Canadian Mortgage and Housing Corporation v Hart, 2023 ONSC 2786

Court File and Parties

Court File No.: 10-21322 Reasons Released: May 10, 2023

Superior Court of Justice – Ontario

Between:

CANADA MORTGAGE AND HOUSING CORPORATION Plaintiff

- and-

MELISSA HART and PATRICIA HART Defendants

Before: ASSOCIATE JUSTICE McGRAW

Counsel: I. Houle, for the Plaintiff M. Hart, for the Defendants, Self-Represented

Motion Heard: In Writing

Reasons For Endorsement

I. Introduction

1This motion in writing was referred by the Registrar pursuant to Rule 2.1.01(7). The Registrar received a letter dated March 7, 2022 from Plaintiff’s counsel requesting an order under Rule 2.1.01 dismissing the Defendants’ motion seeking to set aside the Plaintiff’s default Judgment (the “Motion”) on the basis that the Motion is frivolous or vexatious and/or an abuse of the process of the court.

2As set out in my Endorsement dated June 30, 2022, I concluded that, on its face, there were legitimate concerns that the Motion is frivolous or vexatious or an abuse of the court’s process. Pursuant to Rule 2.1.01(3)(1), I directed the Registrar to give notice to the Defendants that the court was considering making an order under Rule 2.1.01 dismissing or staying the Motion. I also stayed the Motion pending the disposition of this dismissal motion or further order of the court pursuant to section 106 of the Courts of Justice Act (Ontario).

3Pursuant to Rule 2.1.01(3)(2), the Plaintiff and the Defendants filed written submissions. The Defendants subsequently attempted to file additional materials, however, they were not filed with the Registrar and not permitted under Rule 2.1.01.

II. Background

4On September 30, 2010, the original Plaintiff, First National Financial GP Corporation (“FNF”) obtained default Judgment against the Defendants in this action in the amount of $327,964.66 with respect to a mortgage debt plus costs on substantial indemnity scale and post-Judgment interest at 1.65% (the “Judgment”). On February 16, 2011, FNF assigned the Judgment to the current Plaintiff, Canada Mortgage and Housing Corporation (“CMHC”). CHMC obtained an Order to Continue on August 27, 2020. The property at issue, located at 27 Plumtree Lane in Grimsby, was sold by FNF under power of sale on February 28, 2011 leaving a deficiency of approximately $9,189.44. The Defendant Patricia Hart (“Patricia”) made an assignment in bankruptcy in April 2011. In February 2017, the Defendant Melissa Hart (“Melissa”) received a statement of account from Canada Revenue Agency on behalf of CMHC for a “MIF deficiency judgment of $12,336.67 plus additional interest”.

5When CMHC took steps to enforce the Judgment in 2018, the Defendants commenced an action against FNF each claiming $1,000,000 in general damages and $2,000,000 in punitive damages arising from the enforcement of the mortgage. By Reasons For Decision dated April 10, 2018, at the request of CMHC and FNF, Glustein J. dismissed the action on the basis that it was frivolous, vexatious and an abuse of process of the court and that the allegations could not support a cause of action ( Hart v. First National Financial GP Corporation, 2018 ONSC 2336 ). Less than 2 months later on May 31, 2018, the Defendants commenced another action claiming the same damages based on the same facts. By Reasons For Decision dated September 14, 2018, this second action was also dismissed by Glustein J. as frivolous, vexatious and an abuse of process of the court and that the Defendants were attempting to relitigate his prior decision ( Hart v. First National Financial GP Corporation, 2018 ONSC 5405 ).

6On October 24, 2019, the Defendants brought a motion to set aside the Judgment. By Reasons for Judgment dated November 25, 2020, Skarica J. dismissed the motion on the basis that the Defendants had not presented any new evidence or moved with diligence to set aside the Judgment and this was the third time the Defendants were seeking legal redress on claims that were frivolous and vexatious ( Canada Mortgage and Housing Corporation v. Hart, Court File No. 10-21322, Unreported: November 25, 2020 (Delivered Orally)). Skarica J. ordered the Defendants to pay costs of $22,325.63 on a substantial indemnity scale. The Defendants’ appeal of Skarica J’s decision was dismissed by the Court of Appeal on January 24, 2022 ( Canada Mortgage and Housing Corporation v. Hart, 2022 ONCA 51 ).

7On January 31, 2022, the Defendants brought the Motion in which they again seek to set aside the Judgment. The Defendants unilaterally scheduled a return date of March 2, 2022.

8By Order dated June 22, 2022, Krawchenko J. ordered the Defendants to attend examinations in aid of execution on July 19 and 22, 2022.

9More detailed background regarding these proceedings can be found in the decisions cited above.

III. The Law and Analysis

10Rule 2.1.01 of the Rules of Civil Procedure states:

“(1) The court may, on its own initiative, stay or dismiss a proceeding if the proceeding appears on its face to be frivolous or vexatious or otherwise an abuse of the process of the court.

(2) The court may make a determination under subrule (1) in a summary manner, subject to the procedures set out in this rule.

(3) Unless the court orders otherwise, an order under subrule (1) shall be made on the basis of written submissions, if any, in accordance with the following procedures…”

11Frivolous and vexatious proceedings can be defined as those lacking a legal basis or legal merit or commenced without reasonable grounds ( Gao v. Ontario (Workplace Safety and Insurance Board), 2014 ONSC 6497 ( Gao 2 ) at para. 16). Myers J. summarized the purpose of Rule 2.1 in Gao v. Ontario (Workplace Safety and Insurance Board), 2014 ONSC 6100:

“6 Rule 2.1 is a statutory response to a significant and longstanding problem. Vexatious proceedings can cause very substantial costs to be incurred by responding parties. They also cause inefficient and inappropriate utilization of court resources. Knights Village Non-Profit Homes Inc. v. Chartier, [2006] O.J. No. 4436 at para. 16.

7 The Supreme Court of Canada has recognized that ensuring access to justice is the greatest challenge to the rule of law in Canada today. Hryniak v. Mauldin, 2014 SCC 7, at para. 1. The Supreme Court determined that the goal of providing fair and just processes for resolving civil disputes efficiently, affordably and proportionately requires a "culture shift", i.e. new ways of thinking about handling civil matters. Rule 2.1 provides a new approach to managing potentially frivolous and vexatious proceedings.

9 Rule 2.1 is not meant to apply to close calls. It is not a short form of summary judgment. But that does not mean that it is not to be robustly interpreted and applied. Where a proceeding appears on its face to meet the standards of frivolous, vexatious or an abuse of process, the court should be prepared to rigorously enforce the rule to nip the proceeding in the bud. Rigorous enforcement of this rule will not only protect respondents from incurring unrecoverable costs, but should positively contribute to access to justice by freeing up judicial and administrative resources that are so acutely needed to implement the "culture shift" mandated by the Supreme Court of Canada. The new rule tailors appropriate procedural fairness for the category of cases involved and is an example of early resolution of civil cases that is very much in line with the goals set out in Hryniak.”

12The Court of Appeal summarized the development of the law under Rule 2.1 in Scaduto v. Law Society of Upper Canada, 2015 ONCA 733:

“7 Rule 2.1 is a relatively new rule that came into force on July 1, 2014. The motion judge has decided a number of cases which have helped to delineate both the procedure and the test to be applied under the rule: see Gao v. Ontario (Workplace Safety and Insurance Board), 2014 ONSC 6100, 37 C.L.R. (4th) 1 ("Gao No. 1"); Gao v. Ontario (Workplace Safety and Insurance Board), 2014 ONSC 6497, 37 C.L.R. (4th) 7 ("Gao No. 2"); Raji v. Border Ladner Gervais LLP, 2015 ONSC 801; and, Covenoho v. Ceridian Canada, 2015 ONSC 2468.

8 Under this line of authority, the court has recognized that the rule should be interpreted and applied robustly so that a motion judge can effectively exercise his or her gatekeeping function to weed out litigation that is clearly frivolous, vexatious, or an abuse of process. However, the use of the rule should be limited to the clearest of cases where the abusive nature of the proceeding is apparent on the face of the pleading and there is a basis in the pleadings to support the resort to the attenuated process.

9 We fully endorse that case law and the guidance that has been provided by the motion judge in the interpretation and operation of r. 2.1. This approach is summarized in Raji, at paras. 8-9, as follows:

[R]ule 2.1 is not for close calls. Its availability is predicated on the abusive nature of the proceeding being apparent on the face of the pleadings themselves. No evidence is submitted on the motion... [T]here are two conditions generally required for rule 2.1 to be applied. First, the frivolous, vexatious, or abusive nature of the proceeding should be apparent on the face of the pleading as required by the rule. Second, there should generally be a basis in the pleadings to support the resort to the attenuated process of rule 2.1... This second requirement is not in the rule and is not a fixed requirement. It strikes me as a guideline that reminds the court that there are other rules available for the same subject matter and that resort to the attenuated process in rule 2.1 should be justified in each case.

See also Gao (No. 2), at paras. 11-18; and Covenoho, at paras. 6-7. We also recognize that the case law will develop as the rule becomes more widely utilized.” ( Scaduto at paras. 7-9).

13Certain factors or signs may assist the court in determining whether an action is a bona fide civil dispute or the product of vexatiousness. These characteristics include rambling discourse characterized by repetition and pedantic failure to clarify, multiple proceedings involving the same issues, inappropriately ingratiating statements, repeated misuse of legal and technical terms and ultimatums ( Van Sluytman v. Canada (Department of Justice), 2017 ONSC 481 (“Van Sluytman-Canada”) at para. 6; Van Sluytman v. Orillia Soldiers’ Memorial Hospital, 2017 ONSC 692 (“Orillia”) at paras. 9-11), Van Sluytman-Canada and Orillia aff’d at Van Sluytman v. Orillia Soldiers’ Memorial Hospital, 2018 ONCA 32 (“Van Sluytman Appeal”); Van Sluytman v. Brewster, 2017 ONSC 1957 (“Brewster”) at paras. 9-12; Gao 2 at paras. 15-16; Khan v. Krylov & Co., 2017 ONCA 625 at para. 6).

14Grandiose claims, including claims for damages, usually in the millions, and relief that no reasonable person would expect to obtain are further evidence of frivolous and vexatious claims ( Van Slutyman-Canada at para. 11; Van Sluytman Appeal at para. 9). Actions that have no possibility of proceeding to a successful conclusion or fail to advance any justiciable cause of action are also a hallmark of frivolous and vexatious proceedings and an abuse of the process of the court ( Van Sluytman-Canada at para. 15; Orillia at para. 16; Van Sluytman Appeal at para. 8).

15In Van Sluytman Appeal, the Court of Appeal held:

“8 We do not accept the appellant's contention that the application judges erred in dismissing his actions due to deficiencies in his pleadings. Having considered the appellant's pleadings in the relevant proceedings, we agree with the application judges that they fall far short of meeting the pleadings requirements applicable to all litigants. Further, they fail to advance any justiciable cause of action.

9 Simply put, the proceedings in question are facially frivolous and vexatious. The appellant's pleadings fail to contain any coherent narrative or a concise statement of the material facts in support of the wrongs sought to be alleged. Instead, they contain rambling discourse, impermissible attachments, grandiose complaints of injury and damages claims, and bald assertions that repeat similar, if not identical, allegations detailed in multiple other proceedings commenced by the appellant. On this ground alone, it was open to the application judges to dismiss the appellant's actions under R. 2.1.01(1).

11 We also reject any suggestion that the deficiencies in the appellant's pleadings could be cured by appropriate amendments. The record indicates that, in cases where the court provided the appellant with an opportunity to amend his pleadings in an effort to remedy their clear deficiencies, he failed to do so.”

16In Khan, the Court of Appeal highlighted the caution which must be exercised when considering remedies under Rule 2.1.01:

“[7] Justice Myers provided an important caution, at para. 18 of Gao (No. 2): [page583] It should be borne in mind however, that even a vexatious litigant can have a legitimate complaint. It is not uncommon for there to be a real issue at the heart of a vexatious litigant's case . . . Care should be taken to allow generously for drafting deficiencies and recognizing that there may be a core complaint which is quite properly recognized as legitimate even if the proceeding itself is frivolously brought or carried out and ought to be dismissed.

11As distasteful as this allegation might be, it is not entirely implausible. A cautious approach must be taken, as Myers J. noted in Husain v. Craig, 2015 ONSC 1754 (S.C.J.), at para. 10, when he asked: "what if the plaintiff's allegations are true"?

12Rule 2.1 is an extremely blunt instrument. It is reserved for the clearest of cases, where the hallmarks of frivolous, vexatious or abusive litigation are plainly evident on the face of the pleading. Rule 2.1 is not meant to be an easily accessible alternative to a pleadings motion, a motion for summary judgment or a trial.”

17In considering the Plaintiffs’ materials and submissions, I have adopted the standard with respect to self-represented litigants set out by J. DiLuca J. in Orillia and Brewster:

“…I am not holding his statement of claim and motion material to the standard regularly expected with material prepared by counsel. More importantly, I have attempted to read past the bad drafting to assess whether the claim reveals anything that could possibly be a genuine cause of action.” ( Orillia at para. 12)

18This is consistent with the Supreme Court endorsement of the Statement of Principles on Self-represented Litigants and Accused Persons (2006) established by the Canadian Judicial Council ( Pintea v. Johns, 2017 SCC 23 at para. 4). It is the court’s duty to accommodate a self-represented litigant’s unfamiliarity with the litigation process in a reasonable and practical manner to enable them to present their case to the best of their ability subject to the requirement that all litigants must comply with the Rules of Civil Procedure including with respect to the permissible contents of pleadings ( Sanzone v. Schechter, 2016 ONCA 566 at paras. 35 and 37; Van Sluytman Appeal at para. 10).

19For the reasons that follow, I conclude that the Motion is frivolous and vexatious and an abuse of the court’s process. For completeness, I have reviewed the additional written submissions of the Defendants. These submissions would not change my conclusions.

20The Motion represents the fourth time that the Defendants have commenced a proceeding regarding the Judgment since the Plaintiff took steps to enforce it. On all 3 previous occasions, the actions in 2017 and 2018 and the motion in 2020 (upheld on appeal in 2022), the courts held that the Defendants’ proceedings were frivolous, vexatious and an abuse of the court’s process and that the Defendants were relitigating matters previously decided without any new, different or cogent evidence. I reach the same conclusions here.

21On January 31, 2022, approximately one week after the Court of Appeal upheld Skarica J’s decision, the Defendants brought the Motion. The Defendants’ Notice of Motion dated February 28, 2022 states only that they seek to set aside or vary an order. The Defendants’ affidavits and written submissions confirm that they are again seeking to set aside the Judgment on the grounds of fraud and facts arising after the Judgment was made under Rule 59.06(2).

22In support of the Motion, the Defendants filed Melissa’s affidavit sworn February 23, 2022 and her supplementary affidavit sworn May 27, 2022. In their responding submissions on this motion dated July 4, 2022, the Defendants claim that there are two Judgments. They submit that whereas the motion before Skarica J. was to set aside the “deficiency judgment” of $9,189, the present Motion seeks to set aside the Judgment in the amount of $327,964.66 “on the grounds of fraud which has not yet been heard in the Superior Court of Justice. Therefore, there are two separate and distinct arguments”. This is incorrect.

23There is one Judgment. It is the Judgment which was obtained by FNF on September 20, 2010. There is a deficiency owing under the Judgment which CMHC wishes to enforce. It is the same Judgment which Skarica J. refused to set aside on the basis of fraud or facts discovered after the Judgment was granted under Rule 59.06(2) and which the Court of Appeal upheld. This is abundantly clear from the decisions of Skarica J. and the Court of Appeal.

24In his Reasons, Skarica J. stated:

“The defendants have – here, have provided no new evidence to set aside the default judgment, or to justify any further civil proceedings regarding the sale of the Plum Tree residence. The defendants seek to re-litigate old issues already decided. The defendants since 2010/2011 have not moved with any diligence to set aside the default judgment that is now almost 10 years old. There is no new cogent evidence, just opinions and speculation from a defendant whose evidence is not credible. Given the passage of time and no cogent evidence presented to justify the setting aside of the default judgment or to justify any further new litigation, the plaintiffs would be seriously prejudiced by the setting aside of the default judgment and/or being forced to do any further civil proceedings regarding the plaintiffs’ actions and the sale of 27 Plum Tree Lane, Grimsby.”

25The Court of Appeal agreed with Skarica J. that the Defendants failed to move with any diligence or identify any factual basis on which the Judgment could be set aside on the basis of fraud or subsequently discovered facts and that no cogent evidence had been adduced to support a claim of fraud (para. 3).

26The Defendants have again brought the Motion to set aside the Judgment under Rule 59.02(2)(a). In my view, by bringing the Motion, the Defendants are attempting to relitigate the motion before Skarica J. and the subsequent appeal. This is compounded by the fact that both Skarica J. and Glustein J. previously found that the Defendants were relitigating issues with respect to the Judgment. In their responding submissions, the Defendants explicitly argue that their motion before Skarica J. “should have succeeded as the Plaintiff had already taken enforcement in 2011.”

27As with the motion before Skarica J., the Defendants have not provided any new or cogent evidence to set aside the Judgment on the basis of fraud or otherwise. Further, their affidavits in support of the Motion and submissions on this Rule 2.1.01 motion rely almost entirely on the record which was before Skarica J., in particular, the Plaintiff’s affidavit evidence. Skarica J. held that the evidence before him had previously been before Glustein J. In their affidavits on the Motion, the Defendants make numerous legal submissions previously made (including misrepresentation and the alleged existence of sufficient equity). They also may be advancing some legal arguments for the first time (it is not clear from the record), however, these are also based on evidence which was previously before the court.

28The Defendants also filed a brief affidavit from Melissa sworn March 8, 2022 in which she states that the Defendants were not served with CMHC’s Order to Continue until February 25, 2022. In the Defendants’ responding submissions, Melissa advises that the parties agreed to the Order to Continue. It is not clear if the Defendants are asserting that the timing of service of the Order to Continue is grounds to set aside the Judgment. To the extent that they are, this is not evidence of fraud or a basis to set aside the Judgment.

29Dismissing the Motion is also consistent with the purpose of Rule 2.1.01. Significant court resources have been expended on the Defendants’ numerous attempts to argue and reargue issues related to the Judgment. Notwithstanding previous court findings that the Defendants’ various proceedings are frivolous, vexatious and an abuse of the court’s process, and Skarica J’s finding that no further litigation is justified, they continue to bring new proceedings soon after the previous one is dismissed based on the same evidence and facts. This continues to cause prejudice to CHMC which wishes to collect on the balance of the Judgment and has obtained an order compelling the Defendants to attend on examinations in aid of execution. Dismissing the Motion will help ensure that the court’s scarce resources are not continually consumed by litigation which has been decided multiple times to the detriment of other litigants with legitimate disputes who seek access to the justice system.

30Having considered all of the submissions and circumstances, I am satisfied that the Motion is a clear case of a proceeding which is frivolous, vexatious and an abuse of the court’s process.

IV. Disposition and Costs

31Order to go dismissing the Motion. If the parties cannot agree on the costs of the Motion and this motion to dismiss, they may file written costs submissions, not to exceed 4 pages (excluding attachments such as Costs Outlines) on a timetable to be agreed upon by the parties.