ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 82-2012

DATE: 2014-03-14

BETWEEN:

Brent Hillier and Maverick Paintball Inc.

Plaintiffs

– and –

Craig (Sandy) Hutchens aka Sandy Hutchens Sandy Craig Hutchens aka Craig Hutchens aka Moishe Hutchens aka Craig Alexander aka Moishe Alexander aka Moshe Alexander aka Moishe Ben Avaham aka Moishe Ben Avohom aka Ben Avrohom aka Ben Avraham aka Fred Hayes aka Alexander McDonald aka Alex McDonald, Dave McDonald aka Mathew Kovee, Tanya Hutchens aka Tatiana Brik, TD Canada Trust, TD Bank Financial Group, David Macenzie, Barry Poulson, Arseneau Poulson, Michael Spiro, Lorne Honickman, McCague Borlack LLP, Alvin Meisels, Reznick Parsons Meisels Taberner, Blaney Mcmurtry LLP, Jan Luistermans aka Herman Luistermans, Realty 1 Real Estate Services Ltd., Fifth Avenue Private Investigators and Paralegal, Gary White, Tom Warren, Net Patrol, Rabbi Mendel Kaplan and Chabad@Flamingo, Jacob Gryn, and CO4 Computing Inc.

Defendants

Brent Hillier, self-represented

No-one appearing for the plaintiff Maverick Paintball Inc.

Sandra L. Secord, for the Defendants Alvin Meisels, Reznick Parsons Meisels Taberner, Blaney McMurtry LLP, Barry Poulson and Arseneau Poulson

Eli Lipetz, for the Defendants Rabbi Mendel Kaplan and Chabad@Flamingo

HEARD: February 20, 2014 at Goderich

CORRECTED DECISION[1]

HEENEY R.S.J.:

[1] There are three motions before the court. The first is brought against the plaintiffs by the defendants Barry Poulson and Arseneau Poulson (collectively “Poulson”) under rule 21.01(1), for an order striking out the Statement of Claim, and/or an order dismissing the action because it was commenced after the expiration of the applicable limitation period.

[2] The second is brought by the defendant Alvin Meisels (“Meisels”) and seeks an order pursuant to rule 57.03(2) dismissing the action against him for failure of the plaintiffs to pay costs pursuant to the order of Haines J. dated May 31, 2013.

[3] The third is brought by the defendants Rabbi Mendel Kaplan and Chabad@Flamingo (collectively “Kaplan”), and seeks an order pursuant to rule 21.01(1)(b) striking out the statement of claim as against them on the ground that it discloses no reasonable cause of action.

[4] I am advised that these motions represent the seventh, eighth and ninth motions of a similar nature that have been brought in these proceedings, all of which have been successful in whole or in part. Those earlier motions were heard by Haines J., and dealt with many of the same issues that are now again before the court.

Motion by Poulson:

[5] The plaintiffs’ action relates to an allegedly fraudulent “advance fee loan scam” perpetrated against the plaintiffs in 2008 by the defendants Craig (Sandy) Hutchens aka Moishe Alexander, and his spouse Tanya Hutchens, aka Tatiana Brik. The nature of the claim is summarized at paras. 39 to 45 of the Fresh As Amended Statement of Claim. The plaintiff Brent Hillier (“Hillier”), who is the sole shareholder of the plaintiff Maverick Paintball Inc., together with a business partner Mario Pugliese, sought to expand Hillier’s existing operation by purchasing a new facility. They required financing to do so. They entered into negotiations with a man purporting to be Moishe Alexander, and applied for a loan of $4 million. According to the pleading, Moishe Alexander was, in fact, Sandy Hutchens, “a career criminal”. An “advance fee” of $35,000.00 was paid by Pugliese.

[6] Although Hutchens agreed to loan the money, it is alleged that he did not, in fact, have the money to lend, and was only interested in keeping the advance fee. The transaction fell through. It is alleged that Hutchens kept the fee, although in the same pleading it is also alleged that Hutchens returned the fee to Pugliese as part of a different loan to him. In any event, Hillier alleges that when the funds were not advanced, the plaintiffs lost everything. They have sued in these proceedings for those losses.

[7] Poulson acted for Hutchens on the transaction. The plaintiffs make a number of allegations in the Fresh As Amended Statement of Claim against Poulson including the following: that he made representations to the plaintiffs that he was acquainted with Hutchens and his companies and had acted on over 80 transactions for them; that he could personally vouch for their legitimacy and ability to fund the transaction; and that he had a positive duty to the plaintiffs to advise them that the transaction was a fraud and that Hutchens was simply looking to take the advance fee without the intention of completing the loan transaction, which duty he breached.

[8] The Statement of Claim was issued on May 23, 2012. Poulson contends that the action was commenced beyond the two-year limitation period provided for in s. 4 of the Limitations Act 2002, because Hillier was aware as early as September 10, 2008 of all of the matters referred to in s. 5(1)(a) of the Act. It was at that point in time that his lawyers, The Ross Firm, advised him not to proceed with the proposed transaction because it was a scam and fraudulent in nature.

[9] The Fresh As Amended Statement of Claim specifically sets out when the plaintiffs found out about the scam. At para. 108, it states:

Between September 5 and 11, 2008, the Plaintiffs learned that the Moishe Alexander or Craig Alexander he thought he was dealing with was actually Sandy Hutchens, a 20-year career criminal in Canada. In the information uncovered by the Ross Firm in the morning prior to a scheduled meeting later that afternoon with Hutchens and others, the Plaintiffs were referred to the “scam.com” website suggesting that Hutchens had a history of financial frauds and drug offenses. And the Plaintiffs further discovered that Hutchens was at the time on house arrest and then probation for drug trafficking and defrauding elderly and illiterate individuals.

[10] Furthermore, on November 17, 2008, Hillier lodged a complaint with the Law Society of Upper Canada against Barry Poulson regarding his involvement in this transaction and the fraud perpetrated by Moishe Alexander aka Sandy Hutchens. The allegations in that letter are strikingly similar to those in the Fresh As Amended Statement of Claim. For example, at pg. 3 the letter states the following:

As everyone is now aware, “Moishe Alexander” does not exist. This name is an alias of a criminal whose actual name is Sandy Craig Hutchens who has a career in fraud spanning more than 20 years. It is my submission that Barry Poulson was aware of this all along and in representing to us that the man’s name was “Moishe Alexander” he willfully deceived us where if we had known this fact prior to entering into any kind of business deal we would not have even considered doing so.

[11] Hutchens and his companies started a defamation lawsuit in March, 2009, which sought to enjoin SCAM.COM and other parties from making internet postings that alleged he was a conman and that his lending business was a scam. Postings made by Hillier were targeted by Hutchens, although he was not formally made a party until he was added as a defendant by order of Horkins J. dated January 5, 2011. Hillier has added the reasons of Horkins J. as an exhibit to his affidavit sworn February 12, 2014, and relies on them in support of his case. Those reasons are reported at [2011] O.J. No. 8 (S.C.J.).

[12] In summarizing the evidence filed by Hillier on the motions that were before her, Horkins J. said the following, at paras. 72 – 74:

After Brent Hillier learned about the scam in September 2008, his business fell apart and eventually he lost everything. He had spent all of his time trying to get the Kitchener project going. He worked with contractors, had the property rezoned and kept waiting for the financing to be available. He neglected his Zurich paintball location while working on the Kitchener project that he believed would go ahead. The financing kept being delayed and while promised it never materialized.

While it was Mr. Pugliese and not Brent Hillier who paid the advance fee, Brent Hillier claims that he lost everything he owned when the deal finally fell apart. Brent Hillier blames Mr. Hutchens and his scam for the loss of his business.

Brent Hillier could not afford to start a civil action against Mr. Hutchens. Instead, he decided to use the internet to warn others about Mr. Hutchens and the advance fee scam.

[13] Hillier’s postings on the internet began on September 11, 2008.

[14] I conclude that Hillier was aware of all of the facts to support his claim by September 2008, but chose not to commence a lawsuit for financial reasons. The limitation period for such an action would have expired in September, 2010. Since he did not commence this lawsuit until May 23, 2012, it is statute barred.

[15] Mr. Justice Haines dealt with an identical motion in these proceedings, although in that case the motion was brought by the defendant Michael Spiro, who is also a lawyer who had involvement with Hutchens. His reasons were released October 30, 2012, and are reported at 2012 ONSC 5988, [2012] O.J. No. 6367 (S.C.J.). At paras. 41 – 46, Haines J. dealt with the limitation issue in the following terms:

The statement of claim indicates that the plaintiffs entered into negotiations with Hutchens in the summer of 2008. On November 17, 2008, Hillier filed a written complaint with The Law Society of Upper Canada relating to Spiro's conduct on the 2008 transaction. Complaints were filed by Hillier with the Canadian Association of Accredited Mortgage Professionals and the Financial Services Commission of Ontario on November 20, 2008 and December 4, 2008 respectively.

In this correspondence Hillier sets out essentially the same allegations of Spiro facilitating fraudulent conduct that the plaintiffs have made against him in the statement of claim. Hillier claimed among other things:

a) that Spiro wrote a "reference letter dated March 24, 2008 ... posted on the Canadian Funding Corporation website" in which he claimed that he had closed approximately 40 transactions for Moishe (Hutchens);

b) that Spiro stated that he had worked with "Moishe Alexander" for 3 1/2 years when Hutchens had been using that alias for only 1 1/2 years; and

c) that Spiro was the lawyer who worked with Hutchens on the subject transaction and received a $10,000 advance deposit in legal fees as well as a 1% commission for acting as mortgage broker on the transaction.

This action was commenced May 23, 2012. The conduct complained of occurred in 2008. Any civil action was required to be commenced by the second anniversary on which the claim was discovered. Section 4 of the Limitations Act, 2002 provides:

Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

Section 5 states:

A claim is discovered on the earlier of,

a) the day on which the person with the claim first knew,

i) that the injury, loss or damage had occurred,

ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

iii) that the act or omission was that of the person against whom the claim is made, and

iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

b) the day on which a reasonable person with the abilities and in circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

The plaintiffs realized there was an issue relating to the limitation period and in their statement of claim sought to address it at paragraphs 35 and 36:

At first blush, many of the claims pleaded herein appear to be statute barred as having not been commenced within the applicable limitation period. The plaintiffs plead that it was simply impossible to appreciate the involvement of each defendant in this vast fraud network until a Mareva injunction was granted over the assets of Hutchens and Tanya on March 18, 2011. The fruits of that injunction revealed that Hutchens and Tanya had established a network of participants in their fraud scheme and that each defendant to this proceeding in some way helped to ensure that the fraud scheme of Hutchens and Tanya would be successful.

The plaintiffs plead that the limitation period against each of the defendants only started to run, at a minimum, after the plaintiffs became aware of the Mareva Injunction and the documents that were generated as a result after March 18, 2011.

Notwithstanding the foregoing, it is apparent from the record that Hillier had sufficient knowledge of Spiro's alleged misconduct to complain to three different regulatory bodies in November and December of 2008. The allegations in those complaints are, in many respects, strikingly similar to the allegations against Spiro in the statement of claim. Hillier may have learned more as a result of the "Mareva injunction" granted in March 2011, but it is apparent from a review of his complaints to the regulatory bodies that by at least the end of 2008 he knew all that he needed to know, as contemplated by s. 5 of the Limitations Act, 2002, to commence the action against Spiro that was eventually started in May 2012, well outside the limitation period provided for under that Act.

In the result I am satisfied that the claim against Spiro is statute barred and the action against him is dismissed.

[16] I agree with the analysis and conclusions of Haines J., and find the situation relating to Poulson indistinguishable from that of Spiro.

[17] Mr. Hillier, in the motion before me, placed reliance on the affidavit of Martin Lapedus sworn February 1, 2011, and the affidavit of Randy Guzar, sworn March 16, 2011, both of which were filed as exhibits to his own affidavit. These affidavits were filed in another proceeding brought against Hutchens and a number of other defendants by Marsbury Homes Inc., Lake Austin Properties, I, Ltd, and Ayres Rock Ltd., in court file CV-11-421871. The motion with regard to which those affidavits were filed apparently led to the granting of the Mareva injunction referred to by Haines J. above.

[18] Hillier states in para. 5 of his factum that “the plaintiffs had no knowledge of the exact role that various defendants played in the furtherance of the fraud and the extent of their involvement prior to the disclosures made by Martin Lapedus and Randy Guzar, a business associate of Sandy Hutchens.” This statement is made in support of his argument that the claim against those defendants, including Poulson, was not discoverable until those affidavits were in hand.

[19] I have reviewed those affidavits carefully. Without doubt, they paint a damning picture of Hutchens, his wife and the companies Hutchens controlled. They indicate that from 2004 to 2009 his companies received advance fees totalling several million dollars, but funded very few mortgages. What those affidavits do not do is implicate Poulson or the other defendants in this fraudulent scheme. Poulson is mentioned only once, in the affidavit of Martin Lapedus, but only in reference to Hutchens having borrowed some money from Poulson to finance the purchase of properties in Sudbury. The defendant Alvin Meisels is also mentioned with respect to a comfort letter he wrote on August 13, 2008, but that was in connection with a Florida transaction, and had nothing to do with the transaction involving the plaintiffs. There is no evidence at all that relates specifically to the plaintiffs’ dealings with Hutchens in the fall of 2008.

[20] I agree with Haines J. that, while the plaintiffs may have learned more about the scope of this scheme from those affidavits and the results of the Mareva injunction, they knew, by September of 2008, all that they needed to know to commence proceedings, as contemplated by s. 5 of the Act.

[21] Accordingly, the action is dismissed as against Poulson. It is, therefore, unnecessary to consider the other relief sought in Poulson’s Notice of Motion.

Motion by Meisels:

[22] This motion seeks to dismiss the action as against the defendant Alvin Meisels, arising out of the failure of the plaintiffs to pay costs pursuant to the order of Haines J. dated May 31, 2013.

[23] The reasons of Haines J. dated October 30, 2012, to which reference has already been made, dealt with three motions, one of which was brought by Alvin Meisels, together with the law firms Reznick Parsons Meisels Taberner, and Blaney McMurtry LLP. Justice Haines struck the claims as against the two law firms and dismissed the action as against them. With respect to the defendant Alvin Meisels, Haines J. concluded that the Statement of Claim disclosed a reasonable cause of action but did not do so with sufficient particularity to meet the requirements of rule 25.06(8). He declined to strike the pleading, but instead granted leave to amend.

[24] Costs were dealt with by a subsequent endorsement dated February 7, 2013. In those reasons, costs were awarded to Alvin Meisels and the two law firms in the total amount of $10,000, payable within 60 days.

[25] Those costs remain outstanding in full. No explanation has been put before the court by the plaintiffs to explain this default. The plaintiffs simply ask in their factum that any costs orders be delayed until the end of the trial.

[26] Rule 57.03(2), provides as follows:

(2) Where a party fails to pay the costs of a motion as required under subrule (1), the court may dismiss or stay the party’s proceeding, strike out the party’s defence or make such other order as is just.

[27] In Bottan v. Vroom, [2001] O.J. No. 2737 (S.C.J.), Nordheimer J. dealt with an identical motion. In that case, the plaintiff claimed impecuniosity, and argued that the matter should be determined on the merits at trial. At para. 23 Nordheimer J. pointed out that failing to give effect to a costs order made by another judge amounts to second-guessing that judge’s order, which he lacks jurisdiction to do:

Third, even assuming that these parties are impecunious, I do not know of any authority, and I was not referred to any, which would permit one judge, on the basis of a party's impecuniosity, to relieve against an order made by another judge that costs be paid forthwith. To do so, I would either have to be sitting in appeal from the order (which I am not) or I would have to have a basis to vary the order. The grounds upon which an order may be varied are set out in rule 59.06 and none of those are applicable here. Further, assuming there remains a residual authority to do so in order to prevent an injustice or to reflect extraordinary circumstances, I find none here. The orders for costs which were made by Somers J., Then J. and B. Wright J. were made with full knowledge of the facts and circumstances of this case. They clearly viewed it as appropriate to order that the costs be paid forthwith in the circumstances. I am not in a position to second guess the exercise of their discretion regarding the payment of costs nor would it be appropriate for me to do so.

[28] As to the argument that it would be unjust to dismiss the plaintiff’s action absent a trial on the merits, Nordheimer J. said this, at para. 26:

Finally, the submission that the striking out of pleadings is not justified because it results in a determination of an action other than on its merits is one which is contradicted by the very existence of rules 57.03(2) and 60.12. The rationale for those rules is predicated on the fact that there will be situations where a party's position ought to be determined for procedural reasons arising from the failure of that party to abide by orders made by the court. If it was the case that the merits of the matter always had to be determined before such remedies could be imposed, there would be little room for the effective application of either of these rules.

[29] I agree with these comments. In his reasons for awarding costs, Haines J. expressly considered the submissions of the plaintiffs as to their financial inability to pay costs. He quoted from the closing paragraph of their submissions, part of which is reproduced here:

In closing, the Plaintiffs submit to your Honour, that I am a Pro Se self-represented lay litigant. I am a common man who has been financially ruined as a result of the fraud by the defendants … The Plaintiffs have a right to be heard at trial and have the case decided on its merits … A costs award against the Plaintiffs, particularly when an appeal is pending, will deny the Plaintiffs right to access to justice and will defeat the purpose of civil proceedings to determine the real matters in dispute.

[30] Justice Haines considered those submissions, but nevertheless made the following ruling at para. 15:

The plaintiffs have a right to be heard and have their claims adjudicated but that right is subject to compliance with the Rules of Civil Procedure that are designed to promote a full, fair and orderly adjudication of the issues. Litigation is often complicated and navigation through the rules can be challenging for unrepresented litigants. This is recognized and indulgences are granted. However, where, as here, the pleadings are fundamentally flawed the defendants are entitled to move for relief, and when successful, entitled to recover their reasonable costs.

[31] Costs were ordered to be paid within 60 days. Justice Haines could have ordered them to be paid at the conclusion of the trial but, with full knowledge of the facts and circumstances of the case, did not do so. I am not disposed to second-guess his views on the matter. This is a large and cumbersome lawsuit against a multitude of defendants. The professional integrity and reputation of several defendants, including Alvin Meisel, is under attack. The Statement of Claim has been found to be deeply flawed, and is now in its third iteration, which still contains many allegations that were previously struck out. For such an unwieldy case to continue, it is essential that the rules of procedure and the orders of this court be followed to the letter.

[32] In Baksh v. Sun Media, 2003 64288 (ON SC), [2003] O.J. No. 68 (S.C.J. Master), Master Dash thoroughly reviewed the caselaw under rule 57.03(2), before ordering that the plaintiff’s action be dismissed for non-payment of costs. He said this, at para. 19:

For orders of the court to have any meaning they must be enforced. I am not satisfied by cogent evidence that the plaintiff is impecunious. Even if I were so satisfied, a party should not be able to set up his own impecuniosity as a shield against costs sanctions. To allow that would mean that a plaintiff could bring, resist, or appeal motions with no fear of consequences, and would emasculate the powers provided in rules 57.03(2) and 60.12.

[33] I agree with those comments. I am not persuaded that there is any order that is more “just” in these circumstances than an order dismissing the action. Given that costs have been in default for more than one year, there is little point in granting an extension, nor have the plaintiffs asked for one.

[34] In the result, the motion is allowed. The action as against Alvin Meisels is dismissed.

Motion by Kaplan:

[35] This is a motion pursuant to rule 21.01(2), which reads as follows:

(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.

[36] The Fresh As Amended Statement of Claim alleges that Kaplan committed the torts of fraud and deceit. Those allegations are contained in paras. 134 to 140, which I will set out in full:

Claims against Rabbi Kaplan and Chabad@Flamingo

134. Rabbi Kaplan owns and runs Chabad@Flamingo. At all times material to this action, Hutchens and Tanya were members of Chabad@Flamingo.

135. Rabbi Kaplan acted as a reference for Hutchens and testified on his behalf at a sentencing hearing related to various criminal convictions against Hutchens in 2005. The court accepted his evidence and Hutchens received a two-year sentenced [sic] under house arrest as opposed to jail time, which was sought by the Crown. Moreover, Rabbi Kaplan asked other members of his congregation to write letters of support for Hutchens despite that they did not really know Hutchens and Rabbi Kaplan knew that they did not really know Hutchens but still insisted on reference letters.

136. The plaintiffs plead that Rabbi Kaplan played a vital role in encouraging potential investors, including the plaintiffs, to do business with Moishe Alexander. He did this despite his knowledge that Hutchens was a career criminal and that he was using his Hebrew name in his business dealings so that potential victims would not know that he was a convicted criminal.

137. In many instances, the particulars of which are known to Rabbi Kaplan but concealed from the plaintiffs, Rabbi Kaplan took part in the fraud scheme by negotiating with victims to provide a portion of their advanced fee back to them when he knew, or should have known, that the victims were entitled to all of the advanced fees back because Hutchens purported loan transaction was nothing more than a ruse to defraud these people of their advanced fees. Rabbi Kaplan’s negotiations included letters that did not reveal Hutchens’ true identity.

138. In exchange for his participation in the fraud scheme, Rabbi Kaplan and Chabad@Flamingo received large donations of money from Hutchens and Tanya. These large donations came exclusively from monies stolen from supposed potential borrowers of Hutchens and Tanya.

139. The plaintiffs relied on the representations and actions of Rabbi Kaplan and Chabad@Flamingo to their detriment, and like many of the other defendants, these two defendants gave credibility to Hutchens and Tanya by attesting to their bona fides as supposed religious people and honest businessmen when they were nothing but charlatans and criminals.

140. As a direct result of the conduct of Rabbi Kaplan and Chabad@Flamingo as pleaded herein, the plaintiffs have suffered damage [sic]. The plaintiffs plead that these defendants committed the torts of fraud and deceit as they knowingly assisted Hutchens and Tanya in their fraud scheme in the manner pleaded herein and did so in exchange for large sums of stolen money.

[37] The basic requirement for a pleading is set out in rule 25.06(1), which reads as follows:

25.06 (1) Every pleading shall contain a concise statement of the material facts on which the party relies for the claim or defence, but not the evidence by which those facts are to be proved.

[38] Because fraud and deceit are alleged, rule 25.06(8) is also engaged. It states:

25.06(8) Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.

[39] In Deep v. Ontario, [2004] O.J. No. 2734 (S.C.J.), aff’d [2005] O.J. No. 1294 (C.A.), Spence J. summarized the law that applies to a motion of this kind, at paras. 32 to 36:

Rule 21.01(1)(b) provides that a judge may strike out a pleading if it discloses no reasonable cause of action. The purpose of a rule 21.01(1)(b) motion is to test whether a plaintiff's allegations state a legally sufficient or substantively adequate claim. Where it is plain and obvious that is discloses no cause of action, it should be struck: Rule 21.01(1)(b); Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959 at 976-977.

A claim will be found to be legally insufficient when either the allegations it contains do not give rise to a recognized cause of action, or it fails to plead the necessary legal elements of an otherwise recognized cause of action. As explained by Borins J.A. in Dawson v. Rexcraft Storage and Warehouse Inc. (1998), 1998 4831 (ON CA), 164 D.L.R. (4th) 257 at p. 264 (C.A.),

In some cases, a statement of claim will be vulnerable to dismissal under rule 21.01(1)(b) because the plaintiff has sought relief for acts that are not proscribed under the law. The typical textbook example is a statement of claim that alleges that the defendant made a face at the plaintiff, or that the defendant drove a car of an offensive colour. In other cases, however, the statement of claim may be defective because it has failed to allege the necessary elements of a claim that, if properly pleaded, would constitute a reasonable cause of action.

In order to survive the second type of rule 21.01(1)(b) motion, a plaintiff must, at minimum, plead the basic elements of a recognized cause of action pursuant to which an entitlement to damages is claimed. The absence of a necessary element of the cause of action will constitute a radical defect on the basis of which it is plain and obvious that the plaintiff cannot succeed. Accordingly, such a claim should be struck out.

On a motion under Rule 21, the plaintiff has the benefit of an assumption that the facts pleaded are true or capable of being proven. Accordingly, the court is left to consider the legal sufficiency of the plaintiff's claim stated in its best and most positive light by the plaintiff himself. However, a court is not required to take "allegations based on assumptions and speculations" as true for the purpose of assessing the cause of action at issue. A party may therefore not supply a missing element of a cause of action by pleading speculative allegations: Region Plaza Inc. v. Hamilton Wentworth (Regional Municipality) (1990), 1990 6761 (ON SC), 12 O.R. (3d) 750 at 754 (H.C.).

Rule 21.01(1)(b) permits the court to strike out less than the entire pleading, where the portion being struck is a distinct purported cause of action. In exercising its discretion, the court should consider whether or not "paring down" the pleadings will actually result in savings of money or time for the parties: Montgomery v. Scholl-Plough Can. Inc. (1989), 1989 4045 (ON SC), 70 O.R. (2d) 385.

[40] While fraud and deceit are recognized causes of action, Kaplan submits that the plaintiffs have failed to plead the necessary legal elements of those causes of action, such that their pleading should be struck out.

[41] In Mosher v. Ontario, [2004] O.J. No. 5412 (S.C.J.). at para. 23, Smith J. identified the elements of fraud and deceit for purposes of a motion under rule 21.01(1)(b):

The four main elements of fraud or deceit are:

1. there must be a false representation of fact;

2. the representation must be made with knowledge of its falsity;

3. the representation must be made with the intention that it should be acted upon by the plaintiff in the manner which caused damages to him; and

4. it must be proved that the plaintiff actually acted upon the representation and suffered damages. (See: Bradford Building Society v. Borders, [1941] 2 All E.R. 205).

[42] A reading of the relevant paragraphs of the Fresh As Amended Statement of Claim set out above reveals that they fail to plead the necessary particulars of fraud and deceit, as required by rule 25.06(8).

[43] Paragraph 135 refers to Kaplan providing a reference letter for a sentencing proceeding that Hutchens was facing in 2005. No nexus between that letter and the transaction in 2008 is pleaded. In particular, there is no pleading that the representations made in the letter were made with the intention that they be acted upon by the plaintiffs, and that they were in fact acted upon.

[44] Paragraph 136 refers to Kaplan playing a “vital role” in encouraging potential investors to do business with Moishe Alexander, but provides no particulars that address the elements of fraud and deceit.

[45] Paragraph 137 appears to relate to transactions other than the one that the plaintiffs were involved in. It refers to “negotiating with victims”, and “a ruse to defraud these people of their advanced fees”. Once again, there is nothing that connects these allegations with the transaction in question, and nothing that addresses the elements of fraud and deceit that must be pleaded.

[46] I note that this paragraph refers to “the particulars of which are known to Rabbi Kaplan but concealed from the plaintiffs”. Since the essence of the cause of action is that false representations were made to the plaintiffs, intending that they should be acted upon and which were, in fact, acted upon, such representations must, by definition, be known to the plaintiffs. This pleading is nonsensical.

[47] Paragraph 138 contains nothing that addresses the elements of fraud and deceit.

[48] Paragraph 139 makes the bald allegation that the plaintiffs relied on the representations relating to the bona fides of Hutchens and Tanya to their detriment, but fails to particularize what representations were made, in what manner, by whom, to whom, when and where such representations were allegedly made. Furthermore, it fails to allege that such representations were made with the intention that they should be acted upon by the plaintiffs in the manner which caused damages to them.

[49] Paragraph 140 adds nothing in the way of further particulars.

[50] Mr. Hillier filed an affidavit sworn February 13, 2014 in apparent response to this motion, which contained vague allegations against Kaplan that had no connection to the 2008 transaction. I do not propose to deal with this affidavit because the motion before the court is to be determined on the pleadings alone, without evidence.

[51] I am satisfied that the plaintiffs have failed to plead the necessary elements of the causes of action of fraud and deceit. As stated by Spence J. above, “[t]he absence of a necessary element of the cause of action will constitute a radical defect on the basis of which it is plain and obvious that the plaintiff cannot succeed. Accordingly, such a claim should be struck out.”

[52] This is not a case where it is appropriate to exercise my discretion to grant leave to amend. The plaintiffs have drafted three versions of the Statement of Claim and it is still rife with defects. A review of the court file indicates that the claims against most of the defendants for fraud and deceit have already been dismissed. The following is a summary of those orders:

Haines J. October 30, 2012 - dismissed all claims against Lorne Honickman, McCague Borlak LLP, Reznick Parsons Meisels Taberner, Blaney McMurtry LLP, and Michael Spiro;

Haines J. April 9, 2013 - dismissed fraud and deceit claims against Craig (Sandy) Hutchens and Tanya Hutchens; remaining claims for damages relating to Anton Pillar order and defamation and conspiracy given leave to amend within 60 days failing which those claims would also be struck;

Haines J. May 21, 2013 – dismissed all claims against TD Canada Trust, TD Bank Financial Group and David MacKenzie.

[53] To that list of dismissal orders can be added the order that I just made to dismiss the action as against Barry Poulson, Arseneau Poulson and Alvin Meisels.

[54] By virtue of para. 5 of the order of Haines J. dated October 30, 2012 as issued and entered, portions of 19 paragraphs of the Statement of Claim were struck out. Notwithstanding that order, each and every one of the offending passages was included in the Fresh As Amended Statement of Claim issued March 11, 2013.

[55] As noted above, the claims that remained as against Craig (Sandy) Hutchens and Tanya Hutchens required amendment within 60 days of April 9, 2013, failing which they too would be struck. A review of the court file indicates that no amendments have been made to the Fresh As Amended Statement of Claim since it was issued on March 11, 2013, so those claims are presumably now dismissed as well.

[56] The corporate plaintiff Maverick Paintball Inc. was ordered by Haines J. in 2012 to appoint counsel as required by Rule 15.01, or to seek leave to waive that requirement. Counsel has never been appointed nor has leave been sought.

[57] The time for granting further indulgences to the plaintiffs has passed, particularly as it concerns the amendment of their pleadings. It is clear that there is a radical defect in the Fresh As Amended Statement of Claim, on the basis of which it is plain and obvious that the plaintiffs cannot succeed against the moving parties. An order will go that the claims as against Rabbi Mendel Kaplan and Chabad@Flamingo are struck out, and the action as against them is dismissed.

[58] If the moving parties are seeking costs, and the parties cannot agree, I will accept brief written submissions from the successful defendants within 15 days. The plaintiffs shall have 10 days thereafter to file their written response, and any reply to that response will be due within 5 days thereafter. Failing all of that, the parties will be deemed to have resolved the issue of costs between themselves. Written submissions shall be served by mail on the other parties or their counsel, and mailed with proof of service to my office at the Courthouse, 80 Dundas St., 15th Floor, Unit G, London, ON, N6A 6B3.

“T. A. Heeney R.S.J.”

T. A. Heeney R.S.J.

Released: March 14, 2014

COURT FILE NO.: 82-2012

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

Brent Hillier and Maverick Paintball Inc.

Plaintiffs

– and –

Craig (Sandy) Hutchens aka Sandy Hutchens Sandy Craig Hutchens aka Craig Hutchens aka Moishe Hutchens aka Craig Alexander aka Moishe Alexander aka Moshe Alexander aka Moishe Ben Avaham aka Moishe Ben Avohom aka Ben Avrohom aka Ben Avraham aka Fred Hayes aka Alexander McDonald aka Alex McDonald, Dave McDonald aka Mathew Kovee, Tanya Hutchens aka Tatiana Brik., TD Canada Trust, TD Bank Financial Group, David Macenzie, Barry Poulson, Arseneau Poulson, Michael Spiro, Lorne Honickman, McCague Borlack LLP, Alvin Meisels, Reznick Parsons Meisels Taberner, Blaney Mcmurtry LLP, Jan Luistermans aka Herman Luistermans, Realty 1 Real Estate Services Ltd., Fifth Avenue Private Investigators and Paralegal, Gary White, Tom Warren, Net Patrol, Rabbi Mendel Kaplan and Chabad@Flamingo, Jacob Gryn, and CO4 Computing Inc.

Defendants

REASONS FOR JUDGMENT

Heeney R.S.J.

Released: March 14, 2014

[^1]: Correction made on March 17, 2014: Counsel’s name was misspelled and accordingly this decision has been amended to reflect the proper spelling of “Eli Lipetz.”