COURT FILE NO.: CV-22-1773-0000 DATE: 2023-06-08
SUPERIOR COURT OF JUSTICE – ONTARIO 491 Steeles Avenue East, Milton ON L9T 1Y6
RE: Stephen B. Sutherland, Plaintiff -and- Canadian Imperial Bank of Commerce, Defendant
BEFORE: C. Chang J.
COUNSEL: S. Sutherland, self-represented R. Aisenberg, for the Defendant
HEARD: May 30, 2023 (in-person)
Endorsement
Overview
[1] The defendant (“CIBC”) brings this motion for orders dismissing or staying this action pursuant to rule 21.01(3)(d) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, or striking out the statement of claim pursuant to rules 25.11(b) or (c), or striking out the statement of claim pursuant to rule 21.01(1)(b) or requiring the plaintiff to post security for costs. It submits that the claims advanced by the plaintiff in this action are res judicata and should be barred from proceeding, but, if allowed to proceed, the unpaid costs orders against him warrant an order for security for costs.
[2] The plaintiff (“Mr. Sutherland”) opposes the motion on the basis that the court should refuse to apply res judicata on the basis of fairness. On the motion for security for costs, Mr. Sutherland submits that he is impecunious and should nonetheless be allowed to proceed with his action without posting security for CIBC’s costs. Mr. Sutherland also brought a cross-motion for various relief, which was adjourned sine die by the order of Conlan J. dated May 9, 2023.
[3] The claims advanced by Mr. Sutherland in this action relate to the consequences of power of sale proceedings taken against his recreational property in Muskoka (the “Cottage”) and his residential property in Aurora (the “Home”). CIBC was involved in the proceedings related to the Cottage (the “Cottage Sale Action”), but not the one related to the Home (the “Home Sale Action”). CIBC also commenced another action against Mr. Sutherland for collection of line of credit and credit card accounts (the “Collection Action”).
Facts
[4] The facts relevant to this motion are undisputed and can be summarized as follows:
a. CIBC held a first mortgage against the Cottage; b. other parties held a subordinate mortgage against the Cottage that was cross-collateral to those parties’ mortgage against the Home; c. CIBC commenced the Cottage Sale Action, but was not party to the Home Sale Action, which was commenced by others; d. in the midst of the Cottage Sale Action, one of the subordinate mortgagees took an assignment of CIBC’s mortgage and CIBC discontinued that proceeding; e. CIBC subsequently commenced the Collection Action under Milton court file number CV-20-3008-0000; f. Mr. Sutherland advanced a counterclaim in the Collection Action in which he claimed damages against CIBC for its alleged misconduct in the Cottage Sale Action; g. by order of Chozik J. dated May 20, 2021, that counterclaim and parts of Mr. Sutherland’s statement of defence were struck out as disclosing no reasonable cause of action or defence; h. Mr. Sutherland did not appeal from that order; i. Conlan J. granted summary judgment in the Collection Action on October 20, 2021; j. Mr. Sutherland appealed that judgment, which appeal the Court of Appeal for Ontario dismissed by order dated June 29, 2022; k. Mr. Sutherland commenced this action by notice of action issued September 12, 2022 in which he advances the same claims as in his counterclaim in the Collection Action; and l. CIBC delivered a very brief statement of defence and brought this motion.
Issues
[5] The issues to be decided on this motion are as follows:
a. Should Mr. Sutherland’s action be dismissed or stayed pursuant to rule 21.01(3)(d) as being frivolous, vexatious or otherwise an abuse of the court’s process? b. Should Mr. Sutherland’s statement of claim be struck out pursuant to rules 25.11(b) or (c) as being scandalous, frivolous, vexatious or an abuse of the court’s process? c. Should Mr. Sutherland’s statement of claim be struck out pursuant to rule 21.01(1)(b) as disclosing no reasonable cause of action? d. Should Mr. Sutherland be required, if his action is allowed to proceed, to post security for CIBC’s costs?
Issue 1: Should the action be dismissed or stayed pursuant to rule 21.01(3)(d)?
Parties’ Positions
[6] CIBC argues that Mr. Sutherland advances in this action claims, issues and allegations of material fact that are identical to those advanced in his counterclaim in the Collection Action. Given that Chozik J. struck out that counterclaim and no appeal was taken from her order, res judicata applies and prevents Mr. Sutherland from re-litigating those identical claims and issues.
[7] Mr. Sutherland admits that he is advancing in this action the same claims, issues and allegations of material fact that he unsuccessfully advanced in his counterclaim in the Collection Action. However, he submits that this matter falls within exceptions to the doctrines of res judicata and abuse of process and that his action should be allowed to proceed. I understand Mr. Sutherland’s reference to those “exceptions” to mean that the court should exercise its discretion not to apply those doctrines because CIBC’s failure to disclose a document (the “PBA”) in advance of the motion before Chozik J. in the Collection Action resulted in an unfair process. Therefore, to apply res judicata and/or abuse of process in these circumstances would result in unfairness and an injustice.
Law
[8] Rule 21.01(3)(d) of the Rules of Civil Procedure provides:
21.01 (3) A defendant may move before a judge to have an action stayed or dismissed on the ground that,
(d) the action is frivolous or vexatious or is otherwise an abuse of the process of the court,
and the judge may make an order or grant judgment accordingly.
[9] On a motion under rule 21.01(3)(d), the moving party bears the onus of proving that it is “plain, obvious and beyond doubt” that the plea could not succeed due to the application of res judicata or abuse of process and the court “should invoke its authority to stay an action for abuse of process only in the clearest of cases” (see: Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141, at para. 27).
[10] Extrinsic evidence is permitted and the judge hearing the motion may make factual determinations, “including with respect to whether the facts in an underlying action were already litigated in earlier proceedings” and must “take a hard look at the factual background, and especially the position and conduct of the parties” (see: Dosen, at para. 28).
[11] The doctrine of res judicata has two branches: cause of action estoppel and issue estoppel.
[12] Cause of action estoppel “prohibits a litigant from bringing an action against another party when that same cause of action has been determined in earlier proceedings by a court of competent jurisdiction, and also prevents a party from re-litigating a claim that could have been raised in an earlier proceeding” (see: Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc., 2023 ONCA 363, at para. 42).
[13] Issue estoppel is narrower than cause of action estoppel and prohibits “the re-litigation of an issue that has already been decided in an earlier proceeding, even where the cause of action is different in the two proceedings” (see: Bryton Capital, at para. 43). Three conditions are required before issue estoppel can operate: 1) the same issue was decided in an earlier proceeding; 2) the prior judicial decision was final; and 3) the parties to the earlier and current proceedings are the same (see: Bryton Capital, at para. 43). Even where the requirements for issue estoppel are met, the court retains a residual discretion to refuse to apply the doctrine on the basis of fairness according to the circumstances of the case (see: Fresco v. Canadian Imperial Bank of Commerce, 2022 ONCA 115, at para. 81).
[14] Under the doctrine of abuse of process, the court has discretion “to prevent re-litigation where necessary to preserve the integrity of the adjudicative process” (see: Plate v. Atlas Copco Canada Inc., 2019 ONCA 196, at para. 92). Re-litigation should be avoided unless the circumstances dictate that same is necessary to enhance the credibility and effectiveness of the adjudicative process as a whole, for example where “fairness dictates that the original result should not be binding in the new context” (see: Plate, at para. 93).
[15] One of the circumstances where actions have been struck as an abuse of process is where the matter is, in essence, an attempt to re-litigate a matter that the court has already decided (see Wright v. Urbanek, 2019 ONCA 823, at para. 8). The “recycling of argument considered and rejected” by the court constitutes an abuse of process (see: Midland Resources Holding Limited v. Shtaif, 2018 ONCA 743, at para. 4).
Decision
[16] I find that CIBC has discharged its onus of proof. In my view, it is plain, obvious and beyond doubt that the claims advanced and the issues raised by Mr. Sutherland in this action cannot succeed due to the operation of res judicata and because they are an abuse of process.
[17] Mr. Sutherland admitted that he raises in this action the same claims and issues that were raised in his statement of defence and counterclaim in the Collection Action, parts of which (including the entire counterclaim) were struck out as disclosing no reasonable cause of action or defence. My own comparison of the statement of claim in this action to Mr. Sutherland’s pleading in the Collection Action confirms the accuracy of Mr. Sutherland’s admission, as the documents are identical in substance and effectively identical in content.
[18] I therefore find that both branches of res judicata apply to prevent Mr. Sutherland from re-litigating in this action his claims and issues in the Collection Action. Cause of action estoppel applies because the causes of action advanced in that counterclaim were finally determined by Chozik J., who struck out that counterclaim after hearing a motion that Mr. Sutherland vigorously opposed. Furthermore, issue estoppel also applies because: 1) the issues raised in this action and those raised in the struck-out portions of his pleading in the Collection Action are the same; 2) the order of Chozik J. was final, as no appeal was taken; and 3) the parties to this action and the Collection Action are the same.
[19] I do not accept Mr. Sutherland’s argument that I should refuse to apply issue estoppel on the basis of unfairness or injustice, as there is no evidence to support such a finding. Indeed, the only alleged unfairness that Mr. Sutherland points to is CIBC’s failure to produce the PBA in the Collection Action before bringing its motion to strike. Beyond the fact that no evidence is permissible on that type of motion (see: rule 21.01(2)), Mr. Sutherland’s remedy would properly have been a motion to set aside the Chozik J. order or an appeal from it. He chose neither.
[20] I also find that this action constitutes an abuse of process. Mr. Sutherland is recycling in this action the arguments that he made in his struck-out pleading in the Collection Action, which arguments Chozik J. considered and rejected. Furthermore, fairness does not dictate that the decision of Chozik J. should not be binding in the current circumstances, as, among other things, there is no “new context”. Mr. Sutherland’s allegations against CIBC and the bases for those allegations remain unchanged from what they were in the Collection Action.
[21] Based on the evidence, I find this to be one of those clearest of cases that warrants dismissal of this action as frivolous, vexatious or otherwise an abuse of process.
Issue 2: Should the statement of claim be struck out pursuant to rules 25.11(b) or (c)?
Parties’ Positions
[22] The parties advance the same arguments on the rule 25.11 issue as they do on the rule 21.01(3)(d) issue.
[23] CIBC argues that, for the same reasons that this action is frivolous, vexatious and an abuse of process under rule 21.01(3)(d), it is also frivolous, vexatious and an abuse of process under rule 25.11 and Mr. Sutherland’s statement of claim should be struck out accordingly.
[24] Mr. Sutherland argues that, for the same reasons that this action should not be dismissed under rule 21.01(3)(d), being unfairness and injustice, his statement of claim should also not be struck out under rule 25.11.
Law
[25] Rules 25.11(b) and (c) of the Rules of Civil Procedure provide:
25.11 The court may strike out or expunge all or part of a pleading or other document, with or without leave to amend, on the ground that the pleading or other document,
(b) is scandalous, frivolous or vexatious; or (c) is an abuse of the process of the court.
[26] The law is settled that the applicable threshold for denying leave to amend pleadings that have been struck out is a high one. Leave to amend should be denied only in the clearest of cases and should be granted where the applicable deficiencies can be cured and the granting of leave to amend would not occasion prejudice on the other party (see: China Yantai Friction Co. Ltd. v. Novalex Inc., 2023 ONSC 3424, at para. 41).
Decision
[27] If I am wrong in my conclusion on the rule 21.01(3)(d) issue, I would strike out Mr. Sutherland’s statement of claim, without leave to amend, pursuant to rules 25.11(b) or (c).
[28] As outlined above, based on Mr. Sutherland’s admissions and on my review of Mr. Sutherland’s pleading and the decision of Chozik J. in the Collection Action and of the statement of claim in this action, res judicata applies and operates to bar Mr. Sutherland from re-litigating the Collection Action and recycling his arguments from that case. In my view, that bar renders this action frivolous, vexatious and an abuse of process within the meaning of rule 25.11 and Mr. Sutherland’s statement of claim should be struck out accordingly.
[29] Given that both branches of res judicata apply to the claims and issues advanced in Mr. Sutherland’s statement of claim, no amendments could be made that would render it anything other than an improper attempt to re-litigate the claims and issues that he unsuccessfully advanced in the Collection Action. Therefore, in my view, this is one of those clearest of cases where leave to amend should not be granted.
Issue 3: Should the statement of claim be struck out pursuant to rule 21.01(1)(b)?
Parties’ Positions
[30] On the rule 21.01(1)(b) issue, the parties again advance the same arguments as they do on the rule 21.01(3)(d) and rule 25.11 issues.
Law
[31] Rules 21.01(1)(b) and (2)(b) of the Rules of Civil Procedure provide:
21.01 (1) A party may move before a judge,
(b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence,
and the judge may make an order or grant judgment accordingly.
(2) No evidence is admissible on a motion,
(b) under clause (1)(b).
[32] The applicable test on a motion under rule 21.01(1)(b) is “whether, assuming that the facts as stated can be proved, and reading the pleading generously and with allowances for drafting deficiencies, it is ‘plain and obvious’ that an action or a claim within the action cannot succeed” (see: Abbasbayli v. Fiera Foods Company, 2021 ONCA 95, at para. 20).
Decision
[33] If I am wrong in my conclusions on both the rule 21.01(3)(d) and rule 25.11(b) and (c) issues, I would strike out Mr. Sutherland’s statement of claim, without leave to amend, pursuant to rule 21.01(1)(b) as failing to disclose a reasonable cause of action.
[34] As outlined above, after hearing Mr. Sutherland’s admissions, reviewing his statement of claim in this action, his pleading in the Collection Action and the May 20, 2021 decision of Chozik J., I have no doubt that both branches of res judicata apply to bar this action. Therefore, reviewing the statement of claim generously and assuming that the facts stated in it are capable of proof, I find it to be plain and obvious that this action cannot succeed.
[35] As also outlined above, given the operation of res judicata, there are no amendments that could be made to Mr. Sutherland’s statement of claim that would render it anything other than an improper attempt to re-litigate his unsuccessful case in the Collection Action. Therefore, this is one of those clearest of cases where leave to amend should be denied.
Issue 4: Should Mr. Sutherland be required to post security for costs?
Parties’ Positions
[36] CIBC argues that, if this action is permitted to proceed, Mr. Sutherland should be required to post security for its costs pursuant to rules 56.01(c) and (e) of the Rules of Civil Procedure, as he has failed to pay two costs orders against him. Those orders are of Conlan J. dated October 20, 2021 and of the Court of Appeal dated May 30, 2022; both made in the Collection Action. At para. 41 of its factum, CIBC requests that security for costs be posted in the total amount of $75,000.00 payable as follows:
a. $35,000.00 within sixty days of my order; b. $10,000.00 by no later than thirty days before the matter is scheduled for a pre-trial conference; and c. $30,000.00 by no later than sixty days before the start of trial.
[37] Mr. Sutherland admits that he has not paid the two costs orders made against him in the Collection Action, but argues that he should not be required to post security for costs, as he is impecunious and the interests of justice militate against an order for security for costs. He also argues that he shouldn’t be required to post security for costs because, under the Transfer of Charge pursuant to which CIBC assigned its mortgage against the Cottage, the transferee agreed to indemnify CIBC in respect of its costs of this action.
Law
[38] Rule 56.01(1)(c) and (e) of the Rules of Civil Procedure provide:
56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,
(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part; (e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or
[39] On a motion under rule 56.01, the defendant bears the initial burden of demonstrating that there appears to be good reason to believe that the matter falls under one of the enumerated subrules, which burden is not onerous (see: Kirpak Services Inc. v. Kulvelis, 2022 ONSC 3724, at para. 28).
[40] Once the defendant has discharged its burden, the plaintiff then bears the burden of demonstrating that an order for security for costs would be unjust by demonstrating any one of the following:
a. it has sufficient or appropriate assets to satisfy a costs order; b. it is impecunious and justice demands that it be allowed to continue with its action because it is not plainly devoid of merit; and c. if it cannot establish impecuniosity, it meets the high threshold of satisfying the court that it has a reasonable chance of success in its action.
(see: SRK Woodworking Inc. v. Devlan Construction Ltd. et al., 2022 ONSC 6229, at para. 13).
Decision
[41] If I am wrong in my conclusions on dismissing or staying this action and on striking out the statement of claim, I would order that Mr. Sutherland post security for costs.
[42] I find that CIBC has discharged its burden of demonstrating that this matter falls under one of subrules 56.01(1)(c) and (e). Given Mr. Sutherland’s admission respecting the unpaid costs orders of Conlan J. and the Court of Appeal, subrule 56.01(1)(c) applies. Given the operation of res judicata, subrule 56.01(1)(e) applies.
[43] I also find that Mr. Sutherland has failed to discharge his burden of proof under the second branch of the applicable test. Not only has he admitted that he “has no money”, he has also failed to adduce any evidence that he has sufficient or appropriate assets available to pay a costs order. Indeed, Mr. Sutherland has failed to provide any applicable financial information whatsoever. He has also failed to adduce any evidence of impecuniosity and to meet the high threshold of demonstrating that his claims in this action have a reasonable chance of success, particularly given the operation of res judicata. Indeed, as outlined above, the operation of res judicata is dispositive of this entire action.
[44] I therefore find that, in the circumstances and considering the overall justice of this case, it would not be unjust to make an order for security for costs.
[45] I do not accept Mr. Sutherland’s argument that he should not be required to post security for costs because the assignee of CIBC’s mortgage against the Cottage has agreed to indemnify CIBC for its costs of this action. That indemnity has nothing to do with those costs. The applicable language clearly states that the indemnity covers “loss, costs, damages, liabilities, actions, claims, debts, demands and expenses… due to, arising from, or in any manner whatsoever relating to this transfer of the Mortgage [emphasis added]”.
[46] I also do not accept CIBC’s argument respecting the appropriate amount of security for costs to be posted by Mr. Sutherland. In my view, given the issues in this action, a more appropriate amount would be a total of $50,000.00 payable as follows:
a. $20,000.00 within ninety days of today’s date; b. $5,000.00 no later than forty-five days before the scheduled pre-trial conference; and c. $25,000.00 no later than sixty days before the start of trial.
Summary
[47] For the reasons above, I find that, given the operation of res judicata, Mr. Sutherland’s claims are frivolous, vexatious and/or an abuse of process and cannot proceed.
[48] In my view, this action should therefore be dismissed pursuant to rule 21.01(3)(d) of the Rules of Civil Procedure. That rule provides the court with jurisdiction to stay or dismiss the action, but, in the circumstances of this case, the practical effect of either would be the same. Therefore, in my view, the interests of finality would be better served by the dismissal of this action as opposed to a stay.
[49] If I am wrong in my conclusion respecting rule 21.01(3)(d), then Mr. Sutherland’s statement of claim in this action should be struck out pursuant to rules 25.11(b), 25.11(c) or 21.01(1)(b), without leave to amend.
[50] If I am wrong in my conclusions respecting rules 21.01(3)(d), 25.11(b), 25.11(c) and 21.01(1)(b), then I would order Mr. Sutherland to post security for CIBC costs in the amounts and in the manner set out above.
Costs
[51] CIBC was successful on its motion and is therefore entitled to its costs, which it claims on a partial indemnity basis in the all-inclusive amount of $16,526.40.
[52] Mr. Sutherland does not deny CIBC’s entitlement to costs, but takes issue with the claimed quantum, which he says is excessive and should be reduced to $10,000.00. By comparison, Mr. Sutherland, a self-represented litigant, claims in his bill of costs the all-inclusive amount of $181,270.15, which amount he revised to $36,000.00 in oral argument.
[53] Although I find the amounts claimed by CIBC to be reasonable generally, senior counsel’s time was spent on unrelated matters (e.g., communicating with counsel in the Home Sale Action) and on clerical tasks or those better suited to junior counsel (e.g., communications with the court, receipt and review of CaseLines invitations and confirmation forms).
[54] Taking into consideration the factors set out in rule 57.01(1) of the Rules of Civil Procedure, including the relatively low complexity of the motion, the very brief statement of defence, the very early stage of the action, the experience of counsel, the rates charged, the time spent and the reasonable expectations of the unsuccessful party, I find the all-inclusive amount of $12,500.00 to be fair, reasonable and proportional in the circumstances.
Disposition
[55] I therefore make the following orders:
a. this action is dismissed; and b. Mr. Sutherland shall pay to CIBC its costs of this action, inclusive of this motion, on a partial indemnity scale, which are fixed in the all-inclusive amount of $12,500.00 and payable within thirty days of today’s date.
Closing Remarks
[56] I sympathize with Mr. Sutherland for the ordeal that he appears to have gone through in losing both the Cottage and the Home to power of sale, as well as the resultant consequences.
[57] However, his proper avenue of redress is not the attempted re-litigation of claims that have already been finally determined by the courts. I accept his stated genuine belief that CIBC should have done more for him as a long-term and loyal customer, but, as stated by Conlan J. in his endorsement on the summary judgment motion in the Collection Action, “‘Should-haves’ are not part of the equation.”.
[58] Furthermore, based on his motion materials and his written and oral submissions before me, Mr. Sutherland’s “fight” is actually with those persons whom he calls “the Deceptive Third Parties” (which group does not include CIBC) and against whom he may still be in litigation.
“C. Chang J.” Date: June 8, 2023