COURT OF APPEAL FOR ONTARIO
CITATION: Birdseye Security Inc. v. Milosevic, 2020 ONCA 355
DATE: 20200605
DOCKET: C67407&C67708
Rouleau, van Rensburg and Roberts JJ.A.
DOCKET: C67407
BETWEEN
Birdseye Security Inc.
Plaintiff
and
Danilo Milosevic also known as Danny Milosevic carrying on business as VCMS Security Services and as VCMS Security
Defendant
AND BETWEEN
Danilo Milosevic also known as Danny Milosevic carrying on business as VCMS Security Services and as VCMS Security
Plaintiff by Counterclaim (Appellant)
and
Birdseye Security Inc., and Mile Grabovica
Defendants by Counterclaim (Respondent)
DOCKET: C67708
BETWEEN
Birdseye Security Inc.
Plaintiff
and
Danilo Milosevic also known as Danny Milosevic carrying on business as VCMS Security Services and as VCMS Security
Defendant
AND BETWEEN
Danilo Milosevic also known as Danny Milosevic carrying on business as VCMS Security Services and as VCMS Security
Plaintiff by Counterclaim (Respondent)
and
Birdseye Security Inc. and Mile Grabovica
Defendants by Counterclaim (Appellants)
Rocco Galati, for the appellant in C67407 and the respondent in C67708
Tyler H. McLean, for the appellants in C67708 and the respondent in C67407
Heard: In writing
On appeal from the order of Justice Michael T. Doi of the Superior Court of Justice, dated August 14, 2019 (C67407).
On appeal from the order of Justice Judy A. Fowler Byrne of the Superior Court of Justice, dated October 21, 2019 (C67708).
REASONS FOR DECISION
INTRODUCTION
[1] These two appeals arise out of two separate actions that are pending in the Superior Court in Brampton. Both involve the same parties: Mile Grabovica and Danilo Milosevic and their respective security and home surveillance businesses. Mr. Grabovica, through his company, Birdseye Security Inc. (“Birdseye”), commenced Action CV-18-1527 (“Action 1527”) in April 2018 and Action CV-18-4669 (“Action 4669”) in October 2018. Both actions named as defendant Mr. Milosevic’s sole proprietorship VCMS Security Services or VCMS Security (“VCMS”).
[2] In Action 1527, Birdseye claims damages for, among other things, conversion and theft of confidential and sensitive proprietary information, inducing breach of contract, conspiracy, and unlawful interference with economic relations. In Action 4669, Birdseye claims damages for trademark infringement and defamation, alleging that VCMS has attempted to duplicate its business by infringing its “Voice-Down” trademark and by making false and misleading statements that discredit its goods and services.
[3] Mr. Milosevic has defended and asserted a counterclaim against Birdseye and Mr. Grabovica in both actions. Essentially, he pleads various facts concerning the business and personal relationship between himself and Mr. Grabovica (who are brothers-in-law), asserting that there is no merit to the actions, and that they have been brought to harass him and to put him out of business. The counterclaim in each action seeks essentially the same relief: damages and an order prohibiting Birdseye and Mr. Grabovica from bringing further proceedings against him and his business without prior leave of the court. The counterclaim in Action 4669 also seeks an injunction against Birdseye and Mr. Grabovica from trademarking the VCMS logo. Mr. Milosevic pleads essentially the same facts in each counterclaim, except that in Action 4669 he pleads, at para. 29, that having launched a claim for trademark infringement against him, Mr. Grabovica is attempting to trademark the VCMS logo for collateral purposes, and to cause him and his company harm.
[4] Neither action has progressed beyond the pleadings stage. Birdseye has brought motions to strike various paragraphs of Mr. Milosevic’s statement of defence and counterclaim in each action. These appeals arise out of the two most recent pleadings motions.
[5] Birdseye brought its first motion in Action 1527 seeking to strike certain paragraphs of the counterclaim on various grounds, including that it disclosed no reasonable cause of action (in relation to the claim for abuse of process), that it was frivolous and vexatious, and that it failed to contain a concise statement of material facts. The motion was served in August 2018 and was heard on December 19, 2018. By order dated April 29, 2019, Kumaranayake J. struck certain paragraphs of the counterclaim with leave to amend: 2019 ONSC 2676. No appeal was taken, and Mr. Milosevic amended his pleading.
[6] While this motion was under reserve, Birdseye served a motion in January 2019, returnable April 2, 2019, to strike certain paragraphs of the statement of defence and the entire counterclaim in Action 4669. By order dated August 14, 2019, Doi J. dismissed the motion with respect to the statement of defence and struck the counterclaim without leave to amend.
[7] Meanwhile, while the motion before Doi J. was under reserve, in June 2019, Birdseye served another motion in Action 1527, seeking to strike certain paragraphs of Mr. Milosevic’s amended counterclaim, including the entire cause of action of abuse of process. That motion was heard by Fowler Byrne J. on July 23, 2019. She dismissed the motion by order dated October 21, 2019.
[8] In their appeals to this court, Mr. Milosevic appeals the order of Doi J. striking its counterclaim in Action 4669 (Appeal C67407), and Birdseye and Mr. Grabovica appeal the order of Fowler Byrne J. dismissing the motion to strike in Action 1527 (Appeal C67708).
APPEAL C67407
[9] Birdseye moved to strike paras. 16 to 19 of the statement of defence and the entire counterclaim in Action 4669.
[10] The relevant paragraphs of the statement of defence set out the personal and business history of the parties, referring to the other proceedings commenced by Birdseye, which Mr. Milosevic claims are abusive. These paragraphs also allege that Birdseye’s pleadings contain misleading or blatantly false claims. Birdseye asserted that these paragraphs were neither relevant nor material to the defence, and were pleaded to give atmosphere and to show Birdseye in a bad light. The motion judge disagreed and refused to strike paras. 16 to 19 of the statement of defence.
[11] Birdseye argued that the entire counterclaim should be struck under r. 21.01(3)(c) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194because it duplicated the counterclaim asserted in Action 1527. Mr. Milosevic submitted that any concern about duplication could be addressed by consolidating or ordering the trial together of the two Superior Court actions, as well as another action between the same parties in the Small Claims Court in Toronto (SC-18-5547). He also argued that he would be prejudiced if the counterclaim were struck and Birdseye discontinued Action 1527.
[12] The motion judge rejected the request for consolidation or trial together in the absence of a motion for such relief. He noted that Mr. Milosevic had retained a different lawyer to defend the Small Claims Court action, which was not before the court. He directed that, should the parties wish to pursue a consolidation or joinder of the actions, they would need to do so by motion with notice on a different occasion. The motion judge found that the counterclaim should be stayed under r. 21.01(3)(c) and made an order striking the counterclaim. He concluded that to do otherwise would constitute an abuse of process and that Mr. Milosevic would not be prejudiced as, under r. 23.02, he could pursue the counterclaim in Action 1527 even if Birdseye were to discontinue its claim in that action.
[13] On appeal, Mr. Milosevic submits that the counterclaim ought not to have been struck and that, in the alternative, all of the actions ought to be consolidated or ordered to be tried together. In response, Birdseye asserts that the order striking the counterclaim reflected a proper exercise of discretion, as there was no motion to consolidate, and the counterclaim duplicates what is asserted in Action 1527.
[14] A defendant may move for an order staying or dismissing an action (in this case a counterclaim) under r. 21.01(3)(c) where “another proceeding is pending in Ontario or another jurisdiction between the same parties in respect of the same subject matter”. Having concluded that the duplicative counterclaim justified a stay, the motion judge ought to have stayed, and not “struck” the counterclaim. No issue was made of this, and nothing turns on it for the purpose of the appeal. Rather, the issue is whether there was a reversible error in the application of r. 21.01(3)(c) to bring to an end the counterclaim in Action 4669.
[15] The determination of whether a stay of proceedings should be granted because another proceeding is pending between the same parties involves an exercise of discretion, taking into consideration the circumstances of the particular case. The moving party must demonstrate that the continuation of the action would cause it substantial prejudice or injustice (beyond inconvenience and expense) because it would be oppressive or vexatious or would otherwise be an abuse of the process of the court, and that the stay would not cause an injustice to the responding party: Farris v. Staubach Ontario Inc. (2004), 2004 CanLII 11325 (ON SC), 32 C.C.E.L. (3d) 265 (Ont. S.C.), at para. 15. Factors relevant to prejudice include: the likelihood and effect of the two matters proceeding in tandem, the possibility and effect of different results, the potential for double recovery, and the effect of possible delay: Farris, at para. 16.
[16] The fact that another proceeding is pending between the same parties in respect of the same subject matter does not automatically lead to an order dismissing or staying the claim. Rather, the order is discretionary and the judge hearing the motion must be satisfied that the stay or dismissal is warranted in the particular circumstances of the case. While a multiplicity of proceedings may constitute an abuse of process which warrants an order staying or dismissing a proceeding (see e.g., Maynes v. Allen-Vanguard Technologies Inc. (Med-Eng Systems Inc.), 2011 ONCA 125, 274 O.A.C. 229, at paras. 36, 46), that is not necessarily always the case. All of the circumstances must be considered to determine whether, in the interests of justice, a stay or dismissal should be granted.
[17] In this case, the motion judge stayed the counterclaim “to avoid an unjust multiplicity of proceedings”. He concluded that the duplicative litigation would “on the facts of this case” constitute an abuse of process, and he rejected Mr. Milosevic’s claim of prejudice on the basis that he would be able to pursue his counterclaim in Action 1527 regardless of whether Birdseye discontinued the main action in that proceeding.
[18] An order dismissing or staying a proceeding under r. 21.01(3)(c) is a discretionary order that is subject to deference on appeal, absent an error in principle: 1420041 Ontario Inc. v. 1 King West Inc., 2010 ONSC 6671, 1 R.P.R. (5th) 33 (Div. Ct.), at para. 24, rev’d on other grounds 2012 ONCA 249, 349 D.L.R. (4th) 97, leave to appeal refused, [2012] S.C.C.A. No. 272; Canada (Minister of Citizenship and Immigration) v. Tobiass, 1997 CanLII 322 (SCC), [1997] 3 S.C.R. 391, at para. 87. In this case, the motion judge did not explain why permitting Mr. Milosevic to assert his counterclaim in both actions would constitute an abuse of process. He appears to have assumed that the existence of an almost identical pleading in both actions would ipso facto constitute an abuse of process. His failure to consider the context of the litigation was an error in principle that warrants this court’s intervention.
[19] Considering the matter afresh, we set aside the order of Doi J. We are not persuaded, in the context of the proceedings involving these parties, that there would be any prejudice or injustice in permitting Mr. Milosevic to assert a counterclaim in response to both actions.
[20] First, it is Birdseye that is responsible for the fact that there are multiple proceedings. Rather than asserting all of its claims in a single action, Birdseye chose to commence three separate actions in the Superior Court in Brampton (one of which it discontinued) and an action in the Toronto Small Claims Court. Birdseye opposed the consolidation or trial together of the pending actions as a solution to its concern about duplication. If the facts pleaded by Mr. Milosevic in his statement of defence and counterclaim are true (and they are assumed to be true for the purpose of the pleadings motions), the actions commenced by Birdseye are without merit, an abuse of process, and were initiated for the collateral purpose of causing him harm. The fact that Mr. Milosevic has asserted a counterclaim in each of the multiple actions commenced by Birdseye does not in itself constitute an injustice or prejudice to Birdseye. Indeed, no specific harm was alleged by Birdseye.
[21] Second, we note that the counterclaim in Action 4669 seeks additional relief that is not claimed in Action 1527: an injunction against Birdseye and Mr. Grabovica from trademarking the VCMS logo, and it pleads the additional facts to support that claim. Striking the counterclaim in Action 4669 would eliminate this claim for relief altogether.
[22] For these reasons, we agree with Mr. Milosevic that, by striking his counterclaim, the motion judge deprived him of a claim that he was validly entitled to make in response to each of Birdseye’s actions – that the actions started against him were an abuse of process. It was not sufficient to strike the counterclaim in Action 4669 simply because the same type of claim was asserted in response to Action 1527. The counterclaim followed on the facts pleaded at paras. 16 to 19 of the statement of defence, which the motion judge had refused to strike.
[23] Accordingly, the appeal is allowed, and the order of Doi J. is set aside.
APPEAL C67708
[24] This appeal is in respect of the order of Fowler Byrne J. dismissing Birdseye’s motion to strike certain paragraphs of Mr. Milosevic’s Fresh as Amended Counterclaim in Action 1527 on the grounds that they disclose no cause of action and are frivolous and vexatious. Fowler Byrne J. dismissed the motion, concluding that Mr. Milosevic had addressed the flaws previously identified by Kumaranayake J. and that the pleading was not otherwise deficient. In particular, she concluded that the claim in respect of abuse of process was properly pleaded. She encouraged the parties to move beyond the pleadings stage to focus on discovery and then possible mediation or trial. Birdseye and Mr. Grabovica appeal from the order dismissing the motion.
[25] Birdseye and Mr. Grabovica submit that it is plain and obvious that the claim for abuse of process discloses no reasonable cause of action, or alternatively that the claim is frivolous and vexatious and should be struck. Mr. Milosevic argues that the order under appeal is interlocutory and that the appeal should be quashed for want of jurisdiction. In the alternative, he asserts that the question of whether the claim for abuse of process could stand was already decided in his favour in the earlier motion before Kumaranayake J.
[26] We agree that the order of Fowler Byrne J. is interlocutory. Birdseye’s motion was to strike paragraphs in Mr. Milosevic’s pleading as failing to disclose a cause of action and as frivolous and vexatious, relying on rr. 21.01(1)(b), 21.01(3)(d) and 25.11. An order dismissing such a motion is typically interlocutory: S.(R.) v. H.(R.) (2000), 2000 CanLII 17038 (ON CA), 195 D.L.R. (4th) 345 (Ont. C.A.), at paras. 13-15; Hopkins v. Kay, 2014 ONCA 514, at para. 7. The appellants’ reliance on Brown v. Hanley, 2019 ONCA 395, 2019 C.L.L.C. 220-044, as authority that the order under appeal is final, is misplaced. That case involved, among other things, the appeal of an order refusing to strike a claim under r. 21.01(3)(a) on the basis that the dispute was covered by a collective agreement. See Abbott v. Collins (2002), 2002 CanLII 41457 (ON CA), 62 O.R. (3d) 99 (C.A.), at paras. 6-7, where Morden J.A. distinguished between such an order, which determines jurisdiction on a final basis, and an order dismissing a motion under r. 21.01(1)(b) to strike pleadings for failure to disclose a reasonable cause of action, which is interlocutory.
[27] As the order of Fowler Byrne J. dismissing Birdseye’s motion is interlocutory, any appeal lies to the Divisional Court with leave under s. 19(1) of the Courts of Justice Act, R.S.O. 1990, c. C-43. Accordingly, the appeal to this court is quashed.
DISPOSITION
[28] For these reasons, we allow the appeal in C67407, and set aside the order of Doi J. dated August 14, 2019, and we quash the appeal in C67708.
[29] Mr. Milosevic is entitled to his costs of both appeals, and he may be entitled to costs of the motion before Doi J. If the parties are unable to agree on costs, they shall serve and file with the court at COA.E-File@ontario.ca their written submissions as follows: Mr. Milosevic shall provide his costs outline and written submissions of no more than three pages within 20 days, and Birdseye and Mr. Grabovica shall provide their written submissions limited to three pages, within 15 days thereafter.
“Paul Rouleau J.A.”
“K. van Rensburg J.A.”
“L. B. Roberts J.A.”