Court of Appeal for Ontario

Date: 2019-01-11

Docket: M49710 (M49016)

Panel: Rouleau, van Rensburg and Roberts JJ.A.

Between

Byeongheon Lee Moving Party

and

Richcraft Homes Ltd. Responding Party

Counsel

Byeongheon Lee, acting in person

John D. Dempster, via teleconference, for the responding party

Heard: December 10, 2018

Reasons for Decision

Background

[1] This is a panel review of two orders of single judges of this court. The first motion judge refused an extension of time for the moving party, Byeongheon Lee, to move for leave to appeal an order of a single judge of the Divisional Court. The second motion judge refused an extension of time for Mr. Lee to seek a panel review of the first motion judge's order.

[2] In August 2015, Mr. Lee commenced an action against the respondent Richcraft Homes Ltd. ("Richcraft"), the owner of a commercial plaza, asserting that as the owner of Jay-Pee Dry Cleaners, he had suffered business losses of $200,000 and special damages of loss of income and loss of equipment in the amount of $150,000.

[3] The substance of the claim is that Mr. Lee's use of and access to the dry cleaning premises was interfered with by another tenant that operated a daycare from three other units at the plaza, that the landlord ignored his complaints, threatened to terminate the lease, and ultimately did terminate the tenancy after seeing a mattress on the premises and insisting the premises were being used as residential accommodation.

Motion to Strike and Default

[4] Richcraft was properly served with the statement of claim, did not defend the action, and was noted in default. After learning of the claim from Mr. Lee, Richcraft moved in June 2016 to set aside the noting in default under r. 19.03 and to strike out the statement of claim as disclosing no reasonable cause of action under r. 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[5] Richcraft's motion was supported by the affidavit of its chief operations officer. The affidavit appended a draft statement of defence and the affiant deposed that the facts pleaded in the defence were true. The draft defence stated that the plaintiff was not a party to the lease, which was between Richcraft and Jay-Pee Dry Cleaners 2004 Inc. ("Jay-Pee"), and had no cause of action in his personal capacity. It also asserted that the lease was properly terminated after the tenant permitted the premises to be used as residential sleeping accommodations and failed, after notice, to cure the default.

[6] Mr. Lee responded to the motion with his own affidavit, essentially deposing to the facts alleged in his statement of claim and attaching proof of service of the claim.

The Lease Issue

[7] Neither party's materials included a copy of the lease. In the course of argument, the master asked to see the lease, presumably in order to determine whether, as Richcraft contended, Mr. Lee had no personal claim as a tenant of the property. The lease that was provided by Richcraft's counsel was dated in 2009 and was between Richcraft as landlord and Jay-Pee as tenant. Mr. Lee's primary concern, as expressed to this court, is his contention that Richcraft misled the master by providing the wrong lease. Mr. Lee provided a copy of a lease dated January 1, 2010, which included his name as guarantor.

Master's Decision

[8] The master concluded that Mr. Lee had no apparent standing under the lease. He also stated that, while the statement of claim contained grievances against the landlord, it did not articulate a claim for damages based on a recognizable cause of action. He stated that the only possible cause of action would have been for a breach of the landlord's covenants and wrongful termination of the lease, but that these grounds were not pleaded in a comprehensive or understandable form. The master noted that nothing in the claim alleged that the lease was not properly terminated or explained how Mr. Lee, in his personal capacity, had a right to sue. The master refused leave to amend because the plaintiff was not a proper party to sue for damages under the lease. The master's order dismissing Mr. Lee's claim was dated June 7, 2016.

Divisional Court Appeal

[9] Mr. Lee appealed the master's order to a single judge of the Divisional Court. The appeal was dismissed on June 16, 2017. The judge concluded that the master applied the correct legal test, that there was evidence to support his conclusion that Mr. Lee had no standing or personal cause of action, and that he was correct in concluding that the statement of claim on its face did not disclose a cause of action. He also stated that the master had "good reason" to refuse leave to amend the statement of claim and that a dismissal of the action was the only possible outcome.

First Motion Judge's Decision

[10] Mr. Lee then sought leave to appeal the Divisional Court order to this court. He emailed Richcraft's counsel his notice of motion for leave to appeal on July 7, 2017, three days after the 15-day time limit for such a motion. He subsequently brought a motion for an order to extend the time for leave to appeal. The motion was set down and heard in April 2018. The first motion judge dismissed the motion, on the grounds that Mr. Lee, although having a bona fide intention to appeal, had not adequately explained his delay in moving forward with the motion for leave to appeal, and that the motion appeared to lack merit because Mr. Lee's appeal raised questions of fact.

Second Motion Judge's Decision

[11] The second motion judge dismissed Mr. Lee's motion for an extension of time to seek a panel review of the order of the first motion judge. He found that Mr. Lee's explanation for the five-week delay in bringing the motion for a panel review was not compelling, and that his application for review of the first motion judge's order was without merit, as the first motion judge had provided detailed and cogent reasons for denying the extension of time, including that Mr. Lee was attempting to appeal the Divisional Court decision based on factual errors, and he could point to no legal error.

Panel Review

[12] Mr. Lee then brought a motion before this panel seeking to review the order of the second motion judge. The motion was opposed by Richcraft. Counsel for Richcraft fairly agreed that the panel should proceed to review the order of the first motion judge if it was inclined to reverse the decision of the second motion judge, and made submissions accordingly, seeking to support both orders.

[13] For the reasons that follow, we have decided to set aside the orders of both motion judges in this matter, and to extend the time for Mr. Lee to bring his motion for leave to appeal the Divisional Court order, dated June 16, 2017, that upheld the master's order dismissing his action.

Legal Analysis

Test for Extension of Time

[14] The test for extending time is whether the justice of the case requires that an extension be given. While each case depends on its own circumstances, the court will typically take into consideration (a) whether the moving party formed a bona fide intention to appeal within the relevant time period; (b) the length of, and explanation for, the delay in filing; (c) any prejudice to the responding parties occasioned by the delay; and (d) the merits of the proposed appeal. This is the appropriate test whether the motion is to extend time to appeal, or to extend time to file a motion for leave to appeal: Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, 114 O.R. (3d) 636, at para. 15.

[15] In our view, the justice of the case strongly favours an extension of time for Mr. Lee to file his notice of leave to appeal. These grounds apply equally to this panel's review of the second motion judge's order.

Bona Fide Intention and Delay

[16] First, not only did Mr. Lee intend to move for leave to appeal to this court, he communicated this intention to Richcraft by preparing and sending by email his notice of motion for leave to appeal. It was only three days late. The real delay here was in the motion to extend time. Mr. Lee only brought this motion more than nine months after purporting to serve Richcraft. This delay was a significant period of time that was not accounted for, even considering that Mr. Lee was not represented by legal counsel. In Miller Manufacturing and Development Co. v. Alden (1979), 13 C.P.C. 63 (Ont. C.A.), a case referred to by the first motion judge, a lengthy delay in filing a notice of appeal and perfecting the appeal after having served the notice of appeal, led the court to doubt the firmness of the appellant's intention to appeal and resulted in prejudice to the respondent. Such inferences however were not available in the present case. As the first motion judge found, Mr. Lee always maintained an intention to appeal and Richcraft did not claim prejudice. In our view, in the absence of prejudice to Richcraft this unexplained delay, on its own, is not sufficient to deny Mr. Lee's request for an extension of time.

Merits of the Proposed Appeal

[17] Second, in our view the leave to appeal motion has a reasonable chance of success. There were arguable errors in the orders of the court below in striking the statement of claim without leave to amend.

Jurisdictional Issues: Rule 21 vs. Rule 25.11

[18] Richcraft's motion to strike was brought under r. 21, as a motion to dismiss a claim that discloses no reasonable cause of action. Since rule 21 motions are required to be heard by judges, the master was unable to hear the motion under this rule. Instead, he agreed at the hearing to consider the motion to strike under r. 25.11 (which permits the court to strike, with or without leave to amend, a pleading that is scandalous, frivolous or vexatious, or an abuse of the process of the court).

[19] In Panalpina Inc. v. Sharma (1988), 29 C.P.C. (2d) 222, Master Sandler helpfully explained the difference between motions to strike out pleadings under r. 25.11 and r. 21.01: at pp. 234-35, 241. He correctly stated that, to determine whether there is jurisdiction, the master first needs to decide which rule is the real basis for the motion, regardless of what the moving party is claiming: at p. 231; see also A.B. v. Halton Children's Aid Society, 2016 ONSC 6195 (Master), at paras. 21-23. The master hearing the motion in this case was required to adjourn the motion to a judge, if it was in fact a motion to strike for failure to disclose a reasonable cause of action, under r. 21. Here, the primary reason for the master's dismissal of the claim without leave to amend was that Mr. Lee lacks standing. Standing is a matter that is properly addressed in a r. 21 motion: see George-McCool v. Toronto (City) Police Service Board, at para. 6. To the extent that the master's decision was based on Mr. Lee's lack of standing, it appears to have been made outside the master's jurisdiction under r. 25.11.

Application of Rule 25.11

[20] The master also concluded that the claim was "frivolous" and "an abuse of process", apparently because of the deficiencies in Mr. Lee's pleading. "As the exercise of the power set out in rule 25.11 denies a litigant a full trial of the merits of the claim, it must be exercised only in the clearest of cases": Wernikowski v. Kirkland, Murphy & Ain (1999), 50 O.R. (3d) 124 (C.A.), leave to appeal to SCC refused, [2000] S.C.C.A. No. 98, at para. 12; M.A.S. (Litigation guardian of) v. Ludwig (2004), 245 D.L.R. (4th) 149 (Ont. C.A.), at p. 154. Reading the statement of claim generously, Mr. Lee's claim is for damages for the loss of his business and equipment as a result of Richcraft's conduct in failing to deal with his complaints about the other tenant and in terminating the lease. The master ought to have considered whether the pleadings deficiencies could have been addressed through amendments to the statement of claim under rules 26 and 5.04(2), to clarify Mr. Lee's personal claim based on his plea of harassment and/or to add Jay-Pee, the tenant under the lease, as a plaintiff. See for example Mazzucca v. Silvercreek Pharmacy Ltd. (2001), 56 O.R. (3d) 768, and in particular (with the abolition of the doctrine of special circumstances), the concurring reasons of Laskin J.A. in that case.

Test for Leave to Appeal to Court of Appeal

[21] The test for leave to appeal an order of the Divisional Court exercising its appellate jurisdiction is set out in Re Sault Dock Co. Ltd. and City of Sault Ste. Marie, [1973] 2 O.R. 479 (C.A.), at pp. 480-81; see also Enbridge, at paras. 19-22. Typically, the matter will present an arguable question of law or mixed fact and law requiring the interpretation of Ontario statutes or regulations, principles of law or, where the point in issue involves a question of public importance, a municipal by-law, or agreement. The court may also grant leave to appeal when there has been a departure from established principles of law that would result in a miscarriage of justice, or when there has clearly been an error in a judgment or order of the Divisional Court: see Sault Dock at p. 481; Enbridge at paras. 21-22.

Overall Justice of the Case

[22] As we have already explained, in our view the motion for leave to appeal has apparent merit, based on errors in the orders of the court below. The master's order dismissing Mr. Lee's claim without leave to amend, that was upheld by order of the Divisional Court, disposed of Mr. Lee's claim against Richcraft. We note that, if the order dismissing Mr. Lee's claim had been made on a r. 21 motion before a judge, he would have been able to appeal the order directly to this court, without leave. The overall justice of the case accordingly favours granting the extension of time sought by Mr. Lee.

Disposition

[23] For these reasons, we allow Mr. Lee's motion and set aside the orders of the first and the second motion judges in this matter. Mr. Lee shall file his notice of motion for leave to appeal within 15 days of this order. He shall then comply with r. 61.03.1(4)-(6), filing three copies of his motion record and factum on the motion for leave to appeal and, should he choose to do so, a book of authorities, with proof of service on the respondent within 30 days after the filing of the notice of motion for leave to appeal.

[24] There will be no costs of this motion.

Paul Rouleau J.A.

K. van Rensburg J.A.

L.B. Roberts J.A.