CITATION: C&M Properties Inc. v. 1788333 Ontario Inc., 2015 ONSC 706
DIVISIONAL COURT FILE NO.: 407/14 DATE: 20150129
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
C&M PROPERTIES INC. and 2176069 ONTARIO LIMITED
Plaintiffs
(Respondents)
– and –
1788333 ONTARIO INC., 2085257 ONTARIO LTD., 2176542 ONTARIO LTD., 1586896 ONTARIO INC., STEPHEN QUINN and REG QUINN
Defendants
(Appellants)
Timothy S. B. Danson and
Marjan Delavar, for the Plaintiffs (Respondents)
Arthur L. Hamilton, for the Defendants (Appellants)
HEARD at Toronto: January 29, 2015
D. L. CORBETT J. (ORALLY)
[1] The defendants appeal the decision of Master Abrams dated 29 August, 2014, in which the Master permitted the plaintiffs to amend their claim on the basis of the proposed Fresh as Amended Statement of Claim, and denied some of the proposed amendments in the draft Statement of Defence and Counterclaim of the defendants. She made a limited order in respect of production of further documents and deferred the issue of a discovery plan until the pleadings issues had been completed and the new pleadings had been exchanged.
[2] The defendants’ four grounds of appeal are as follows, briefly stated:
(i) The defendants argue that the Master erred in refusing certain of their amendments on the grounds that those amendments pleaded impermissible similar fact evidence. The argument is really distilled into two points. First, the defendants argue that the proposed similar fact evidence is permissible and should have been allowed and second, that the essence of the allegations contained in those impugned pleadings was a defence of abuse of process that was asserted to the substantive claims of the plaintiff.
(ii) The second ground that was raised by the defendants is that the learned Master erred in permitting the plaintiffs to assert claims of misrepresentation and other extra-contractual claims in the face of an entire agreement clause and other terms of the agreement between the parties that would seem to preclude extra-contractual claims. The learned Master found, on the strength of the authority of the Supreme Court of Canada’s decision in Tercon Contractors Ltd. v. British Columbia (Transportation and Highway) 2010 SCC 4, [2010] S.C.J. No. 4, that these claims were not doomed to failure and as a result should be at least allowed to proceed through the pleadings stage.
(iii) The third ground raised by the defendants is that the learned Master erred by not ordering a further and better affidavit of documents as sought, given the history of the matter, which goes back to June 2010, where there have been previous production orders and a significant history of production issues.
(iv) The fourth point that was raised by the defendants is that a discovery plan ought to have been put into place by the Master at the time of this motion rather than deferred until after an exchange of pleadings.
[3] I deal with the pleadings motions first. In respect to the defendants’ pleading, I agree completely with the Master’s assessment of the impugned pleadings and I agree with her conclusion that they ought not to be permitted. There is no hard and fast rule about the pleading of similar fact evidence. In this case, however, the general allegations, to summarize them in my own words rather than those of the pleadings, is that the plaintiffs engaged in a pattern of aggressive litigation in order to wring concessions out of their litigation opponents. This is not a coherent allegation of similar fact evidence and would have the effects of expanding the scope of discovery, introducing numerous collateral issues in the case, driving costs up, and not assisting the trier of fact in getting to the bottom of whether there were breaches of contract or of duty in this particular case. Indeed, it would have been an error in principle for the Master to permit these allegations to go forward.
[4] I do not accept the argument that these pleadings amount to an affirmative defence at law called “abuse of process”. The authorities relied on in respect to this suggestion refer to the claim of civil abuse of process, not an affirmative defence of abuse of process. The elements of the claim of civil abuse of process are not expressly pleaded, no remedy is sought in respect to it, and the facts as pleaded would not give rise to such a claim. This is nothing more and nothing less than a series of allegations of similar fact to the effect that the plaintiff is an aggressive, perhaps vexatious litigant, who engages in litigation for the purpose of wringing commercial advantage out of the other side. That sort of pleading will almost never be permitted and certainly should not have been permitted in this case.
[5] The second point raised by the defendants is one that has more merit. The agreement contains an entire agreement clause, in what I would characterize as fairly standard language, and also contains other provisions that expressly negative (i) representations that have not been included in the contract and (ii) any assumption of risk by the vendor.
[6] In terms of background, this is a sale of a car dealership that was under construction and so apportioning risk in respect to the anticipated construction costs is something to which the parties should be taken to have put their minds.
[7] The plaintiffs have had an inconsistent position about the status of the contract. I say that, not to be critical, but to indicate that this issue has evolved over the course of the litigation. At one point, the claim by the plaintiffs was for rescission of the agreement of purchase and sale. Naturally, if the agreement is rescinded, any of the terms in that agreement, including the whole agreement clause, and clauses that negative the extra-contractual representations, would cease to have any effect or be enforceable, because the contract itself would be unenforceable. As a result, allegations inconsistent with the terms of the contract could be tenable if the contract itself is not enforced.
[8] The claim for rescission is no longer advanced by the plaintiffs and, as a result, to coin a phrase from the defendants, the plaintiffs are not negativing or avoiding the contract or seeking to avoid it: they cannot now enforce the contract on the one hand, and yet avoid its terms on the other.
[9] The learned Master cited the Supreme Court of Canada’s decision in Tercon, which stands for the proposition that in some circumstances a party may be able to avoid the effect of a particular term in a contract while still being able to rely on the rest of the contract. In particular, that case was dealing with an exclusion clause but, as noted in other jurisprudence, the principles in Tercon were broad enough to extend to an entire agreement clause or other clauses limiting the scope of reliance upon extra-contractual representations.
[10] The language in Tercon has to be examined carefully. Justice Cromwell was careful to state that he was not, in that decision, departing from the long historic principle that contracts are to be enforced between parties, and it will be an exceptional case where a party will be able to avoid exclusion clauses to which they agreed in a commercial bargain.
[11] Here, we have contracting parties that both have business sophistication, although they may not have equal sophistication when it comes to construction projects. It appears to me that the plaintiffs will have an uphill battle in enforcing the contract, on the one hand, while avoiding some of its terms, on the other. Nonetheless, I cannot conclude that the Master erred in permitting the plaintiff to plead these claims and requiring the defendants to plead over against them. If, as expected, the defendants plead over by denying that claims of extra-contractual representations can survive the express terms of the contract, then the plaintiffs will be required in their reply to plead a basis on which the contractual limitations and exclusions can be avoided. It will then be up to the defendants to determine whether they wish to proceed with a Rule 21 motion, a Rule 20 motion, or to carry on with production and discoveries and address that issue later in the litigation.
[12] This leaves the issues of the fresh affidavit of documents and the discovery plan. These are not decisions about what should or should not be done, but rather, when things should or should not be done. These are discretionary decisions that the Master decided on the basis of what she considered to be most convenient, given her disposition of the pleadings issues. Certainly there is no palpable and overriding error. The Master was not clearly wrong in exercising her discretion as she did and I see no basis to interfere.
[13] Accordingly, for these reasons, the appeal is dismissed.
[14] I wish to address one final point. This appeal was brought in Divisional Court before a single judge on the basis that the order of the Master was interlocutory in some respects and final in others, and that where there are both final and interlocutory orders from the Master, the appeal may be brought in Divisional Court.
[15] As I indicated to counsel at the outset, it appeared to me that the entire order below was interlocutory and that the appeal should have been to a single judge in Motions Court rather than a single judge in Divisional Court. However, I was fully prepared. I am both a single judge in Divisional Court and, on other days, a single judge in Motions Court, and I saw no benefit to the administration of justice, or to the parties, in adjourning this into another courtroom on another day because of my view of the jurisdictional issue and the nature of the orders below.
[16] However, the nature of the orders below, and thus of the decision on this appeal, may be relevant to the question of where any appeal from my order should go, and so I want it clearly understood that, in my view, the order of the Master was interlocutory, and, as a result, I have decided an appeal of an interlocutory decision of the Master as a single judge of the Superior Court of Justice.
[17] I reach this conclusion for the following reason. The only basis on which to consider the Master’s decision below a final order is if the impugned pleadings of the defendants are characterized as an affirmative defence or claim. Clearly they are not claims, since no remedy is sought in respect to them. As I indicated earlier, they are not pleaded as an affirmative claim of abuse of civil process for which a remedy is sought and the Master has not dismissed any such claim. In my view, what was pleaded is not an affirmative defence of abuse of process - to the extent that there may be such a thing - and I make no finding about whether there is such a thing – the impugned pleadings were nothing more and nothing less than similar fact allegations.
[18] As a result, there is no final order. There is simply determination that a particular pleading is not proper and should not be permitted. It is an interlocutory pleadings motion.
[19] The parties have indicated to me what they were seeking in terms of costs. The plaintiffs have been successful and shall have costs on a partial indemnity basis of $5,000 inclusive.
COSTS
[20] I have endorsed the back of the Appeal Book, “For reasons given orally, the appeal is dismissed with costs to the plaintiffs fixed at $5,000, inclusive, payable forthwith.”
___________________________ D. L. CORBETT J.
Date of Reasons for Judgment: January 29, 2015
Date of Release: February 4, 2015
CITATION: C&M Properties Inc. v. 1788333 Ontario Inc., 2015 ONSC 706
DIVISIONAL COURT FILE NO.: 407/14 DATE: 20150129
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
C&M PROPERTIES INC. and 2176069 ONTARIO LIMITED
Plaintiffs
(Respondents)
– and –
1788333 ONTARIO INC., 2085257 ONTARIO LTD., 2176542 ONTARIO LTD., 1586896 ONTARIO INC., STEPHEN QUINN and REG QUINN
Defendants
(Appellants)
ORAL REASONS FOR JUDGMENT
D. L. CORBETT J.
Date of Reasons for Judgment: January 29, 2015
Date of Release: February 4, 2015