Court File and Parties

Citation: Lo Faso v. Kelton & Ferracuti Consultants Limited, 2009 ONCA 513 Date: 2009-06-24 Docket: C49111 Court of Appeal for Ontario

Before: Doherty, Moldaver and Lang JJ.A.

Between

Gaetano Lo Faso and 588147 Ontario Inc. Plaintiffs (Appellants)

and

Kelton & Ferracuti Consultants Limited, Anthony (aka Tony) Ferracuti, Mallt Construction Inc., Thomas (aka Tom) Lekushoff, Minden Gross Grafstein & Greenstein, Morris Rose Ledgett, Max Shafir, Julian Heller Defendants (Respondents)

Counsel: Richard B. Swan, for the appellants Michael R. Kestenberg, for the respondents

Heard and orally released: June 12, 2009

On appeal from the order of Justice L.A. Pattillo of the Superior Court of Justice dated June 20, 2008.

Endorsement

[1] The motion judge declined to exercise his discretion under Rule 2.01 in favour of the appellants to cure the admitted irregularity in the proceeding. It was common ground that the cross-claim was improper when commenced in that the respondents were no longer a party to the main action when the purported cross-claim was issued. The appellants, who obtained carriage of the proceedings at some subsequent point through an order in the bankruptcy proceeding, sought to cure that defect and to commence a third party proceeding. The motion judge, as indicated, declined for the reasons he gave, to exercise his discretion and permit the appellants to so proceed. It is noteworthy that the appellants made no such request for the relief eventually sought until the proceedings before the motion judge in which the respondents moved to strike the cross-claim against them as an abuse of process.

[2] The appellants challenge the exercise of the motion judge’s discretion. They argue that that exercise was tainted by at least two legal errors.

[3] We do not propose to examine the alleged errors. We accept, for the purposes of disposing of the appeal, that two aspects of the motion judge’s reasons cannot be supported in law. However, in the end, we are satisfied that apart from those errors, he was not clearly wrong in concluding that it would be an abuse of process to permit the appellants to convert the purported cross-claim to a third party claim and to proceed at this point against the respondent. In so holding, we have regard to the following:

• The convoluted and tortured history of this litigation, which stretches back over twenty years. That history is fully set out by the motion judge and in the parties’ helpful facta.

• The artificial, if not, contrived nature of the proceeding now being advanced by the appellants, which has the appellants seeking to advance a claim for solicitor’s negligence against the lawyers for the parties against whom the appellants litigated a lengthy and contentious mechanic’s lien action. The appellants have also unsuccessfully sued the same lawyers in their own capacity in the same litigation.

• The failure of the appellants to take any steps to cure the irregularity and to proceed by way of a third party claim for the better part of five years. This inertia was in the face of repeated letters from counsel for the respondent pointing out the obvious defect and inviting the appellants to take the appropriate steps to cure that defect.

• The thread bare nature of the allegations in the purported cross-claim as pleaded against the respondents on which this action would hang were it allowed to proceed.

• The failure of the appellants to put any explanation before the motion judge for their failure to cure the defect in anything approaching a timely manner.

[4] The motion judge, apart from the aspects of his reasons which cannot be supported, effectively summarized his reasons for declining to cure the defect at para. 39 and the first sentence of para. 40 of his reasons. In our view, those reasons withstand scrutiny and justify the exercise of the discretion by the motion judge.

[5] As we read those reasons, they do not depend on a finding by the motion judge that the claim against the respondents or any part of it was statute barred. Rather, the reasons reflect the very real and obvious prejudice that would inevitably flow to the respondents in an effort to defend against allegations that stretch back two decades.

[6] The appeal is dismissed. Costs to the respondents in the amount of $10,000, inclusive of disbursements and GST.

“Doherty J.A.” “M.J. Moldaver J.A.” “S.E. Lang J.A.”