COURT OF APPEAL FOR ONTARIO

CITATION: Aurora (Town) v. Lepp, 2020 ONCA 528

DATE: 20200825

DOCKET: C67682

Huscroft, Zarnett and Coroza JJ.A.

BETWEEN

The Corporation of the Town of Aurora

Applicant (Appellant)

and

Robert Lepp

Respondent (Respondent)

Charles A. Painter, for the appellant

Robert Lepp, acting in person

Heard: July 22, 2020 by video conference

On appeal from the judgment of Justice Mark L. Edwards of the Superior Court of Justice, dated October 17, 2019, with reasons reported at 2019 ONSC 6041, and from the costs order, dated December 11, 2019.

REASONS FOR DECISION

A. OVERVIEW

[1] In December of 2018, Robert Lepp, the respondent, issued a 27-page Statement of Claim in the Superior Court of Justice against several parties including the appellant, the Corporation of the Town of Aurora (“Aurora”). In that claim, Mr. Lepp asserted (among other things) that numerous parties, including Aurora, had committed the torts of false arrest, false imprisonment, misfeasance in public office, and malicious prosecution. In addition to the Superior Court claim, Mr. Lepp had also initiated several other claims in the Small Claims Court.

[2] Aurora brought an application before the Superior Court of Justice seeking that Mr. Lepp be declared a vexatious litigant pursuant to s. 140(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”). Aurora also brought a motion to have Mr. Lepp’s claim dismissed under r. 2.1.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), as being a proceeding that “appears on its face to be frivolous or vexatious or otherwise an abuse of the process of the court."

B. THE APPLICATION JUDGE’S DECISION

[3] The application judge heard the matters together. On October 17, 2019, he provided written reasons dismissing Aurora’s request to declare Mr. Lepp a vexatious litigant and refusing to dismiss the entire action under r. 2.1.01. The application judge permitted Mr. Lepp’s action to continue, but he streamlined the claim by striking out many paragraphs without leave to amend. In the end, the application judge concluded that the claim contained the necessary components of false arrest, false imprisonment, and misfeasance in public office, such that, it could proceed.

[4] The application judge seized himself of the matter in order to case manage the action. He imposed several conditions on Mr. Lepp. Of significance, he prohibited Mr. Lepp from initiating any further motion, action or proceeding against Aurora, its elected officials, employees, former employees or legal counsel, without first obtaining leave of the court.

[5] Both parties sought their costs on the application and the motion. The application judge encouraged the parties to come to an agreement as to costs. The parties could not reach an agreement. After reviewing their submissions, the application judge viewed success as divided and held that neither party was entitled to costs.

C. ISSUES ON APPEAL

(1) Aurora’s Submissions

[6] On appeal, Aurora argues that the application judge erred by:

(1) failing to declare Mr. Lepp a vexatious litigant pursuant s. 140(1) of the CJA;

(2) failing to dismiss Mr. Lepp’s claim under r. 2.1.01 of the Rules;

(3) displaying a reasonable apprehension of bias during the hearing; and

(4) failing to order that Aurora should receive full indemnity costs in the amount of $30,668.07.

[7] Aurora also brings a motion to adduce fresh evidence. The fresh evidence consists of an affidavit that summarizes several events that occurred after the application was heard. These events include negative findings against Mr. Lepp made by several judges in unrelated proceedings and a finding of contempt made by the application judge.

(2) Mr. Lepp’s Submissions

[8] In response, Mr. Lepp contends that the application judge did not make any of the alleged errors. He denies that he is a vexatious litigant and he takes a very different view of the events that are summarized in Aurora’s fresh evidence affidavit. He asserts that many of the claims made against him in the affidavit are false.

[9] Mr. Lepp has also brought his own fresh evidence application. In his application, he seeks to adduce evidence that one of the parties he has sued (an employee of Aurora) was previously married to the Deputy Chief of the York Regional Police and that this relationship influenced the police to arrest him.

[10] For the following reasons, we dismiss Aurora’s appeal with respect to the application judge’s refusal to declare Mr. Lepp a vexatious litigant and his refusal to dismiss the entire action under r. 2.1.01. We also dismiss both motions to adduce fresh evidence. However, we grant leave to appeal costs. We agree with Aurora’s submission that the application judge erred in depriving Aurora of costs on the basis that success was divided. Aurora achieved overall success in the court below and should have received its costs.

D. ANALYSIS

(1) Vexatious Litigant Designation – s. 140(1) of the CJA

[11] Courts have a broad discretion to control their processes and to make appropriate orders where vexatious proceedings have been instituted or proceedings have been conducted in a vexatious manner: Peoples Trust Co. v. Atas, 2019 ONCA 359, at para. 5. Section 140(1) provides a process that can bar a party from commencing or continuing litigation except upon obtaining leave of the court. Section 140(1) reads as follows:

140(1) Where a judge of the Superior Court of Justice is satisfied, on application, that a person has persistently and without reasonable grounds,

(a) instituted vexatious proceedings in any court; or

(b) conducted a proceeding in any court in a vexatious manner,

the judge may order that,

(c) no further proceeding be instituted by the person in any court; or

(d) a proceeding previously instituted by the person in any court not be continued,

except by leave of a judge of the Superior Court of Justice.

[12] Aurora’s primary submission on this appeal is that the trial judge erred in refusing to make the s.140(1) designation by focusing exclusively on whether there was a tenable cause of action in Mr. Lepp’s statement of claim. That focus, Aurora argues, led the application judge to ignore the troubling and vexatious conduct of Mr. Lepp in other proceedings and to erroneously characterize the other Small Claims Court proceedings as duplicative of the statement of claim, when, in fact, they were different claims, unrelated to the claim before the application judge.

[13] We do not accept Aurora’s argument for several reasons.

[14] First, the application judge properly focused on the Statement of Claim in his written reasons because one of the essential aspects of Aurora’s argument was that Mr. Lepp’s action was vexatious and abusive. Therefore, in assessing whether Mr. Lepp had instituted a vexatious proceeding against Aurora under s. 140(1)(a) of the CJA, the application judge was required to examine the claim and determine whether the pleadings were vexatious.

[15] Second, although the judge may have mistakenly referred to the Small Claims Court proceedings as duplicative of the claim before the court, this error is of no moment. The application judge turned his mind to these proceedings, at para. 44 of the reasons, and noted that Mr. Lepp agreed that they should be dismissed. Whether the claims related to different matters or the same matter is irrelevant. After securing an undertaking that Mr. Lepp would abandon those proceedings, the application judge noted that Mr. Lepp would only have one claim left against Aurora in the Superior Court. Indeed, the application judge imposed a condition on Mr. Lepp that his proceeding could not continue in the Superior Court until he fulfilled his undertaking that the actions in the Small Claims Court would be disposed of by way of a dismissal order and that any costs awarded in that court against him shall be paid prior to his continuing with the action.

[16] Finally, contrary to Aurora’s submission, the application judge did not ignore Mr. Lepp’s conduct in the proceeding. The application judge noted that Mr. Lepp had conducted himself in a troubling matter and indicated that this type of conduct would not be tolerated by the court.

[17] Rather than designating Mr. Lepp a vexatious litigant under s. 140(1) of the CJA, the application judge concluded that aggressive case management of the proceeding would achieve the most “expeditious, just, and least expensive” determination of the merits of the litigation. He explicitly stated his intention to ensure that Mr. Lepp conducted himself throughout the ongoing litigation in a manner that is consistent with how civil litigation should be conducted. We see no basis to interfere with his decision.

(2) Rule 2.1.01 Motion

[18] Having dismissed Aurora’s application under s. 140(1) to designate Mr. Lepp as a vexatious litigant, we also see no basis to interfere with the decision to permit Mr. Lepp’s action to proceed, albeit in a streamlined form. Aurora sought to terminate the entire action by resorting to r. 2.1.01, on the basis that the entire claim was frivolous, vexatious, or an abuse of process.

[19] This court has held that the use of r. 2.1 is not for close calls and “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”: Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733, 343 O.A.C. 87, at paras. 7-9, leave to appeal refused, [2015] S.C.C.A. No. 488. This court has also stressed that judges should be cautious about allowing parties to have recourse to r. 2.1, except where it is “plain and obvious on the face of the pleading” that the action is frivolous, vexatious or an abuse of process: Khan v. Law Society of Ontario, 2020 ONCA 320, at para. 15.

[20] The application judge carefully examined Mr. Lepp’s claim. He recognized that although some of the allegations and pleadings were outrageous and should be struck, there were pleadings with respect to the torts of false arrest, false imprisonment, and misfeasance in public office that a court could recognize as legitimate, even if Mr. Lepp’s conduct was troubling. In our view, the application judge properly took a cautious approach and we see no error in his decision to permit Mr. Lepp’s action to proceed to the extent he did.

(3) Reasonable Apprehension of Bias

[21] Aurora claims that the application judge displayed a reasonable apprehension of bias by refusing to designate Mr. Lepp as a vexatious litigant and not awarding Aurora costs. We reject this submission as devoid of merit. Allegations of judicial bias should not be made lightly. The application judge, like all judges, benefits from a strong presumption of judicial fairness, impartiality, and integrity that is not easily displaced: Neufeld v. Neufeld, 2020 ONCA 395, citing R. v. S.(R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, at paras. 31-32. There is nothing in the record that can be seen as evidence of prejudgment or bias on his part.

(4) Costs

[22] In his written reasons, the application judge encouraged the parties to resolve the issues of costs given “what some might perceive as a measure of divided success.” The parties could not agree, and they filed submissions.

[23] After reviewing the costs submissions, the application judge subsequently released a very brief endorsement. In that endorsement, the application judge reiterated that success was divided, and he awarded no costs to either party.

[24] With respect, the application judge erred in denying Aurora costs on the basis that success was divided. Although Mr. Lepp’s action was permitted to proceed and he was not declared a vexatious litigant, the application judge disregarded Aurora’s “overall success”: see Wesbell Networks Inc. v. Bell Canada, 2015 ONCA 33, at para. 21. The practical effect of the application judge’s decision is that Mr. Lepp’s claim has been trimmed down considerably and there is a condition that restricts him from initiating any further motion, action, or proceeding against Aurora, its elected officials, employees, former employees, or legal counsel, without first obtaining leave of this court. Although it did not obtain the designation it sought under s. 140(1), Aurora was, nevertheless, the more successful party because it obtained aggressive case management of a pared-down claim as well as an order restricting further litigation. Therefore, Aurora was entitled to its costs of the application.

[25] We will now consider the appropriate scale of costs. In its costs submissions, Aurora had requested full indemnity costs in the amount of $30,668.07. Aurora argued that Mr. Lepp’s conduct was so reprehensible and outrageous that it justified a departure from the general rule that partial indemnity costs are awarded to the successful party. We disagree. We see no basis to depart from the general rule. Although Aurora had greater success given the orders obtained, we note that the application judge did not ultimately grant the s. 140(1) designation or the r. 2.1.01 motion in its entirety.

[26] Having reviewed the costs outlines and the factors set out in r. 57 of the Rules, we fix the costs below at $15,000, inclusive of fees, disbursements, and applicable taxes.

(5) Fresh Evidence

[27] During the hearing of this appeal, the parties advised the court that they had agreed not to object to the respective motions to adduce fresh evidence. However, the admissibility of fresh evidence is a matter for the panel hearing the appeal.

[28] Under s. 134(4)(b) of the CJA, this court “may, in a proper case … receive further evidence”. In Ojeikere v. Ojeikere, 2018 ONCA 372, 140 O.R. (3d) 561, at para. 46, Laskin J.A. noted that, in civil cases, this court has used two separate tests to determine the admissibility of fresh evidence, although they are not materially different: (1) the test in Palmer v. The Queen, 1979 8 (SCC), [1980] 1 S.C.R. 759 (typically used in criminal appeals); and (2) the test established in Sengmueller v. Sengmueller (1994), 1994 8711 (ON CA), 17 O.R. (3d) 208 (C.A.).

[29] The evidence proposed by both parties does not meet either test and we are not persuaded that the proposed evidence from either party should be received. Therefore, both motions to introduce fresh evidence are dismissed.

[30] Aurora’s motion to adduce fresh evidence relates to events that occurred after the hearing of the application and motion below. The fresh evidence consists of an affidavit that summarizes court proceedings and events that portray Mr. Lepp in a negative light. For example, it appears that Mr. Lepp filed a motion against Aurora, contrary to the order of the application judge, because legal counsel for Aurora did not pass along his messages to employees. The fresh evidence also reveals that the application judge has subsequently found Mr. Lepp in contempt for violating a condition prohibiting him from contacting the Superior Court until the resolution of this appeal.

[31] Given the nature of the fresh evidence, we are not persuaded that this proposed evidence would have “affected the result” (Palmer, at p. 775) or would “likely be conclusive of an issue in the appeal” (Sengmueller, at pp. 210-11). As we have noted above, the application judge was clearly alive to Mr. Lepp’s troubling conduct and his tendency to abuse the court process. The application judge attempted to achieve an appropriate balance at controlling Mr. Lepp’s conduct and permitting him access to justice by allowing a streamlined version of his claim to proceed.

[32] The fresh evidence would not have changed his approach.

[33] We also dismiss Mr. Lepp’s motion to have the panel consider fresh evidence that he has discovered. Specifically, that one of Aurora’s employees may have been married to the Deputy Chief of the York Regional Police and that this relationship influenced the police to arrest him. The evidence is not relevant or germane to the issues that the application judge had to consider.

E. DISPOSITION

[34] Claims relating to vexatious litigants are not easy to resolve. In our view, the application judge struck the appropriate balance. Aurora’s appeal in relation to the s. 140(1) application and r. 2.1.01 motion is dismissed. We grant Aurora leave to appeal the decision on costs, and Aurora is entitled to its costs below on a partial indemnity basis. We fix those costs at $15,000, inclusive of fees, disbursements, and applicable taxes.

[35] The parties also made submissions as to costs of this appeal. Aurora claims $5,000 for costs on the appeal and Mr. Lepp claims $10,000. In our view, success is divided. Mr. Lepp is successful on the substantive appeal. However, Aurora has succeeded on its costs appeal. Therefore, we award no costs for the appeal.

[36] Before leaving this matter, we encourage Mr. Lepp to focus his attention on the claim that is before the court in Newmarket. As we have noted, the application judge imposed a number of conditions on Mr. Lepp to ensure that the action moves forward in an orderly fashion. Mr. Lepp would be well advised to take advantage of the application judge’s decision to case manage this proceeding and to ensure that the matter proceeds to finality.

“Grant Huscroft J.A.”

“B. Zarnett J.A.”

“S. Coroza J.A.”