COURT OF APPEAL FOR ONTARIO
Feldman, Watt and van Rensburg JJ.A.
BETWEEN
Manoucher Baradaran
Plaintiff (Appellant)
and
Tarion Warranty Corporation, Roger Boyd, Abbassgholi
Nasseri and Master Custom Homes Inc.
Defendants (Respondents)
Manoucher Baradaran, acting in person
Howard L. Shankman, for the respondents Abassgholi Nasseri and Master Custom Homes Inc.
Sophie Vlahakis, for the respondents Tarion Warranty Corporation and Roger Boyd
Heard: June 16, 2014
On appeal from the orders of Justice Thomas J. McEwen of the Superior Court of Justice, dated July 9, 2013, with reasons for decision reported at 2013 ONSC 3145, and reasons for costs reported at 2013 ONSC 6559.
van Rensburg J.A.:
Introduction
1This is an appeal from the orders of McEwen J. dated July 9, 2013. The first order, dismissing the appellant’s action in Superior Court, resulted from a motion in the action by respondents Master Custom Homes Inc. (“Master”), Abbassgholi Nasseri (“Nasseri”), and Tarion Warranty Corporation (“Tarion”), who were the remaining defendants to the action. The motion was brought under rules 20 and 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
2The second order, declaring the appellant to be a vexatious litigant and prohibiting him from continuing or commencing any action without leave against Master and Nasseri and prohibiting the appellant without leave from any further action against Tarion and its representatives with respect to certain matters only, resulted from an application by Master and Nasseri under s. 140 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
3The appellant also appeals the refusal of McEwen J. to grant his motion for leave to amend the statement of claim.
Background Facts
4The appellant has been involved in a long-standing dispute with the respondents over alleged construction defects in his home located in Toronto, which he purchased in October 2007. Master, a corporation of which Nasseri is a principal, was the builder and vendor of the house. The respondent Tarion is a non-profit corporation that administers the mandatory warranties and compensation scheme under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”).
5Section 13(1) of the Act provides for the following statutory warranties, subject to exclusions in s. 13(2), for all new homes sold in Ontario:
- (1) Every vendor of a home warrants to the owner,
(a) that the home,
(i) is constructed in a workmanlike manner and is free from defects in material,
(ii) is fit for habitation, and
(iii) is constructed in accordance with the Ontario Building Code;
(b) that the home is free of major structural defects as defined by the regulations; and
(c) such other warranties as are prescribed by the regulations.
6Section 14(3) provides that a homeowner has a right to claim from the Tarion guarantee fund, damages resulting from a breach of warranty where the homeowner “has a cause of action against the vendor or builder, as the case may be, for damages resulting from breach of warranty.”
7Section 13(6) provides that the statutory warranties apply despite any agreement or waiver to the contrary, and are in addition to any other rights the owner may have and to any other warranty agreed upon.
8The appellant addressed his complaints about defects in his home through the warranty and claims process under the Act. He made complaints about deficiencies on the 30-day and first year-end claim forms which were submitted to Tarion, with a copy provided to Master. Some of the issues were resolved between the appellant and Master. Other alleged defects were pursued through the inspection, assessment and decision process provided under the Act.
9In response to the construction defect claims asserted by the appellant, Tarion issued a warranty assessment report and three decision letters, dated, respectively, October 7, 2008, November 18, 2008, December 16, 2008 and April 30, 2009. In the warranty assessment report, Tarion determined that, of the 45 construction defects alleged by the appellant, only one was warranted and required repair by Master. All of the other alleged defects were found to be “not warranted”. In some cases, Tarion concluded that there was no defect in work or materials or violation of the Ontario Building Code; in others, Tarion identified an item of damage, but was unable to determine the cause. There were other reasons Tarion concluded that certain alleged defects were not warranted, including that the complaint was with respect to a design defect, and that the item was not subject to statutory warranties but may be covered by the purchase and sale agreement. The appellant raised an additional 30 separate deficiencies following the warranty assessment report, which Tarion addressed in its three decision letters.
10The appellant appealed the findings in the Tarion decision letters to the Licence Appeal Tribunal (the “Tribunal”). The appellant, Master, Nasseri and Tarion were all parties to the appeal.
11Prior to the appeal, Tarion agreed that some of the outstanding claims that had been denied were in fact warranted.
12In the course of the hearing, Tarion reassessed a number of other claims that it had originally denied. Tarion advised the appellant by letter dated October 7, 2009 that it would issue a reassessment report confirming that these items would be warranted and that they would be withdrawn from the various decision letters and not form part of the hearing before the Tribunal. Warranty assessment reports were issued November 5 and 6, 2009 confirming that the items were warranted and that the vendor was required to remedy them.
13The reassessed claims were later the subject of two decision letters dated February 11, 2010. While Tarion confirmed that these items were defects that amounted to a breach of warranty, the claims were all denied on the basis that the appellant had refused access to the home to Master to complete the repairs, and to Tarion’s field claim representative to assess the warranted items.
14The February 2010 decision letters informed the appellant that he had a right of appeal to the Tribunal. No such appeal was taken.
15Of the 30 alleged deficiencies addressed in Tarion’s three initial decision letters, a total of 12 were resolved or reassessed as warranted, leaving 18 claims to be considered by the Tribunal. The appeal hearing with respect to these items lasted 16 days. Thirteen witnesses, including experts, provided evidence at the hearing. In its decision dated August 25, 2010, the Tribunal concluded that two of the contested claims were warranted. The Tribunal noted the undisputed fact that the relationship between the appellant and the respondent was acrimonious and, in order to avoid further conflict, acceded to the appellant’s request that payment be ordered out of the guarantee fund rather than the “usual order” that Tarion carry out repairs. The Tribunal ordered payment to the appellant of the sum of $800. This amount was set off against costs awarded against the appellant of $1,600.
16The appellant also submitted claims to Tarion under the Act at the end of the second-year warranty period. In a decision letter dated November 30, 2009, Tarion concluded that none of the defects were warranted. This decision was also appealed to the Tribunal. The appeal hearing with respect to these claims lasted three days, and again the appellant, Tarion, Master and Nasseri participated. The Tribunal dismissed the appeals on June 23, 2010. An appeal of this decision was dismissed by the Divisional Court on April 5, 2011, and leave to appeal to this court was refused.
The Small Claims Court Action
17The appellant commenced an action against Nasseri in Small Claims Court on February 25, 2008, alleging a number of defects in the home and claiming damages of $10,000. This claim, which was defended by Nasseri, has not been pursued.
The Superior Court Action
18The appellant commenced Action No. CV-10-413391 in the Superior Court on November 1, 2010. The respondents in this appeal were named as defendants to the action. An employee of Tarion, Roger Boyd, was also originally named as a defendant; however, the action was dismissed against him, and that decision was upheld by this court: Baradaran v. Tarion Warranty Corporation, 2014 ONCA 123.
19In the statement of claim the appellant seeks general damages of $500,000 and special damages of $500,000. The pleading refers to the various complaints made by the appellant to Tarion, the handling of the complaints by Tarion, and Nasseri’s refusal to fix the defects. The substance of the claim appears to be pleaded at paras. 23 to 27. After referring to the appeal hearing of the 30-day claim and year-end claim before the Tribunal, the appellant pleads:
During the Process of the Hearing, Tarion warranted the following items:
Slate Tiles in front of the house, (30 Days Application).
Uneven bricks flooring on drive way leading to back.
Drive way leading to the garage is too steep, (30 Days Application).
Cold room need a fan, (30 Days Application).
Exterior Stone in Drive way has been fallen, (year-End Application).
The Stucco on the left side of the exterior is uneven,
A few stone are missing in the exterior of the property.
[T]he door from the basement hallway to garage was damaged.
Gap between walls and bricks in driveway.
At the Hearing, Mr. Nasseri did testify before the Tribunal that he unsuccessfully attempted to repair the deficiencies a number of times. It is therefore time to allow a more competent contractor to address the deficiencies to save costs for all involved. Previous case-law has shown that where there is a great deal of animosity between Mr. Nasseri and the homeowner, the Tribunal will order that Mr. Nasseri not be permitted to do the repairs but that a third party contractor do the work. CLAIM No. 4773-ONHWPA - Claim
The Plaintiff advised the Tribunal that there was a great deal of animosity between Mr. Nasseri and himself, as seen in a letter dated January 12, 2009 from Shadi Nasseri, responding to his service of documents to Mr. Nasseri. In her letter, she indicates that she “advised [the Plaintiff] not to ever trespass on the [Mr. Nasseri’s] property… the next time [he] set foot on the [Mr. Nasseri’s] property [they would]… call the police for trespass.” The Plaintiff does not see any circumstances under which he would be able to work with Mr. Nasseri in the future.
Shortly after the Hearing with [the Tribunal], the Plaintiff received an email from Linda Leclair at Tarion indicating that, Mr. Boyd will attend to his home to do a quotation with respect to the items that were warranted, he advised Tarion particularly Linda Leclair, that he lost his trust on Mr. Boyd and he preferred an independent contractor do the quotation, however as he mentioned before he believed there was some financial issue between Mr. Boyd and Mr. Nasseri and that was the reason he did not let him come to inspect Major Defect and Tarion sent Mr. Bryan to do inspection.
Mr. Boyd and Mr. Nasseri without the other independent contractor came to the Premises to do the quotation for warranted items, the Plaintiff told him that he would not trust him to do the quotation and he left, immediately he sent a letter to Tarion and Licence Appeal Tribunal and advised all the parties of this situation and since he did not receive any documentation to his request.
20The statement of claim includes particulars of the damages alleged to have been suffered, including psychological damage, and damage to the appellant’s vehicle from the slope deficiencies in the driveway (para. 28). There is also a claim for special damages and future expenses (para. 32).
Decision of the Court Below
21McEwen J. – referred to for convenience as the “application judge” – heard two motions and an application in respect of the appellant’s action. First, he heard a motion by the respondents to dismiss or stay the action on the basis of res judicata, issue estoppel and abuse of process. Second, he considered a motion by the appellant to amend the statement of claim to include certain claims for compensatory damages against Tarion, and to add his wife and children as plaintiffs and include their claims for personal injuries and psychological harm. Third, the application judge heard the application by Master and Nasseri for an order under s. 140 of the Courts of Justice Act.
22The application judge accepted the respondents’ position that the statement of claim was an attempt to relitigate matters already determined by the Tribunal. He stated:
In this action, Baradaran did not seek damages for the two items that the Tribunal found were warranted (the rust on an iron railing and a missing backyard light).
Although the Statement of Claim was difficult to understand, a close reading disclosed that Baradaran’s complaints in this action arose solely from the complaints he made to Tarion, specifically, how they were dealt with by Tarion and adjudicated by the Tribunal. In particular, Baradaran complained that the defendants refused to pay for warranted items, which caused him damage, as well as physical and emotional injuries. There were further allegations that the defendants “breached their contracts” to Baradaran by failing to honour warranties which, again, resulted in the aforementioned losses.
23The application judge stated that any uncertainty as to whether the appellant was seeking to relitigate the same issues in the action that were decided by the Tribunal was resolved by the appellant’s own evidence given at his cross-examination, where he responded affirmatively to the question: “So the construction deficiencies that you’re complaining about in this action are the same construction deficiencies that you complained about to Tarion in 2008 and 2009, aren’t they?”
24The application judge observed that the Tribunal, in dismissing the appellant’s claims for breach of warranty, had already found against the appellant on the liability issues that would need to be determined in the action.
25The application judge dismissed the action after concluding that the decisions of the Tribunal gave rise to issue estoppel. He also observed that the action was barred by the doctrine of res judicata, and that the action constituted a collateral attack on the correctness of the Tribunal’s decisions and an abuse of process.
26With respect to the appellant’s motion to amend his pleadings, the application judge concluded that, if he was wrong with respect to the dismissal of the action, he would have permitted the amendments to the appellant’s own claims, but would have disallowed the amendments to assert claims by the appellant’s spouse and children, without prejudice to their right to commence their own actions or to bring their own motions to be added as plaintiffs.
27With respect to the vexatious litigant application, the application judge considered the appellant’s history of commencing claims against a variety of persons (48 Small Claims Court actions in Toronto since 2003 and 11 actions in the Superior Court since 2007), his obstreperous conduct while appearing before tribunals, the fact that he wrongly held himself out as a licensed paralegal, and his pattern of expanding his grievances to include lawyers who acted against him and judges who had presided over the proceedings. The application judge also considered evidence that the appellant had made complaints to the Law Society of Upper Canada against the respondents’ counsel of record in the Superior Court action, and had reported one judge to the Canadian Judicial Council and another to the Regional Senior Justice. He had failed to pay outstanding costs totalling $4,500 in the action and the $800 awarded by the Tribunal.
28The application judge concluded:
…When one reviews the totality of the proceedings that have been commenced by Baradaran, many of which have been unsuccessful, and when one examines his conduct and his pattern of escalating attacks against other lawyers and members of the judiciary, a finding that he has engaged in vexatious litigation is inescapable.
29The application judge declared the appellant a vexatious litigant and prohibited him from instituting or continuing litigation against Master and Nasseri, their agents, solicitors, employees and assigns, without both leave of the court and payment of all outstanding costs orders against him in the Tribunal proceeding and the action. The order also prohibited the appellant from instituting or continuing proceedings against Tarion and its agents, solicitors, employees and assigns without leave in respect of the two matters dealt with by the Tribunal.
30Tarion was awarded costs in the sum of $3,544.12, and Master and Nasseri were awarded costs of $24,927.14, both payable by the appellant on or before January 3, 2014.
Issues
31The appellant challenges the dismissal of his action and the vexatious litigant order. The issues on appeal are whether the action ought to have been dismissed (specifically, whether the doctrine of issue estoppel in fact operates to preclude all of the claims in the action), and whether the appellant ought to have been declared a vexatious litigant and made subject to the restrictions provided for in the order. If the action is to survive, the appellant seeks an order permitting all of the amendments to the statement of claim that he pursued before the application judge.
32For the reasons that follow, I would allow the appeal in part.
The Dismissal Order
33The application judge dismissed the appellant’s Superior Court action on the basis of issue estoppel, res judicata and abuse of process. Fundamental to his decision was the conclusion that the appellant was seeking in the action to relitigate the very issues that had been determined against him by the Tribunal.
34As the point of departure, it is important to recall that proceedings under the Act do not necessarily preclude a civil action based on the same facts.
35In Metropolitan Toronto Condominium Corp. No. 1352 v. Newport Beach Development Inc., 2012 ONCA 850, 113 O.R. (3d) 673 (“Newport Beach”), this court considered the appeal of an order dismissing a rule 21 motion brought by a new home vendor seeking to dismiss an action against it as an abuse of process. The vendor argued that the claims were for alleged defects in respect of which the owner had already pursued relief under the Act, resulting in a decision against the owner by Tarion. Writing for the court, Laskin J.A. described the statutory scheme, including the right to pursue a claim for breach of statutory warranty and review rights. He referred to s. 13(6) of the Act, which provides that the statutory warranties are in addition to any other rights the homeowner may have. Laskin J.A. held, at para. 76, that Tarion decisions do not give rise to issue estoppel. However, at para. 77, he limited his conclusion to Tarion decisions and left open the question whether issue estoppel would have succeeded if the respondent had unsuccessfully appealed the Tarion decision to the Tribunal.
36The appellant, as part of his record on appeal, filed a transcript of the proceedings before the application judge. It is apparent from the transcript that Newport Beach, although the leading authority on the scope of the Act and whether and to what extent proceedings under the Act may preclude a civil action, was not referred to by any of the parties in the court below. Indeed, the respondents only addressed this case during argument in the appeal at the specific request of the panel.
37On the authority of Newport Beach, the fact that the appellant pursued his complaints under the Act and received certain adverse decisions from Tarion with respect to his claims would not preclude a civil action in respect of the same defects. The appellant’s “admission” that in the action he was complaining about the same defects that he complained about to Tarion, which was relied on both by the application judge and by the respondents in this court, is irrelevant: the appellant was entitled under the Act to engage in the statutory claims process and to pursue a legal action.
38The respondents assert that Newport Beach leaves open the question whether a decision of the Tribunal adverse to the claimant may give rise to issue estoppel, and contend that in this case the application judge correctly gave such effect to the Tribunal’s decisions. The error in this argument however is that the construction defects pleaded in the statement of claim are those that were ultimately found by Tarion to be warranted (the reassessed claims), and not the alleged defects that the Tribunal found were not warranted.
39The respondents submit that, to the extent that the appellant’s claims in the action are based on defects that Tarion reassessed as warranted, but ultimately rejected on the basis of the denial of access to the home (under the February 2010 decision letters), issue estoppel should apply because the Tarion decisions were not appealed to the Tribunal. This argument is met by Newport Beach: a Tarion decision against a homeowner does not give rise to issue estoppel. In any event, the decision letters state that the defects the appellant continued to complain about had been further investigated and were in fact warranted. Rejection of a claim for compensation by Tarion based on lack of access does not negate the existence of a construction defect, or indeed the statutory warranty itself. The Act permits the appellant to pursue his claims in respect of such warranties in a court proceeding.
40In my view, the application judge misconstrued the appellant’s claims and the statutory regime, and therefore wrongly applied the doctrines of issue estoppel, res judicata and abuse of process to preclude all claims asserted in the action. The application judge erred in concluding that the appellant is seeking in this action to relitigate the issues that were decided against him by the Tribunal, and in dismissing the action.
41I recognize that the appellant’s own materials – including parts of the statement of claim, the affidavits he filed in the court below, and indeed the factum he filed in the appeal – may suggest that his action in the Superior Court is about a great deal more than the defects in his home that Tarion has already found to be warranted. For example, the appellant’s affidavit of March 25, 2013 includes many allegations that are irrelevant or only collateral to what is pleaded in the statement of claim, including complaints about the conduct of the lawyers and judges involved in this matter as well as about the Tribunal proceedings, and allegations of corruption and conspiracies.
42The substance of the action however depends on the allegations contained in the statement of claim. The essence of the claim relates to the construction defects that the appellant claims were determined by Tarion to be warranted. It is these claims that the appellant has chosen to assert in a court proceeding.
43If the appellant, notwithstanding how the action is currently pleaded, chooses to pursue items that were determined by the Tribunal against him, the respondents, in addition to any other defences they may have to such specific claims, would be entitled to assert issue estoppel. I would not comment on any such defence, but only observe that the action as pleaded asserts claims that were not already determined against the appellant by the Tribunal, and that are not precluded by issue estoppel. As such, there was no basis for dismissing the action on the respondents’ motion.
The Vexatious Litigant Order
44Section 140(1) of the Courts of Justice Act permits a judge to make a vexatious litigant order where satisfied that the “person has persistently and without reasonable grounds, (a) instituted vexatious proceedings in any court; or (b) conducted a proceeding in any court in a vexatious manner.”
45The impetus for the vexatious litigant order in this case was the respondents’ contention that the appellant, having had recourse to the claims procedure under the Act, had no right to pursue his action in the Superior Court, and that such action was itself a vexatious proceeding. I have rejected that position, and as such the key consideration for the vexatious litigant order in this case falls away.
46The only outstanding proceeding between the appellant and the respondents in the court system (apart from the dormant Small Claims Court action) is the one Superior Court action that the appellant will be permitted to continue. There is no evidence of the appellant having instituted any vexatious proceeding against any of the respondents at this time.
47There is evidence that the appellant has conducted himself in a vexatious manner in respect of the Tribunal proceedings and in the course of the Superior Court action. The application judge described such conduct as obstreperous. While such conduct no doubt makes it difficult for both opposing counsel and the court to understand and deal with the appellant’s claims in the action, is distracting and impedes the proper resolution of the litigation, it does not justify the vexatious litigant order in the terms made by the application judge in this case.
48At the suggestion of the respondents, the application judge, after declaring the appellant a vexatious litigant, made an order that was limited in scope. It was designed to put an end to the Superior Court litigation as well as any future attempts by the appellant to relitigate issues the court believed had already been determined. It was premised on the erroneous conclusion that the Superior Court action itself was vexatious.
49The respondents rely on a volume of legal proceedings pursued by the appellant against other parties, litigation which the appellant contends was warranted given his activities as a paralegal acting for some 500 clients. The application judge observed that it was “difficult to put all the claims [the appellant] has commenced into context given the limited evidence at the application.” Even if such evidence of other actions suggests that the appellant has engaged in a pattern of vexatious litigation against other parties, the concern addressed by the order was to put an end to the appellant’s attempts to litigate against the respondents. Whatever mischief may have been caused by the appellant’s pattern of litigation at large was not addressed by the order in this case which precluded only legal action in the courts by the appellant against the respondents. As such, the appellant’s pattern of litigation against others is not sufficient reason to uphold the vexatious litigant order in this case.
50For all of these reasons, I would set aside the vexatious litigant order. I would also observe that the Superior Court action would benefit from case management under rule 77, and I urge the parties to seek an order in this regard.
The Appellant’s Motion to Amend
51The application judge concluded that, if he had not dismissed the action, he would have allowed the appellant to amend the statement of claim to pursue compensatory damages for depression and property damage and to make resulting minor amendments, subject to any defences the defendants might raise, including any limitation period defence. The application judge would have refused the proposed amendments to add the appellant’s wife and daughters as plaintiffs and claims on their behalf. The order refusing to allow such amendments was without prejudice to the right of the appellant’s wife and children to commence their own actions or to bring their own motions.
52The application judge extended considerable latitude to the appellant to argue the amendment of the statement of claim in the absence of a formal notice of motion. I see no error in his conclusion that, if the action were to continue, the appellant would be entitled to make the proposed amendments to his own claims, but not permitted to add as parties to the litigation and to assert claims by his wife and children. The application judge refused this relief because the appellant had no legal authority to represent such parties at the motion, no notice of motion had been delivered by them, no litigation guardian had been appointed for the children, and no lawyer had been appointed to act on their behalf. There is no reason to interfere with this decision, and I would uphold the decision of the application judge on this point.
Disposition
53For these reasons, I would allow the appeal in part. I would set aside the decision dismissing the appellant’s action, the orders made against the appellant under s. 140 of the Courts of Justice Act, and the costs award of the application judge. I would grant the appellant leave to amend the statement of claim in the terms and to the extent the application judge would have permitted. I would not order costs of the appeal.
Released: August 19, 2014
(KF) “K. van Rensburg J.A.”
“I agree K. Feldman J.A.”
“I agree David Watt J.A.”
