Her Majesty the Queen, Judgment Creditor, v. Ilio Mauro, Judgment Debtor, and Regal Ware Inc, Garnishee., [1984] CTC 214, 84 DTC 6209

Muldoon, J:—In this matter, Ilio Mauro is a judgment debtor under and by virtue of Minister’s certificates registered in this court and having the same force and effect as if they were judgments. [1] Subsequently, the judgment creditor moved to effect garnishment of the judgment debt to the extent possible and its motion was supported by the filed affidavit of David John Kimball.

He swore that demands had been made upon the judgment debtor for the amounts owning pursuant to those certificates, but that they remain unsatisifed, and that

a balance of $506,062.08 remains outstanding as of the 15th day of December, 1983, pursuant to the certificates relative to the said Ilio Mauro.

Mr Kimball further swore that as a result of his investigations, which he detailed, he concluded that the garnishee owes money to “Franco Mauro [also a judgment debtor] and Ilio Mauro operating as F Domanico & Company” in the approximate amount of $987,105. Whether or not such is the case remains to be determined in further proceedings between the judgment creditor and the garnishee.

Such further proceedings were directed by a show-cause order of the Associate Chief Justice pronounced ex parte on December 19, 1983. Those proceedings have been adjourned to take place in Toronto on March 5, 1984. It would appear from the representations made to the court by the garnishee’s counsel, that the garnishee does and will dispute liability to pay the debt claimed. The affidavit of Harold V White, filed by the garnishee, indicates that a very thorough and determined dispute will be mounted as to its liability.

In the meanwhile, the judgment debtor has been seeking to cross-examine Mr Kimball on his affidavit, even though the judgment debtor has thus far made no move to set aside the Associate Chief Justice’s ex parte order. Having failed to have Mr Kimball produced voluntarily for cross-examination, the judgment debtor’s solicitors resorted to having a subpoena duces-tecum issued on January 9, 1984, directing Mr Kimball to appear, with a plethora of documents, before one, Paul Rosenberger, a special examiner, to testify. Although this subpoena in Form 8 does not mention Mr Kimball’s affidavit, it is understood by the parties that its purpose is to enable the judgment debtor to cross-examine Mr Kimball on his affidavit.

The motion now before the court is brought by the judgment creditor for an order that the cited subpoena be set aside, or for such other order as seems just. The judgment creditor proffers in support of its motion only the show-cause order given by the Associate Chief Justice, last December. The notice of motion was directed to the respective solicitors for the judgment debtor and the garnishee. Counsel for the garnishee did make some respresentations to the court, which will be noted herein, but he averted that basically his was a “watching” role.

It appears that the only matter now afoot in this matter is the post- registration, that is to say post-judgment, proceedings in which the garnishee will be entitled to show cause, if it can, why it should not pay an alleged debt, allegedly due from it to the judgment debtor allegedly operating under the name and style of F Domanico & Company. Since it also appears that the judgment debtor has not, and is not, moving to attempt to set aside the judgment in the form of the registration of the Minister’s certificates, any issues between the judgment debtor and the judgment creditor are now determined and crystallized. The outstanding issue in this proceeding which remains to be determined arises now between the garnishee and the judgment creditor.

That remaining issue, which is quite within the competence of judgment creditor and the garnishee, respectively, to litigate excludes the judgment debtor as a party to it, although the judgment debtor might well be able to provide testimony or other evidence in and for that litigation. Counsel for the judgment debtor told the Court that it is his client’s right to protect his suppliers and others with whom he has commercial relationships. It is in this purportedly protective role that the judgment debtor then seeks to cross-examine the deponent Kimball. But, since matters between the creditor and the debtor stand crystallized in law, the approbate avenue for effecting the judgment debtor’s avowed purpose is to provide truthful testimony under oath or otherwise admissible evidence if required to do so at the instance of one or both of the interested parties to the outstanding litigation, to wit: the judgment creditor or the garnishee.

In his brief presentation to the Court, counsel for the garnishee maintained that he and his client are quire capable of litigating the garnishee’s dispute with the judgment creditor. He also allowed, that as a rule, no garnishee in this situation would care to have a judgment debtor’s intervention in such proceedings risk losing the garnishee’s case for him.

Some authorities [2] were cited in support of the judgment debtor’s side of the argument, of which one or two are really germane to the issue here.

In the Thomson case a solicitor had sworn an affidavit in support of a motion to strike out a counterclaim. That was a situation of the kind contemplated by Federal Court Rules 419(1)(a) and (2). Accordingly, Gale, J in his reasons twice expressed difficulty in appreciating why the affidavit had been filed at all, but since it had been filed and cross-examination effected he ordered two unanswered questions to be answered. That case is not relevant here.

In both the Volckmar and the Bunker Ramo case Mr Justice Cattanach made two observations which loom significant when one purports to apply those reasons to the situation here.

First, Cattanach, J notes: [3]

Thus it would appear that what is sought to be contested is the jurisdiction of this Court over the subject matter of the action pleaded in the statement of claim as against the defendant TRW Inc, and not the Court’s jurisdiction over the person of TRW Inc.

That, of course, is the most fundamental kind of preliminary objection, for if there were no jurisdiction over the subject matter what would have been the point of service ex juris! Here, of course, the court’s jurisdiction of the subject matter is not disputed by the judgment debtor. That is an important, if not conclusive, distinction to be noted between the Bunker Ramo case and the proceedings at bar.

Second, in that case, Cattanach, J came to this conclusion which surely is the ratio of his judgment in the matter which he was then adjudicating:

I therefore conclude that in the judgment of Gushue, JA and that in Volckmar v Krupp are authority for the proposition that there is the right to order cross- examination on the affidavit submitted in support of the ex parte order for service out of the jurisdiction in a subsequent application to rescind that order. [4]

The case now before the court is not concerned with an ex parte order for service out of the jurisdiction. It is a garnishment proceeding in which the party primarily concerned — the garnishee — has emphatically disputed liability pursuant to Rule 2300(8) of this court.

In the Sherman case an affidavit was filed by a defendant, Seaway Multi-Corp Limited in support of an application by Seaway for an order permitting Seaway to file a counterclaim against the plaintiffs. At this point another defendant, Manley, served an appointment to cross-examine on that affidavit. Seaway then sought to have Manley’s appointment to cross-examine set aside and struck out. The learned Master held:

In my opinion, the right of those entitled to cross-examine is to be decided on the basis of the issues on the motion in relation to which the supporting affidavit is filed. If it is clear, as I feel it is in this case, that the issues upon the motion do not reflect in any way upon a party to the main action, then that latter party is excluded from the right of cross-examination. [5]

The Master’s opinion was surely correct, and it bears instructively upon the issue here at bar.

It seems clear that the garnishee, if it succeed[s] in disputing liability, will have set matters at rest just as effectively as if it had successfully moved to set aside the garnishing order. It is equally clear that the judgment debtor may participate in the garnishment proceedings, if only in order to attempt to demonstrate in opposition to the garnishee’s disputing of liability that the garnishee owes him something, or more than the garnishee acknowledges owing.

But it is not clear that the judgment debtor possesses any right, either accorded by text of law or ex debito justitiae, to cross-examine the deponent Kimball in these proceedings. In the Miles case, the Senior Master of the Ontario High Court dealt with the jurisdiction of the court to restrict the scope of a cross-examination under Ontario Rule 227. He held that the rule gave a party a right to cross-examine. But it never divested the court of its inherent power to control its own proceedings and, in cases where it appeared to be in the interests of justice to do so, to refuse such cross-examination or to restrict its scope. That power can be exercised, also, when it appears that there will be an opportunity to explore the matter at a more appropriate time, or one notes, by an appropriate party with a direct interest in the issue to be litigated. As earlier noted, the issue to be litigated lies between the judgment creditor and the garnishee, perhaps also between the garnishee and the judgment debtor depending on whether the garnishee admits owing anything, and if so, how much. The issue to be litigated does not lie between the judgment creditor an the judgment debtor. Accordingly, the judgment debtor has no right to subject the deponent Kimball to cross-examination on the affidavit. Therefore, the subpoena duces-tecum ad- dressed to David John Kimball, dated the 9th day of January, 1984, is without foundation in these proceedings at the instance of the judgment debtor and it must be quashed and set aside.

The judgment creditor, the applicant herein, is awarded taxable costs of an incidental to this motion against the judgment debtor. No costs are awarded for or against the garnishee.

ORDER

UPON MOTION on behalf of Her Majesty the Queen, the judgment creditor herein, for an order that the subpoena duces-tecum hereinafter mentioned be set aside, and

UPON hearing read the garnishee order to show cause made by the honourable the Associate Chief Justice dated the 19th day of December, 1983, and hearing what was alleged by counsel,

1. IT IS ORDERED that the subpoena duces-tecom addressed to David John Kimball, dated the 9th day of January, 1984, be, and it is hereby quashed and set aside; and

2. IT IS FURTHER ORDERED that the judgment creditor is awarded her taxable costs of and incidental to motion against the judgment debtor, and no costs are awarded for or against the garnishee.