CITATION: Lazi Ventures Inc. v. Carter, 2023 ONSC 578
DIVISIONAL COURT FILE NO.: 316/22 DATE: 20230123
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
LAZI VENTURES INC. Appellant
– and –
PAUL CARTER and ELAINE LAM Respondents
Hershel J. Sahian & Mukta Batra, for the Appellant Eric Turkienicz, for the Respondents
HEARD at Toronto: January 11, 2023 (by videoconference)
REASONS FOR DECISION
Nishikawa J.
Overview
[1] This is an appeal under s. 71 of the Construction Act, R.S.O. c. C.30 (the “Act”). The Appellant, Lazi Ventures Inc. (“LVI”), appeals from the decision of Associate Justice Wiebe of the Superior Court dated May 24, 2022, dismissing the Appellant’s construction lien action: Lazi Ventures Inc. v. Carter, 2022 ONSC 3111.
[2] For the reasons that follow, the appeal is dismissed.
Factual Background
[3] In May 2021, the Respondents, Paul Carter and Elaine Lam, experienced a toilet flood at their home. After an internet search, they contacted “Plumber on Demand” for emergency plumbing services. A plumber attended and advised that it would cost $1,000 to address the plumbing issue. The repair work was completed and the Respondents paid $1,000.
[4] The plumber advised the Respondents that he could address the water damage caused by the flood. When the Respondents asked how much the remediation work would cost, the plumber responded that it would be covered by their home insurance. No quotes or pricing were provided.
[5] Between May 23 to 27, 2021, a crew performed certain remediation work at the Respondents’ property. Mr. Lazi, the “principal” of LVI, attended on May 23, 2021. The Respondents received daily invoices from Plumber on Demand. The Respondents eventually asked the crew to leave. Mr. Lazi advised the Respondents to contact another firm to finish the work. The final invoice showed a total of $33,518.06.
[6] At the request of the Respondents’ insurer, ServiceMaster inspected the site and completed the repair. ServiceMaster provided an estimate of $4,505.04 for the repair work done by Plumber on Demand.[^1]
[7] On June 17, 2021, LVI placed a construction lien on the Respondents’ property. The Respondents received a letter from “Walker Legal Advisers; Counselling/Organisation/Corporation” (“WLA”) signed by Mr. Lazi. The letter stated that because of their refusal to pay the invoice, a construction lien had been registered and threatened legal action if no payment was made.
[8] On July 20, 2021, LVI perfected its lien by commencing an action and registering a Certificate of Action. On July 27, 2021, the Respondents received a further letter from WLA enclosing the Statement of Claim and requiring payment. The Respondents delivered a Statement of Defence on August 19, 2021.
[9] In another proceeding, on September 13, 2021, Black J. of the Superior Court granted the Law Society of Ontario’s motion for an injunction against WLA and Mr. Lazi prohibiting them, and any entity controlled by them, from advertising or holding themselves out as persons who may practice law or provide legal services in Ontario: Law Society of Ontario v. Lazi, 2021 ONSC 6128. WLA was required to take down its website and any social media accounts offering legal services and to change its name to something that did not refer to legal services.
The Decision
[10] The Respondents brought a motion pursuant to s. 47 of the Act to strike the Statement of Claim and discharge the claim for lien.
[11] Section 47 of the Act states as follows:
Power to discharge
47 (1) The court may, on motion, order the discharge of a lien,
(a) on the basis that the claim for the lien is frivolous, vexatious or an abuse of process; or
(b) on any other proper ground.
Power to vacate, etc.
(1.1) The court may, on motion, make any of the following orders, on any proper ground:
An order that the registration of a claim for lien, a certificate of action or both be vacated.
If written notice of a lien has been given, a declaration that the lien has expired or that the written notice of the lien shall no longer bind the person to whom it was given.
An order dismissing an action.
[12] In the Decision, the Associate Justice granted the Respondents’ motion to strike the claim and discharge the claim for lien. The Associate Justice found that there was no triable issue with respect to LVI’s lien claim, contract claim, and claim for quantum meruit because, based on the evidence, there was no contract with LVI, the entity that registered the lien. The Respondents had no knowledge or dealings with LVI and “Lazi Ventures Inc.” did not appear on any invoice or document given to them. While LVI had a registered name, “Plumbers on Demand,” that name was not used on any document. The name used was “Plumber on Demand,” a trademark registered to Martin Lazi.[^2]
[13] On the claim for unjust enrichment, the Associate Justice found that there was a triable issue, but that the proceeding was vexatious and an abuse of process. The Associate Justice found that allowing LVI to use the legal process to further its deceptive scheme would bring the administration of justice into disrepute. The Associate Justice awarded the Respondents $14,000 in substantial indemnity costs on the motion.
Preliminary Issue
[14] On the day of the hearing, the Appellant sought an adjournment of the appeal on the basis that it was bringing a motion for leave to amend its Statement of Claim to add Mr. Lazi personally as a plaintiff. The Appellant submitted that adding Mr. Lazi as a plaintiff would dispose of the issue regarding the absence of a connection between LVI, the entity that registered the lien, and Plumber on Demand, the entity that performed the work.
[15] I denied the request to adjourn with reasons to follow.
[16] The Appellant failed to satisfy me of any valid basis for the adjournment request. The Appellant had not brought a motion to adjourn and provided no affidavit evidence to support its request. The Appellant had ample time to bring a motion before the hearing date and offered no reasonable explanation as to why an adjournment was being sought at the hearing, with only a day’s notice to the Respondents.
[17] In addition, the Appellant sought to adjourn the appeal to take a step that it could have taken at a much earlier stage of the proceedings. Mr. Lazi could have been a named plaintiff from the outset of the action, or the statement of claim could have been amended before the motion before the Associate Justice. Moreover, given that the action was dismissed, it is not clear to me that the Appellant would be entitled to bring a motion for leave to amend the statement of claim.
[18] While the Appellant argued that an adjournment would avoid a multiplicity of proceedings and narrow the issues that this court would have to address, I fail to see how this would be the case. If the appeal was adjourned and the Appellant was granted leave to amend the statement of claim, the issues on appeal would no longer be the same. In respect of a multiplicity of proceedings, it is the Appellant who commenced those actions, which number approximately 45, naming only LVI as plaintiff.
[19] Accordingly, it was not in the interests of justice to grant an adjournment to allow the Appellant to seek leave to amend the statement of claim, which would only delay a decision on the merits of the appeal.
Issues
[20] The Appellant raises the following issues on appeal:
(a) Did the Associate Justice err in finding that there was no triable issue as it relates to unjust enrichment?
(b) Did the Associate Justice err in finding that the Appellant’s claim for unjust enrichment was vexatious and an abuse of process?
[21] The Appellant does not challenge the Associate Justice’s finding of no triable issue in respect of its lien, contract and quantum meruit claims.
Analysis
Standard of Review
[22] The appellate standards of review apply. Questions of law are reviewed on a correctness standard and questions of fact are reviewed on a standard of palpable and overriding error. Questions of mixed law and fact are reviewed on a standard of palpable and overriding error, except where the error relates to an extricable question of law, in which case, a correctness standard applies.
Did the Associate Justice Err in Dismissing the Appellant’s Claim for Unjust Enrichment?
[23] The Appellant submits as one of the grounds of its appeal that the Associate Justice erred in finding no triable issue on its claim for unjust enrichment. However, as noted above, unlike the Appellant’s claims for breach of contract and quantum meruit, the Associate Justice did not find that there was no triable issue on the unjust enrichment claim. The Associate Justice recognized that given the evidence of work done at the property, there was potential merit to the unjust enrichment claim.
[24] The Appellant’s claim for unjust enrichment was dismissed, not on the basis of no triable issue, but because the Associate Justice found that there was no triable issue that the unjust enrichment claim was vexatious and an abuse of process. Accordingly, this ground of appeal fails.
Did the Associate Justice Err in Finding that the Appellant’s Claim Was Vexatious and an Abuse of Process?
[25] In support of its position that the Associate Justice erred in finding that there was no triable issue that its claim was vexatious and an abuse of process, the Appellant raises the following arguments:
(i) The Associate Justice failed to consider that a number of the “hallmarks” of a vexatious proceeding did not exist;
(ii) The Associate Justice failed to take into account the evidence that work was performed and that LVI’s unjust enrichment claim therefore had merit;
(iii) The Appellant’s conduct in sending letters under the name of WLA was an attempt to assert a legitimate right; and
(iv) the Associate Justice unfairly considered LVI’s conduct outside the proceeding as opposed to in the litigation process.
[26] The Respondents submit that in dismissing the action, the Associate Justice appropriately exercised his discretion under s. 47 of the Act.
[27] The Appellant has not raised as a ground of appeal that the Associate Justice made an error of law in interpreting s. 47 of the Act. The issue of whether the Associate Justice erred in finding that the Appellant’s claim was vexatious and an abuse of process is a question of mixed law and fact, to which the standard of palpable and overriding error applies.
[28] In my view, the Associate Justice made no palpable and overriding error in finding LVI’s unjust enrichment claim vexatious and an abuse of process.
[29] There is no basis to the Appellant’s argument that the Associate Justice failed to take into account that it had a meritorious claim. In finding LVI’s claim vexatious and an abuse of process, the Associate Justice did not disregard the work performed on the Respondents’ property. The Associate Justice recognized that a crew was on the property for a number of days and that there were invoices for the equipment and timesheets for the labourers. The Associate Justice identified a “significant issue” as to the quantum of the claim: Decision, at para. 31.
[30] The Appellant’s argument, in essence, is that a potentially meritorious claim cannot be dismissed as vexatious and an abuse of process. This is incorrect. In Re Lang Michener and Fabian (1987), 59 O.R. (2d) 353, [1987] O.J. No. 355 (H.C.), at para. 20, Henry J. summarized the “hallmarks” of a vexatious proceeding as follows:
(a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding;
(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;
(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;
(d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;
(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;
(f) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious; and
(g) persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings.
[31] It is implicit in paragraph (e) above, that a proceeding could be vexatious even where there was originally a good cause of action. The existence of a good cause of action originally does not, after considering the whole history of the matter, preclude a proceeding from being found vexatious.
[32] The Appellant acknowledges that it is not necessary that all of the above hallmarks be present for a proceeding to be deemed vexatious. However, the Appellant argues that the Associate Justice failed to consider whether the other hallmarks were present and relevant.
[33] In my view, the Associate Justice made no palpable and overriding error in considering the factors identified in Lang Michener. Given that this proceeding is at a relatively early stage, a number of the characteristics of a vexatious proceeding (specifically, paragraphs (a), (d), (f) and (g) above) would not exist.
[34] In the Decision, the Associate Justice relied on paragraph (e) above, that the court must look at the whole history of the matter and not just whether there was originally a good cause of action. The Associate Justice considered the evidence before him, which included affidavits of three other individuals who had hired Plumber on Demand and had experiences similar to the Respondents. On the evidence before him, the Associate Justice found that:
(a) The conduct of Plumber on Demand was consistent with a pattern of other cases in 2021 in which Plumber on Demand was called in on an urgent basis to remediate water damage from interior flooding;
(b) In each case, Plumber on Demand avoided being honest and transparent with the homeowners about its costs at the outset by insisting that the relevant insurance company would pay the costs. This deceptive conduct was intended to and did disarm the homeowners, with the result that Plumber on Demand gained access to the work;
(c) During the work and thereafter, Plumber on Demand rendered invoices that had all the trappings of grossly excessive charges;
(d) The Plumber on Demand forces left before properly finishing the work;
(e) Mr. Lazi then misrepresented himself to the homeowners as practicing law by sending them letters under the letterhead of WLA. In the letters, Mr. Lazi threatened legal action if the alleged outstanding invoice was not paid. The WLA letters included an offer to discount if the homeowner paid early. This was no doubt for the purpose of getting a quick “settlement”;
(f) Black J. found that the WLA letters were nothing but attempts to pressure plumbing customers into complying with LVI’s demands; and
(g) Finally, LVI registered a claim for lien and started the lien action.
[35] The Appellant has not argued on appeal that the Associate Justice made a palpable and overriding error in making those findings. Nor has the Appellant directed me to any authority to support its position that the Associate Justice could only consider LVI’s conduct in this proceeding, and that he erred in considering LVI’s conduct as a whole. In any event, the Associate Justice found that LVI’s use of the court’s process was the final step in a scheme that was grounded in oppressive and unfair practices, as detailed above. The Associate Justice also found that the action was brought for an improper purpose, including the harassment and oppression of other parties.
[36] In Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 at para. 37, the Supreme Court of Canada held that the doctrine of abuse of process “engages the inherent power of the court to prevent the misuse of its procedure, in a way that would… bring the administration of justice into disrepute[.]” (Internal quotations omitted). The primary focus of the abuse of process doctrine is the integrity of the adjudicative function of the court as a branch of the administration of justice.
[37] In the circumstances, I agree with the Associate Justice’s finding that to allow LVI to pursue its action in those circumstances would bring the administration of justice into disrepute. LVI was not forthcoming about the amount it would be charging the homeowners, deflecting their questions by convincing them that it would be paid by their insurer. LVI then sought to use the lien regime to coerce homeowners into paying inflated bills while the work was left unfinished. LVI followed up by sending intimidating letters that gave the false impression that they were sent by a law firm and attempted to coerce payment quickly by threatening legal action and by offering a discount.
[38] In A.J. (Archie) Goodale Ltd. v. Risidore Brothers Ltd. (1975), 8 O.R. (2d) 427 (C.A.) at p. 432, the Court of Appeal found that, “where it is apparent at any early stage that the plaintiff has no basis for a lien claim, it would be an abuse of process to allow the summary procedures to be used as a subterfuge for processing a personal claim in summary fashion.” As the Respondent notes, but for the lien claim, the action would be within the jurisdiction of the Small Claims Court.
[39] Based on the wording of s. 47 of the Act, a lien claim can be dismissed as frivolous, vexatious or an abuse of process. In exercising the discretion to discharge the lien and dismiss the action, the Associate Justice found that it was both vexatious and an abuse of process because of LVI’s unfair and oppressive tactics. The Appellant has failed to satisfy me that the Associate Justice made a palpable and overriding error in doing so. I agree that to allow LVI to misuse the legal process in furtherance of its deceptive and coercive scheme would bring the administration of justice into disrepute.
[40] Based on my findings above, it is not necessary for me to consider the Respondents’ arguments based on the doctrine of unclean hands and the Consumer Protection Act, which were also not considered by the Associate Justice.
Conclusion
[41] For the foregoing reasons, the appeal is dismissed.
[42] The Respondents shall have their costs of the appeal on a partial indemnity basis, which total $7,152.56 inclusive.
“Nishikawa J.”
Released: January 23, 2023
CITATION: Lazi Ventures Inc v. Carter, 2023 ONSC 578
DIVISIONAL COURT FILE NO.: 316/22 DATE: 20230123
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
LAZI VENTURES INC. Appellant
– and –
PAUL CARTER and ELAINE LAM Respondents
REASONS FOR DECISION
Nishikawa J.
Released: January 23, 2023
[^1]: An invoice attached to the original affidavit sworn by the Respondent, Paul Carter, showed a ServiceMaster estimate for $5,253.94, which he deposes was the estimate for the work to be performed by ServiceMaster.
[^2]: At the hearing on appeal, the Appellant argued that the use of “Plumber on Demand” as opposed to “Plumbers on Demand” was a typo. Before the Associate Justice, however, no issue of mistake or misnomer was raised. Moreover, LVI did not rely on s. 6(1) of the Act, which provides that as long as there is no prejudice, wrongly naming the lien claimant is a minor error or irregularity that does not invalidate a claim for lien: Decision, at para. 23.