J.).  I do not agree that the plaintiffs presented this as a straightforward business matter.  The plaintiffs’ material makes clear that this is a dispute between brothers based upon an oral agreement which resulted in friends becoming involved in mediating a dispute.  The judge was, therefore, well aware of the familial aspect to the case.  The defendants have not suggested that the dispute over the shareholding was part of some broader and bitter family dispute on other issues.

The plaintiffs failed to disclose to the court the defence position, which the defendants subsequently advanced in their Statement of Defence dated January 7, 2009, that Adel in fact invested $300,000 in Nader Inc. 

[11]        First, it does not make sense conceptually to complain of a failure to disclose in a 2008 affidavit a position advanced in a 2009 pleading.  If, however, there is any valid complaint it would be that at the time he swore his affidavit in 2008, Nashaat knew Adel had invested $300,000, or that Adel claimed to have done so.

[12]        The defendants point to the fact that Nashaat’s affidavit had indicated that “Adel made an initial investment of $80,000 toward Nader Inc.”.  As noted above, there was no affidavit from Adel.  I was not referred to any evidence that would substantiate that Adel in fact invested $300,000 and that Nashaat was aware of the fact he invested $300,000 but lied to the court by stating the investment was only $80,000.  There is no evidence of non-disclosure in this regard.

The plaintiffs did not disclose that they were merely employees and compensated generously as such

[13]        The plaintiffs disclosed that they were employees but also stated that they had an entitlement to a share of the business based upon oral agreements and representations made.  Nashaat also sets out in his affidavit all T4 income the plaintiffs received and all other cash amounts received.  There is no non-disclosure.

The plaintiffs’ evidence refers to working in the store “12 hours a day” without breaking down whether this is the total number of hours worked between them or whether they each worked 12 hours a day

[14]         In my opinion, any lack of precision in this regard is not material.  I would interpret this statement to mean that they were working on the order of 12 hours a day and far beyond the hours of a regular employee.

Nashaat misled the court by suggesting that the plaza was purchased utilizing “recently incorporated” Tamer Investment Inc. when in fact Tamer had been incorporated approximately one year previously

[15]        There is some imprecision as to what “recently” means.  In any event, I am at a loss as to what possible difference this could have made to Borkovich J.’s decision to grant the certificate.

The Motion Record served to obtain the CPL failed to include a copy of Exhibit ‘A’ to the Affidavits of Masood and El-Sedfy being a June 13, 1998 demand letter from the solicitor for the plaintiff to Adel.

[16]        On the evidence the only conclusion is that this was due to inadvertence.  The plaintiffs did not gain anything by this omission.  In my view, reading this letter would not have been material to Borkovich J.

 

 

 

 

Conclusion

[17]        I am satisfied that the plaintiff has made full and fair disclosure of all material facts and that the CPL should not be set aside on the ground of non-disclosure.  The defendants may schedule a 9:00 a.m. appointment before me for a two-hour hearing, to complete argument on the motion.  Costs reserved pending completion of motion.

 

 

 

 

 

___________________________

SPROAT J.

 

 

DATE:         September 7, 2010