SUPERIOR COURT OF JUSTICE – ONTARIO

Court File and Parties

COURT FILE NO.: CV-13-474787

MOTION HEARD: June 2, 2015

Re: MORTEZA PARDIS NEJAD

Plaintiff

v.

LEYLA SALEHPOOR also known as

LEILA SALEHPOOR and VAHID KORRAMNIK

Defendants

BEFORE: Master Lou Ann M. Pope

APPEARANCES: Atoosa Mahdavian, Law Studio Professional Corporation, for moving party plaintiffs/defendant by counterclaim

Fax: 416-487-7474

Harvey J. Ash, for defendants (limited scope retainer for defendant, Leyla Salehpoor)

Fax: 416-225-1124

REASONS FOR ENDORSEMENT

[1] There are two motions before this court brought by both parties which seek numerous forms of relief as set out below.

[2] The plaintiff seeks various relief as follows:

a) validating service of the amended statement of claim on the defendants or, in the alternative, an order extending time for service of the amended statement of claim;

b) validating service of Master Peterson’s order granting a certificate of pending litigation (“CPL”) on the defendants as of July 24, 2013;

c) leave to amend the amended statement of claim;

d) compel the defendants to deliver an affidavit of documents;

e) impose a discovery plan and timetable.

[3] The defendants seek various relief as follows:

a) Regarding the defendant, Leyla Salehpoor:

i) strike out the affidavit of service of Hassan Jaffer, allegedly sworn February 26, 2013;

ii) declaration that the defendant, Leyla Salehpoor, has not been served with either the statement of claim or the amended statement of claim;

iii) dismiss the action;

b) Regarding the defendant, Vahid Korramnik:

i) dismiss this action;

ii) in the alternative,

(A) strike paragraphs 8, 16 to 20, 23, 37, 44 to 46, 47 to 49, 61 to 64 and 66 of the proposed fresh statement of claim on the grounds that those paragraphs are prejudicial, scandalous, frivolous, or vexatious;

(B) strike paragraphs 1(b) to (e), (i), 16 to 20, 37, 50 to 52, and 55 to 64 of the proposed fresh statement of claim on the grounds that they raise new causes of action after the expiry of the limitation period;

(C) vacate the certificate of pending litigation;

iii) costs against the plaintiff’s former counsel, Adam Seif, personally.

Facts

[4] In this action the plaintiff seeks a declaration that he has an interest in property municipally known as 4146 Sheppard Avenue East, Toronto, Ontario, or in the alternative, that the defendant, Leyla Salehpoor (“Leyla”), holds his interest in the property in trust for him. He also seeks entitlement to payments of rental income from the lease of the property, a certificate of pending litigation, and other relief set out in the amended statement of claim.

[5] The facts that give rise to this action are convoluted and most of them are in dispute. The following facts are generally accepted.

[6] The plaintiff, Morteza Pardis Nejad (“Morteza”), and his brother, Mojtaba Chaghai (“Mojtaba”)(“brothers”), wanted to purchase property where they could run a used car dealership and a home where the brothers and their parents could live.

[7] When the brothers found property they wished to purchase in 2011, they approached their former real estate agent and fellow Iranian, Vahid Khorramnik (“Vahid”), the defendant herein, to act as their agent. Vahid represented the brothers when they sold their former used car business.

[8] Vahid and Leyla are spouses. Leyla’s involvement with the facts are set out below.

[9] The balance of the following facts are in dispute.

[10] It is alleged that Vahid promised the brothers that he would discount his real estate commission on the purchase of the property and he would give his commission to the brothers. Vahid offered to help the brothers get a mortgage as he was a licensed mortgage broker. The brothers ran into problems obtaining mortgage financing. Vahid proposed that they become equal partners with him, presumably in the property and the used car sales business as he had good connections to ensure that they would get mortgage financing. Relying on Vahid’s representations, the brothers agreed to become equal partners with Vahid on the understanding that the purchase price would be paid equally and all carrying costs to renovate the property would be shared equally. Unbeknownst to the brothers, Vahid submitted several mortgage applications in Mojtaba’s name, and both a commercial and a residential application. Ultimately, a residential mortgage application in Leyla’s name was approved. Believing that they had no choice because Vahid could not get a mortgage in Mojtaba’s name, they agreed to purchase the property in Leyla’s name.[^1]

[11] The day before closing, Leyla and Mojtaba entered into a trust agreement which declared that Leyla held 50 per cent ownership in the property in trust for Mojtaba and Mojtaba was to contribute equally to the down payment and future mortgage payments. On closing, the brothers paid their share of the down payment. It is alleged that the brothers also paid their share of the payments on the vendor take back mortgage. The sale of the property closed on April 21, 2011.

[12] Shortly after the closing, Mojtaba transferred his beneficial interest in the property to Morteza as Mojtaba decided he did not want to be involved in partnership with Vahid.

[13] After closing, Morteza alleges that he and Vahid entered into an oral agreement that each would share equally the costs of renovations to the property and the setup of the business, including the costs of licenses. In early November 2012, Morteza claims that Vahid prevented him from entering the property and changed the locks. In this action, Morteza claims that Vahid breached the terms of that agreement.

[14] In February 2013, Leyla transferred title to the property to Vahid without Morteza’s knowledge. Morteza claims that this transfer was done fraudulently.

This Action

[15] This action was commenced on February 22, 2013. Adam Seif and the Seif Law Firm represented Morteza at the time. The statement of claim was amended on May 29, 2013, before a defence was entered, which added a claim for a certificate of pending litigation after the Morteza learned that Vahid had listed the property for sale. Before the statement of claim was served, Morteza brought an ex parte motion and obtained an order for a certificate of pending litigation on June 14, 2013.

[16] The statement of claim was purportedly served on both defendants on February 25, 2013. The validity of the Affidavit of Service of Hassan Jaffer (“Jaffer”) declared under oath before Adam Seif on February 25, 2013 is in issue on this motion. Vahid’s evidence is that Jaffer handed him an envelope which contained a letter from Mr. Seif. He claims that the envelope did not contain the amended statement of claim. There was an altercation between Vahid and Jaffer which resulted in an assault charge against Vahid which was eventually dismissed after a trial. Jaffer’s evidence at the trial was essentially that he had never seen the affidavit of service in question before that day and it was not his signature.

[17] Only Vahid delivered a statement of defence and counterclaim on July 24, 2013 in which he claims, inter alia, that Morteza has no interest in the property, both Morteza and Mojtaba are in breach of their obligations pursuant to the trust agreement, the brothers forged Leyla’s signature on a lease, Morteza improperly registered a caution on title to the property on May 7, 2013, and Morteza failed to make full disclosure to the court on his ex parte motion for a certificate of pending litigation which was granted on June 12, 2013 which remains registered on title to the property. In his counterclaim, Vahid claims damages for slander of title and damages representing Morteza’s share of the costs of operating and maintaining the property.

[18] Morteza delivered a statement of defence to counterclaim on October 28, 2013.

[19] Morteza brought this motion first returnable on December 29, 2014. The notice of motion has been amended twice. In their cross-motion, the defendants raise the issue of lack of service of the original statement of claim on them as a result of a false affidavit sworn by Jaffer, details of which follow.[^2]

[20] Cross-examinations of all the parties were held on their affidavits and the transcripts were filed.

[21] I will now deal with each issue raised on this motion.

[22] A point of clarification needs to be addressed. Throughout the plaintiff’s motion material, he refers to the “Amended Amended Statement of Claim”; however, the document is entitled “Amended Statement of Claim.” Therefore, throughout this decision, I refer to this document as the “amended statement of claim.”

Service of the Amended Statement of Claim

[23] Morteza seeks an order validating service of the amended statement of claim on both defendants as of July 24, 2013, which is the date Vahid, only, delivered a statement of defence and counterclaim.

[24] The defendants seek an order striking out the affidavit of service of Jaffer, sworn on February 25, 2013, as it relates to Leyla only, on the grounds that Jaffer admitted under oath that the affidavit of service was false.

(i) Whether to strike out the affidavit of service of Jaffer

[25] Jaffer’s affidavit is filed as exhibit “A” to Vahid’s affidavit filed on this motion. It is purportedly signed by Jaffer and “declared” before Adam Seif on February 25, 2013. It states that he was the process server for Seif Law Firm and that on February 25, 2013 at approximately 12:20 pm he served the defendants with the statement of claim by personal service at 4146 Sheppard Avenue East, Toronto. It also states that at the time of service, he was physically assaulted by Vahid who was subsequently arrested and charged with assault.

[26] Jaffer was called as a witness to Vahid’s criminal trial. For the purpose of this motion, the defendants filed an excerpt of the transcript of Vahid’s trial. Jaffter’s evidence was essentially that he had not seen the copy of the affidavit of service before that day, he did not recall signing the affidavit, the signature was not his, once or twice in the past the law firm had signed his name on his behalf, and he had no idea what he gave to Vahid on February 25, 2013.

[27] As noted by the Court at line 22 of the transcript, “No proof, just a lot of suspicion” with respect to who created the affidavit of service.

[28] The defendants cited no authority for this court to strike out the affidavit of service. There are rules of civil procedure that permit the court to strike certain documents, for example, rule 34.15(1)(c) grants discretion to strike out a person’s affidavit for failure to attend an examination. There are also rules that grant authority to strike a pleading in certain circumstances, such as rule 25.11, if it is found that there is no cause of action.

[29] However, not cited by the defendants, Rules 1.04 and 2 are applicable. Rule 1.04 reads as follows:

1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

[30] Rule 2 deals generally with non-compliance with the Rules and the effects thereof.

2.01(1) A failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court,

(a) may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute; or

(b) only where and as necessary in the interest of justice, may set aside the proceeding or a step, document or order in the proceeding in whole or in part. (emphasis)

[31] Therefore, the Rules are to be applied liberally to secure the just, most expeditious and least expensive determination of an action and to relieve from strict compliance as is just or where and as necessary in the interest of justice.

[32] In accordance with subrule 2.01(1)(b), to strike the affidavit of service of Jaffer requires the defendants to satisfy the court that it is necessary to do so in the interest of justice.

[33] The defendants’ submits that the affidavit of service as it relates to Leyla should be struck out and Leyla should be entitled to a declaration that she was never served with the statement of claim based on the sworn testimony of Jaffer that the affidavit of service is false and the defendants’ evidence filed in this motion.

[34] Firstly, the defendants filed only an excerpt of the “certified transcript” of Vahid’s trial. The defendants filed no authority for this court to find that a document ought to be struck out based on an “excerpt” of a transcript of testimony which took place in another proceeding. Furthermore, there is no documentary proof before this court that the transcript was in fact a certified copy other than Vahid’s statement.

[35] Secondly, the defendants have not met their onus to demonstrate that it is “necessary” in the “interest of justice” to strike a portion of the affidavit as they made no submissions on this point.

[36] In conclusion, for the above reasons, the relief sought to strike the affidavit of service of Jaffer is dismissed.

(ii) Whether to validate service of the amended statement of claim on the defendants

[37] Morteza relies on rule 16.08 for an order validating service of the amended statement of claim on both defendants. Rule 16.08 provides that where a document has been served in a manner other than one authorized by the rules or an order, the court may make an order validating the service where the court is satisfied that,

(a) The document came to the notice of the person to be served; or

(b) The document was served in such a manner that it would have come to the notice of the person to be served, except for the person’s own attempts to evade service.

[38] Although not relied on by the plaintiff, rules 3.02, 1.04 and 2.01 are also applicable.

[39] Rule 3.02 provides, in part, as follows:

3.02(1) Subject to subrule (3), the court may by order extend or abridge any time prescribed by these rules or an order, on such terms as are just.

[40] The leading authority on motions to extend time for service of a statement of claim is the decision of the Court of Appeal in Chiarelli v. Weins, 2000 CanLII 3904 (ON CA), [2000] O.J. No. 296. The principles to be considered are set out at paragraphs 14 to 17 of that decision and can be summarized as follows:

a) The court should not extend the time for service if to do so would prejudice the defendant;

b) The plaintiff bears the onus of demonstrating that the defendant would not be prejudiced by the extension;

c) The defendant has an evidentiary obligation to provide some details of prejudice to him or her which would flow from an extension of time for service;

d) The defendant cannot create prejudice by the failure to do something that he or she reasonably could have or ought to have done; and,

e) Prejudice that will defeat an extension of time for service must be caused by the delay.

[41] As stated by the Court of Appeal in Chairelli at paragraph 17, each case should be decided on its facts with a focus on whether the defence is prejudiced by the delay. The Rules favour the just, most expeditious and least expensive determination of every civil proceeding on its merits. The court may grant relief from strict compliance with the Rules in order to secure the just determination of the “real matters” in dispute. (Rule 2.01(1)(a))

[42] Defence counsel advised that there is no issue regarding service of the statement of claim on Vahid as he delivered a statement of defence.

[43] In my view, it is unnecessary to validate service of the amended statement of claim on Vahid because he delivered a statement of defence and the affidavit of service of Jaffer has not been struck out.

[44] Since the affidavit of service was sworn on February 25, 2013, the plaintiff has relied on it for the fact that service of the statement of claim was effected on both defendants. Neither defendant moved since that time to strike the affidavit of service and it was not until the plaintiff brought this motion to amend the statement of claim that Leyla sought to strike it. She takes the position that the statement of claim was never served on her which is the reason why she did not deliver a statement of defence.

[45] Leyla’s evidence is that she was not at the property the day that Jaffer purportedly served the defendants with the statement of claim and she was not served at any subsequent time. She claims to have had no knowledge of this proceeding. Her affidavit contains no evidence regarding Vahid’s criminal charges and trial.

[46] Vahid’s evidence on cross-examination is that when he learned about this action in mid-June 2013, he told Leyla that he was being sued by Morteza but he did not fully understand that she was also being sued. He did not discuss it with her because she had just given birth to their daughter. Therefore, he did not tell her about this lawsuit until shortly before Leyla met Mr. Ash, defendants’ current counsel, for the first time on December 10, 2014, approximately 18 months after he learned of Mojtaba’s action.

[47] In my view, the defendants’ evidence is incredible that despite both defendants’ involvement with the brothers, Vahid being charged criminally, going through a trial on the charges, learning of the statement of claim in this action, consulting a lawyer and defending this lawsuit, that Vahid never discussed this proceeding with Leyla or brought the statement of claim to her attention. It is my view that there is overwhelming evidence to conclude with reasonable certainty that Leyla had knowledge of this action and the claims being made against her when Vahid delivered his statement of defence and counterclaim on July 24, 2013.

[48] In the alternative, it is clear from Vahid’s evidence that the statement of claim came to Leyla’s attention on or about December 10, 2014, at the latest, when she met Mr. Ash for the first time.

[49] The defendants submit that they will suffer non-compensatory prejudice if service of the statement of claim on Leyla is validated due to the expiry of the limitation period which creates a presumption of prejudice.

[50] If Leyla had notice of the claim on or about July 24, 2013, there would appear to be no limitation period issue, nor did Vahid plead a limitation defence. On the other hand, if it is found that she had notice on December 20, 2014, then expiry of the limitation period will be in issue as the facts pled in the amended statement of claim that gave rise to this action occurred at the time the property was purchased in April 2011 and February 2013 when it is alleged that the defendants fraudulently transferred title to the property from Leyla to Vahid.

[51] The jurisprudence is well established on motions to add a party to an action when there is an issue regarding discoverability of the cause of action. Where there is conflicting evidence on that issue, the court should grant the amendment given the mandatory nature of rule 26.01 with leave to the added defendant to plead a limitation period defence. The issue is best left to be determined at trial when all the evidence will be before the court and subject to cross-examination.

[52] It is the defendants’ position that Leyla will suffer non-compensable prejudice if service is validated because, given the expiry of the limitation period, she is prohibited from adding Mojtaba as a third party to this action. Notably, Leyla asserts no evidence of prejudice in her affidavit, and particularly her intention to add Mojtaba as a third party had she been served with the statement of claim within the timelines under the Rules. Her only evidence regarding prejudice is that the plaintiff’s proposed new causes of action against her are statute barred.

[53] For the above reasons, I find no non-compensable prejudice to Leyla if service of the statement of claim on her is validated.

[54] The legal principle that a party’s action ought not be dismissed on a technicality but heard on its merits must be applied in these circumstances. It is the purpose of rule 2.01(1) regarding the effect of non-compliance with the rules and grants the court discretion to “grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute.” In addition, consideration must be given to another legal principle that a party ought not to be prejudiced by his or her lawyer’s neglect or inadvertence.

[55] For the above reasons, I find that Leyla had notice of the statement of claim at the earliest on July 24, 2013 or, at the latest, on December 10, 2014. I therefore validate service of the amended statement of claim on Leyla as of December 10, 2014, with leave to Leyla to plead a limitation period defence.

Proposed Amendments to Amended Statement of Claim

[56] The plaintiff submits that the proposed amendments merely particularize allegations previously pleaded and any new claims were brought before the expiry of the limitation period. The proposed amendments are extensive such that the plaintiff proposes to deliver a fresh as amended statement of claim. The plaintiff submits that the amendments will not cause the defendants any non-compensable prejudice as the defendants have not produced their affidavit of documents and examinations for discovery have not been held.

[57] The defendants submit that neither the statement of claim nor the amended statement of claim contains a cause of action against Vahid and no relief is sought against him in paragraph one of the claim. Therefore, they oppose some of the proposed amendments on the grounds that they are new claims which are statute barred. They oppose other proposed amendments on the grounds that they are prejudicial, scandalous, frivolous, or vexatious.

[58] The applicable rules are as follows:

26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

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.

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.

25.11 The court may strike out or expunge all or part of a pleading or other document, with or without leave to amend, on the ground that the pleading or other document,

a) may prejudice or delay the fair trial of the action;

b) is scandalous, frivolous or vexatious; or

c) is an abuse of the process of the court.

[59] The rules provide that amendments to pleadings shall be made at any stage of an action to ensure compliance with the principles enunciated in rules 1.04(1) and 2.01(1), unless the prejudice occasioned thereby cannot be dealt with by costs or an adjournment.

(i) Whether proposed amendments are prejudicial, scandalous, frivolous or vexatious

[60] The references below are to paragraphs of the proposed Fresh As Amended Statement of Claim.

[61] Paragraph 8: Although the plaintiff makes no claim for Vahid’s commission fees, this amendment is allowed as it merely provides more detail to the facts plead in paragraph 7 of the amended statement of claim. This pleading is relevant to the relationship between the parties.

[62] Paragraphs 16 to 20: Part of these proposed amendments involve moving paragraphs 11 through 14 of the amended statement of claim under the subheading “The Fraud” found in both versions. With respect, I disagree with defence counsel that the claim for fraud is irrelevant because there is no claim for fraud in paragraph 1. Paragraph 1(b) contains a claim for damages for “fraudulent conveying” and negligence which are alleged in paragraphs 17 and 20 of the proposed amendments. These amendments are permitted.

[63] Paragraph 23: In my view this is a proper pleading. It is relevant to the relationship between the parties and the plaintiff’s allegation of an oral agreement between him and Vahid regarding title to the property. This amendment is allowed.

[64] Paragraphs 44 to 46: The subheading before these paragraphs is entitled “Criminal Charges Laid Against Vahid.”

[65] Paragraph 44 is permitted as it pleads the date that the plaintiff gave Leyla notice of his claim for 50 per cent interest in the property. This is a material fact.

[66] Paragraph 45 contains the date the action was commenced which is not a material fact that is necessary to be pled. This paragraph is not permitted.

[67] Paragraph 46 sets out the circumstances of an attempt to serve the defendants with the statement of claim, an allegation that Vahid “physically assaulted” the process server, and the resultant criminal charges. I decline to accept that that this pleading is relevant to Vahid’s conduct toward the plaintiff. This event post-dates the issuance of the statement of claim and post-dates the events that led to the plaintiff’s claim relating to the purchase of the property in question. Essentially, the alleged assault occurred as a result of the prior dealings between the parties. They are not relevant to the plaintiff’s claims as they are not material facts that form the basis for any of the claims. In my view, the proposed amendment is scandalous and proposed for inflammatory reasons. Therefore paragraph 46 is not allowed. Hence, the subheading is also not permitted for the same reasons.

[68] Paragraphs 47 to 49: Firstly, the proposed pleading fails to state the particular charges to which Vahid pled guilty. Thus, it is a bald statement unsupported by any material fact. Secondly, the facts post-date the dealings between the parties. In my view, they are not relevant to the plaintiff’s claims, are scandalous and proposed for inflammatory reasons. The fact that Vahid allegedly pled guilty to a provincial offence will not assist the trier of fact in determining whether Vahid committed the torts alleged by the plaintiff. To allow this pleading will delay the action by permitting additional questions at examinations for discovery and lengthen the trial. Therefore, these amendments are not permitted.

[69] Paragraph 66: Given my ruling regarding paragraphs 47 to 49, the references to the Real Estate and Business Brokers Act and the Real Estate Council of Ontario’s Code of Ethics are also not permitted.

(ii) Whether the proposed amendments are new causes of action made after the expiry of the limitation period

(a) Fraud, Fraudulent Conveyance, Negligence and an Accounting

[70] It is the defendant’s position that neither the statement of claim nor the amended statement of claim contains a cause of action against him nor do they seek any relief against him. Therefore, they submit that the proposed amendments at paragraphs 1(b) through (e), 16 to 20, 50 to 52 and 55 to 64 are all new claims against Vahid that are statute barred.

[71] A careful review of the amended statement of claim reveals at paragraphs 16, 18 and 19, claims against both defendants for fraud relating to title to the property, fraudulent conveyance, and an alternative claim in negligence relating to the mortgage application. However, although the plaintiff made those claims in the body of the pleading, he failed to seek any remedy against Vahid in paragraph 1. The plaintiff now seeks to assert all claims against both defendants and to remedy the drafting errors.

[72] The proposed amendment for an accounting was claimed previously at paragraph 1(a) iv although it was phrased as monies that could be “traced.”

[73] Notably, Vahid defended against all these allegations in his statement of defence.

[74] After canvassing the jurisprudence, L.C. Leitch J. in Bank of Montreal v. Morris, [2013] O.J. No. 3090, at paragraph 46, held the following regarding what constitutes a new cause of action:

A new cause of action is not asserted if the amendment: (a) pleads an alternative claim for relief arising out of the same facts previously pleaded and no new facts are relied upon; (b) amounts to different legal conclusions from the same set of facts; (c) provides particulars of an allegation already pleaded; (d) provides additional facts upon which the original right of action is based; (e) does not alter the nature of the claim; or, (f) arises from the core factual nexus as the facts and circumstances become clearer and mature.

[75] I find that these proposed amendments are not new causes of action as they were pled against both defendants previously. Further, these proposed amendments arise out of the same set of facts pled previously.

[76] For those reasons, the following proposed amendments relating to fraud, fraudulent conveyance, negligence and an accounting are permitted: paragraph 1(b) regarding negligence and fraudulent conveyance, 1(c), 16 to 20, and 41.

(b) Balance of proposed amendments in issue

[77] I find that the following proposed amendments are new claims against both defendants as they were not pled previously nor was any relief claimed for them:

a) Breach of contract;

b) Breach of duties by Leyla as trustee;

c) Breach of duties by Vahid;

d) Conversion;

e) Misrepresentation;

f) Misappropriation of funds;

g) Restitution for unjust enrichment.

[78] I also find that the following proposed amendments are not new claims in that relief was claimed in paragraph 1 of the amended statement of claim; however, no material facts were specifically pled in support of those claims in the body of the pleading:

a) Unjust enrichment;

b) Constructive trust;

c) Vesting of title to the property;

d) Sale of the property.

[79] I find that the proposed amendment in paragraph 1(b) for “monies had and received” is not a proper cause of action and is therefore not allowed.

[80] Importantly, Vahid defended each and every one of the plaintiff’s claims fully as if the claims were made against him. He made significant admissions and claims in his statement of defence and counterclaim which I review below.

[81] He admitted to being the successor to Leyla on the Declaration of Trust and sought to rely on the indemnity provision contained in the Declaration. (paragraph 19 of Statement of Defence)

[82] He also admitted that Mojtaba contributed $100,000 toward the purchase price of the property. (paragraph 22 of Statement of Defence)

[83] He admitted that the plaintiff and Leyla signed a Declaration of Trust in 2012 (allegedly backdated to May 21, 2011) which named the plaintiff as beneficiary in place of Mojtaba. (paragraph 24 of Statement of Defence)

[84] He admitted that Leyla transferred title to the property to him in February 2013. (paragraph 28 of Statement of Defence)

[85] He pled legal and equitable set-off regarding any amounts that may be found owing to the plaintiff. (paragraph 35 of the Statement of Defence)

[86] Lastly he asserted a counterclaim including a claim for damages for, inter alia, slander of title and a share of the operating costs of the property.

[87] For the above reasons, the proposed amendments set out at paragraph 78 above are permitted.

Limitation Period

[88] The defendants submit that the proposed amendments are being made after the expiry of the limitation period. As discussed above at paragraph 52 regarding adding a party to an action, when there is conflicting evidence on the issue of discoverability of the cause of action, a court will grant the amendment given the mandatory nature of rule 26.01 with leave to plead a limitation period defence. I apply the same principle to the proposed amendments under subheading (ii) above given that the proposed amendments do not rely on any new facts, they do not alter the nature of the claim and they arise from the “core factual nexus as the facts and circumstances become clearer and mature.” (Bank of Montreal v. Morris, para. 46)

[89] For the above reasons, I allow all of the proposed amendments at paragraph 77 above, with the exception of 1(b) for “monies had and received.”

[90] The final amendments in issue are paragraphs 50 to 52 that are preceded by the subheading “Defendants’ Fraudulent Attempts to Sell the Property.” This is a new claim as it relates to alleged events that occurred after the amended statement of claim was issued that gave rise to the plaintiff having obtained a certificate of pending litigation as claimed in the proposed amendment at paragraph 1(g). In the amended statement of claim, the plaintiff claimed that Leyla acted fraudulently in her dealings with the title to the property, and I have allowed amendments that expand on the fraud allegations.

[91] The defendants provided no authority to refuse an amendment that pleads facts that occurred subsequent to issuance of the action. In my view, these amendments provide additional facts upon which the original claim and the amendments are based. Therefore, they are allowed.

[92] In conclusion on the relief sought to amend the amended statement of claim, the proposed amendments are allowed with the exception of the following:

a) The claim for “monies had and received” in paragraph 1(b);

b) paragraphs 45 and 46, including the subheading “H. CRIMINAL CHARGES LAID AGAINST VAHID”;

c) paragraphs 47 to 49;

d) references to the Real Estate and Business Brokers Act and the Real Estate Council of Ontario’s Code of Ethics in paragraph 66.

Certificate of Pending Litigation (“CPL”)

[93] The defendants seek to have the CPL discharged on the basis that the plaintiff has failed to prosecute his action with dispatch and, Mr. Seif, plaintiff’s former counsel, failed to serve the motion materials on the defendants after the CPL was obtained.

[94] They rely on section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C.43 as follows:

The court may make an order discharging a certificate,

a) where the party at whose instance it was issued,

b) claims a sum of money in place of or as an alternative to the interest in the land claimed,

c) does not have a reasonable claim to the interest in the land claimed, or

d) does not prosecute the proceeding with reasonable diligence;

e) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or

f) on any other ground that is considered just,

and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.

[95] Rule 42.01(4) imposes a positive obligation on a party who obtains an order for a CPL to forthwith serve it, together with a copy of the notice of motion and all affidavits and other documents used at the hearing of the motion, on all parties against whom an interest in land is claimed in the proceeding.

[96] This action was commenced on February 22, 2013. After amending the claim to seek an order for a CPL in May 2013, the plaintiff brought an ex parte motion before Master Peterson on June 12, 2013 seeking a CPL. The order was granted and the CPL was registered on title to the subject property on June 14, 2013. There is no dispute that the order and the motion material were not served on the defendants at any time. It appears that sometime in July 2013, Mr. Fromstein, counsel for the defendants at the time, learned of the CPL order and obtained a copy of the order and the materials from Mr. Seif. Shortly thereafter, the plaintiff changed counsel from Mr. Seif to Mr. Doodnauth who delivered the plaintiff’s defence to counterclaim in October 2013. In January 2014, the plaintiff changed counsel again to Roger Gosbee who never filed a notice of change of lawyer. He changed counsel again in July 2014 to his current counsel who has delivered the plaintiff’s affidavit of documents, drafted a discovery plan, attempted to schedule examinations for discovery and brought this motion.

[97] The only explanation offered by the plaintiff for his failure to serve the CPL order and materials is inadvertence by Mr. Seif.

[98] The defendants submit that the plaintiff has not prosecuted this action with reasonable diligence because it was commenced more than two years ago and has not proceeded past the pleadings stage as the statement of claim is now going through its third amendment.

[99] Pleadings were closed in late October 2013 after the plaintiff delivered a defence to the counterclaim. The plaintiff delivered his affidavit of documents in late September 2014. The defendants changed counsel to their current counsel in late November 2014. The plaintiff scheduled this motion in September 2014 which was not heard until June 2, 2015.

[100] In Master Sandler’s short endorsement in 971715 Ontario Inc. v. Robinson, 1989 CarswellOnt 493, at para. 9, he discharged the CPL as he found that there was a complete absence of reasonable efforts to serve the order and prosecute the action with due diligence. There is little explanation in the Master’s reasons for finding a failure to prosecute the action with reasonable diligence. He cites another case where the parties delayed five months in serving the “writ.” It is uncertain what he was referring to regarding this delay and thus I find this case of no assistance on this motion.

[101] In 931473 Ontario Ltd. v. Coldwell Banker Canada Inc., [1991] O.J. No. 1150 (O.C.J.-Gen Div.), Sutherland J. stated that the onus is on the party seeking the discharge of a CPL to persuade the court that its discretion ought to be exercised in favour of the discharge.

[102] With respect, I do not agree that this action has not proceeded past the pleadings stage. The plaintiff delivered his affidavit of documents in late September 2014 and between August and October 2014, plaintiff’s counsel requested the defendants’ affidavit of documents and to schedule examinations for discovery. Despite his change of counsel several times, I find that the plaintiff has attempted to advance this action with reasonable diligence. There have been no significant gaps of time with inactivity. I consider the plaintiff’s efforts to find appropriate counsel an effort to prosecute this action with reasonable diligence.

[103] For those reasons, I decline the defendants’ request to discharge the CPL.

[104] I also decline to validate service of the CPL order. Clearly it was never served despite it coming to the defendants’ attention through counsel. The plaintiff has provided no evidence of any attempts to serve the order.

Affidavit of Documents, Discovery Plan and Timetable

[105] The plaintiff did not pursue this relief.

Dismissal of Action

[106] Given my above rulings, I decline to grant this relief.

Costs against Adam Seif personally

[107] The defendants amended their cross-motion to seek this relief; however, neither defendant adduced any evidence regarding the grounds for such an extraordinary order. In fact, it does not appear that Mr. Seif was served with the motion record as no affidavit of service on him was filed. He is required to have notice of this motion pursuant to Rule 37.07(1). Furthermore, the defendants’ factum contains no submissions or law regarding this issue and defence counsel made no oral submissions on it. Thus I decline to grant this relief.

Conclusion

[108] The plaintiff’s motion:

a) To validate service of the amended statement of claim on Leyla is successful and service has been validated as of December 10, 2014;

b) To validate service of the CPL order is dismissed;

c) For leave to amend the amended statement of claim is granted in part. The following opposed amendments are permitted:

(i) paragraph 1(b) negligence and fraudulent conveyance, 1(c), 16 to 20 and 41;

(ii) Breach of contract;

(iii) Breach of duties by Leyla as trustee;

(iv) Breach of duties by Vahid;

(v) Conversion;

(vi) Misrepresentation;

(vii) Misappropriation of funds;

(viii) Restitution for unjust enrichment;

with the exception of the following:

(i) The claim for “monies had and received” in paragraph 1(b);

(ii) paragraphs 45 and 46, including the subheading “H. CRIMINAL CHARGES LAID AGAINST VAHID”;

(iii) paragraphs 47 to 49;

(iv) references to the Real Estate and Business Brokers Act and the Real Estate Council of Ontario’s Code of Ethics in paragraph 66.

The defendants’ cross-motion:

a) To strike out the affidavit of service of Jaffer is dismissed;

b) For a declaration that Leyla has not been served with the statement of claim and amended statement of claim is dismissed;

c) To dismiss the action is dismissed;

d) To strike some of the proposed amendments is granted in part;

e) To discharge the CPL is dismissed;

f) For costs against Adam Seif, personally, is dismissed.

[109] Leyla shall have 20 days to deliver a statement of defence from the date the issued Fresh As Amended Statement of Claim is served on her, with leave to plead a limitations defence. Vahid is also granted leave to amend his statement of defence and counterclaim to plead a limitations defence within the same timeline.

Costs of the Motion

[110] Counsel did not file costs outlines. Given the divided success on these motions, each party shall bear his own costs.

(original signed)

Released: November 5, 2015 Master Lou Ann M. Pope

[^1]: There is no evidence to explain the following: i) why Vahid submitted a commercial mortgage application and a residential mortgage application, ii) why Vahid applied for a mortgage in Mojtaba’s name only, iv) how Vahid could apply for a mortgage in Mojtaba’s name without Mojtaba’s knowledge and without his signature on the application. It appears that there are gaps in the facts. It appears there were likely numerous discussions between the parties during the relevant times regarding financing, ownership and a partnership that are not set out in the material filed.

[^2]: Leyla retained Vahid’s counsel, Harvey J. Ash, to represent her to defend Morteza’s motion and bring a cross motion on a limited scope retainer as she did not deliver a defence to this action.