Court File and Parties

CITATION: Gaddam v. Eng, 2008 ONCA 240

DATE: 20080404

DOCKET: C47561

COURT OF APPEAL FOR ONTARIO

DOHERTY, GILLESE and EPSTEIN JJ.A.

BETWEEN:

KRISHNAVENI GADDAM (CHAVALI) and REDDY RAJOGOPAL CHAVALI

Applicants (Respondents in Appeal)

and

KAREN ENG (ALSO KNOWN AS MRS. ANTHONY PAPAELLIAS) EVA ENG RE/MAX WEST REALTY INC., EMMANUEL S.T. GOULART AND LARRY ANDREW TUREWICH

Respondents (Appellants)

Counsel: Stuart Forbes for the appellants Andrew Lewis for the respondents

Heard and orally released: March 27, 2008

On appeal from the judgment of Justice I.V.B. Nordheimer of the Superior Court of Justice dated July 3, 2007.

ENDORSEMENT

[1] The order of Justice Nordheimer made under s. 140(3) of the Courts of Justice Act is a discretionary order and is entitled to deference from this court. With respect, however, we are satisfied that he made two significant errors. First, the motion judge misapprehended the evidence when he indicated that the appellants, before they completed the settlement of the underlying action, were “fully aware of the applicants’ interest in that proceeding, including their efforts to be added as parties”. In fact, while the appellants were aware that the respondents wanted to be added as parties, they were not aware until later that the respondents were claiming a beneficial ownership in the property. To the point of the settlement, the respondents had not taken the position that they were beneficial owners, but rather had insisted that they were not.

[2] The second error made by the motion judge arises out his treatment of the issue to be determined on the motion before him. He saw the issue as primarily one involving the principle of issue estoppel as arising out of the settlement of the previous action. While the settlement was a factor in the overall evidentiary picture, we do not think an application under s. 140(3) is properly treated and determined on issue estoppel principles. Rather, a motion under that section triggers a much broader review which focuses to a large degree on the conduct of the vexatious litigants who are seeking leave to proceed with the action. Counsel for the respondents put it well when he said the “totality of the circumstances” must be examined.

[3] In this case, the totality of the respondents’ conduct indicates that they set out on a devious course of conduct to circumvent the s. 140 order that had been made against them in 1998. They did so with the cooperation of Mr. Turewich. Turewich advanced the litigation throughout while the respondents misrepresented their position with respect to the property. They even did so under oath. At some point, there was apparently a falling out between the respondents and Turewich. The respondents then sought to proceed with the litigation in their own names and this led to the motion before Nordheimer J. The obvious victims of this course of conduct are the appellants who are the defendants in the underlying action. If the respondents are allowed to proceed, the appellants will be put to the expense and aggravation of further litigation in a matter they had every reason to believe was settled. In our view, the respondents’ conduct cannot be condoned in any system of justice that seeks to maintain the support of the public. The conduct of the respondents cannot be described as anything other than an abuse of process.

[4] The appeal is allowed, the order of Nordheimer J. is set aside, and in its place an order is made refusing leave to the respondents to proceed with the litigation.

[5] In our view, it is appropriate to order costs to the appellants in the amount of $10,000. These costs are referable both to the proceedings before Nordheimer J. and the proceedings on appeal and are also inclusive of disbursements and GST.

“Doherty J.A.”

“E.E. Gillese J.A.”

“G. Epstein J.A.”