CITATION: Kakoutis v. Bank of Nova Scotia, 2016 ONSC 2300
COURT FILE NO.: 582/15
DATE: 2016 04 05
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: LOUIS KAKOUTIS and EFFIE KAKOUTIS, Plaintiffs
AND:
The Bank of Nova Scotia, Defendant
BEFORE: Trimble J.
HEARD: April 4, 2016
COUNSEL: Louis Kakoutis for himself and Effie Kakoutis
Adrian Visheau for the Bank of Nova Scotia
REASONS FOR JUDGMENT
[1] The Bank moves to strike the Plaintiffs’ action as revealing no cause of action under r. 21.01(1)(b), and as frivolous or vexatious, or an abuse of process under r. 21.01(3)(d). The Bank says that this action is an attempt by the Plaintiffs to re-litigate that which was decided by Pollak J., on April 7, 2015, from which the Plaintiffs’ appeal was dismissed on December 4, 2015, but for which leave to appeal to the Supreme Court of Canada has been sought but not yet determined.
[2] The Kakoutises ask that the Bank’s motion be dismissed, and its defence be struck as deficient and, itself, an abuse of process.
The Toronto Action:
[3] According to the decision of Pollak J., the Kakoutises had a mortgage and line of credit with the Bank, secured against their home. Mr. Kakoutis says that on February 22, 2012, he attended at the Bank and tried to pay cash of $1,188.00 toward the debt. The Bank’s investigation concluded that there had been no cash payment, but that a payment from the Kakoutis’ deposit account had been applied back to the Kakoutis’ deposit account. The Kakoutises said that the payment had not been paid back; rather the Bank lost the payment or it had been misappropriated. They ceased all payments on their mortgage (except for one minimum payment on March 1, 2012), and on November 20, 2012, sued for damages of almost $1.24 million.
[4] Because the Kakoutises failed to make their scheduled mortgage payment on February 9, 2012, when Mr. Kakoutis made the $1,188 payment on February 22 the mortgage was already in default. The Bank in a position to begin to realize on its security. Accordingly, the Bank defended the Kakoutis’ action and counterclaimed seeking possession of the property. They filed their Notice of Sale on February 1, 2013.
[5] The Bank moved for summary judgment on its counterclaim, and sought a dismissal of the Plaintiffs’ action. The Plaintiffs too motioned for judgment against the Bank.
[6] Pollak J., on April 7, 2015, allowed the Bank’s counterclaim, and dismissed the Plaintiffs’ claim. She awarded the Bank a total of $423,986.71, with interest at 4 per cent on the line of credit portion of the amount and 2.25 per cent on the mortgage portion. Although she requested costs submissions, the Plaintiffs never responded. She awarded the Bank $30,964.72 in costs.
[7] The Plaintiffs contested the Defendant’s form of order which the Registrar settled on June 26, 2015.
[8] On May 1, 2015, the Plaintiff appealed from Pollak J. to the Court of Appeal, which dismissed the appeal on December 4, 2015, and awarded $10,000 in costs. The Plaintiffs contested the form of the order which the registrar settled on January 27, 2016.
[9] On February 1, 2016, they sought leave to appeal to the Supreme Court of Canada. I was told in argument that the Defendant responded to that submission, although the Plaintiffs say they never received it.
The Milton Action:
[10] On April 9, 2015, two days after Pollak J. released her reasons in the Toronto action, the Plaintiffs commenced this action. By May 5, 2015, the Bank filed a pro forma defence to prevent the Plaintiffs from noting it in default and brought this motion thereafter.
[11] While the Toronto action was a debt action by the Bank, the counterclaim was much more for the Plaintiffs. They claimed “general and aggravated damages for gross negligence, negligent representation, incompetence, breach of contract, breach of security and breach of duty of care…”, claiming general, special, aggravated and punitive damages. They accused the Bank of incompetence and lying, of negligence and intentional falsehood. They say that the Bank used falsified or incomplete video surveillance. They say that the Bank or its employee stole their money, and inappropriately reported to credit rating agencies that the Kakoutises were in default. They claimed for mental suffering, inconvenience and discomfort caused by the Bank’s breach of contract.
[12] In this action (the Milton Action), the Plaintiffs claim $6.45 million. The causes of action listed in the Statement of Claim are abuse of process, harassment and intentional infliction of emotional distress relating to the Bank’s conduct in the Toronto action. The facts claimed in support of these cause of action include the misappropriation of the $1,188 payment, the Bank’s “deception” which resulted in a denial of the Plaintiff’s right to be heard, setting dates without consulting the Plaintiffs, the Bank’s trying to introduce incomplete video footage, the Bank’s failure to adduce expert evidence concerning the footage, the Bank’s posturing and use of tactics to get its way, the use of self-serving affidavits, and the Bank’s regular attempts to “deliberately frustrate justice”.
Positions:
[13] The Bank says that the Statement of Claim should be struck under r.21.01(1)(b) as revealing no reasonable cause of action. It is an attempt to re-litigate the Toronto action. It discloses no cause of action, and no amount of amendment will cure its deficiencies. It should be struck under r. 21.01(3)(d) as being frivolous, vexatious and an abuse of process.
The Kakoutises say that it is not plain and obvious that the causes of action pleaded in the Statement of Claim cannot succeed, and therefore, the matter should proceed to a trial. Alternately, they say that leave should be given to amend the Statement of Claim, if there are deficiencies. They say that the Toronto action was a simple contract dispute, and the Milton action advances different causes of action. With respect to the Bank’s defence, its blanket denial is an abuse of process. In their oral argument, they said that is it an affront to justice that the Bank’s tactics achieved the result that they did in the Toronto action, and that this action should proceed to right the injustice done in the other action.
Decision:
[14] The Plaintiffs’ action is dismissed as frivolous and vexatious, and an abuse of process, as it is an attempt to re-litigate what was decided in the Toronto action. In addition, it is plain an obvious that it cannot succeed.
Analysis:
Frivolous, vexatious and an abuse of process, R. 20.01(3):
[15] An action is an abuse of process where it seeks, in its essence, to re-litigate a matter which has already been decided, where, in the circumstances, res judicata and issue estoppel do not apply (see Behn v. Moulton Contracting Ltd., 2013 SCC 26 (at 39-41). It also applies to end an action where the causes of action claimed were ones that were known or ought to have been known, and could have been raised in the earlier proceedings (see Reddy v. Oshawa Flying Club, [1992] O.J. No. 1337 (S.C.J.) at p. 5). Generally, to be ‘frivolous and vexatious’, the action must be devoid of merit. To be an abuse of process is different. Abuse of process is a flexible concept arising from the Court’s inherent jurisdiction to control its process, thereby allowing a court to prevent the misuse of its procedure in a way that would be manifestly unfair to a litigant (see Ben, supra, para. 40).
[16] In Currie v. Halton (Region) Police Services Board 2003 7815 (ON CA), [2003] O.J. No. 4516 the Ontario Court of Appeal, commencing at paragraph 10, discusses the application of the frivolous and vexatious rule. At paragraph 11 the Appeal Court refers to the decision of Lang Michener et al v. Fabian et al (1987) 1987 172 (ON SC), 59 O.R. (2d) 353, in which Henry J. summarized the characteristics of vexatious proceedings:
(a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceedings;
(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, if no reasonable person can reasonably expect to obtain relief, the action is vexatious;
(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;
(d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;
(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;
(f) the failure of the person instituting the proceedings to pay the costs of the unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious;
(g) the respondent’s conduct in persistently taking un-successful appeals from judicial decisions can be considered vexatious conduct of legal proceedings.
[17] In my view, the Milton action is frivolous and vexatious, and constitutes an abuse of process. The Kakoutises are re-litigating issues that were litigated in the Toronto proceeding.
[18] In the Milton action, the Plaintiffs say that the Defendants, through sharp tactics prevented or tried to frustrate their motion; improperly adduced video evidence, scheduled court dates without clearing the dates with the Plaintiffs, and improperly raised concerns about Mr. Kakoutis’ mental ability.
[19] In this action, the Plaintiffs have fixed new cause of action labels to the same facts that founded the Toronto action. A Plaintiff must bring forward in an action all issues arising from a set of facts, which the party ought to have known with reasonable diligence (see Reddy, supra, at pg. 4, Graymac v. Feldman (1990), 1990 6939 (ON SC), 46 CPC (2d) 125 (C.A.). Had it been pleaded, I would have stayed the Milton action as res judicata under r. 21.01(1)(a), but that was not pleaded. However, it is an abuse of process to permit the Milton action to continue. It would be manifestly unfair to the Defendants to force them to defend this action, arising out of the same facts as the Toronto action, merely because the Plaintiffs either forgot or failed to advance causes of action in the Toronto action, it now wishes to advance.
[20] I note that the motions judge ignored the video recordings. All of the other complaints made by the Plaintiffs ought to have been, and most were raised before Pollak J. or other judges hearing interlocutory matters in this file. They could also have been raised in the Court of Appeal. Finally, if counsel’s conduct was as reprehensible as claimed by the Plaintiffs, it ought to have been addressed as a matter of costs. It was not.
[21] With respect to the suggestion that Mr. Kakoutis suffered from mental illness, this was said in open court. The Plaintiffs appear to concede that this is protected by absolute privilege. In any event there is reason to raise this question. Mr. Kakoutis’ abilities had been questioned before and found lacking (see Rishi v. Kakoutis, 2011 ONSC 7184 and Kakoutis v. Singh, 2008 17562 (ON SC).
Failing to Disclose a Cause of Action, Rule 21.01(1)(b):
[22] Given my decision that the Milton action is an abuse of process, it is unnecessary to address the issue of no reasonable cause of action. In the event that I am incorrect, however, I deal with the issue of whether the Statement of Claim discloses a reasonable cause of action.
[23] I also would have found that the action should be dismissed as failing to disclose a reasonable cause of action.
[24] In Wellington v. Ontario, 2011 ONCA 274, [2011] O.J. No. 161 (C.A.), at paragraph 14 the Appeal Court discusses the criteria for a Rule 21 motion to strike and sets out the following:
The allegations of fact pleaded must be accepted as proven;
To succeed the defendant must show that it is plain and obvious that the plaintiff cannot succeed at trial;
The claim should not be struck merely because it is novel; and
The pleadings must be read generously with allowances for drafting deficiencies.
[25] In Beardsley v. Ontario (Provincial Police), 2000 22696 (ON SC), [2000] O.J. No. 4057, Lalonde J. at para. 16 refer to Doe v. Metropolitan Toronto Municipality (Commissioners of Police) (1990), 1990 6611 (ON SC), 74 O.R. (2d) 225 (Div. Ct.) and quotes therefrom as follows:
“Before considering the several causes of action pleaded, it may be helpful to review some of the principles relating to statements of claim generally. The following factors are significant:
(1) The pleadings must disclose a cause of action founded in law. So long as this criterion is met, the novelty of the cause of action is of no concern.
(2) In determining whether a cause of action exists, the material facts pleaded are to be taken as proved. However, this principle does not apply where the alleged facts are based on assumptive or speculative conclusions which are incapable of proof.
(3) If the facts, taken as proved, disclose a reasonable cause of action, that is, one with some chance of success, then the action may proceed.
(4) The statement of claim must be read as generously as possible, with a view to accommodating any inadequacies in the form of allegations due to drafting deficiencies.”
[26] In Norris v. Gatien 2001 2486 (ON CA), [2001] O.J. No. 4415, the Court of Appeal noted at paragraph 12 that a claim should not be dismissed at an early stage unless it is plain and obvious that it discloses no reasonable cause of action.
[27] In paragraphs 36 to 37 of the Statement of Claim, the Plaintiffs say that Mr. Kakoutis has suffered from difficulty breathing at night, and an irregular heartbeat. They plead that the Bank’s conduct and abuse put them under unbearable stress that contributed to these problems, there being no diagnosed physical cause.
[28] The stress of litigation, or as it is more frequently called “litigation neurosis” is not compensable in and of itself (see Landry v. Landry, 2012 NSSC 443 (S.C.) at para. 37; Bullock v. Trafalgar Ins. Co., [1996] O.J. No. 2566 (S.C.J). In order for psychological injury to be compensable, it must be a serious, prolonged and rise beyond ordinary annoyances, anxieties and fears that people accept (see Mustafa v. Culligan, 2008 SCC 27, [2008] 2 S.C.R. 114 at para. 9. The psychological effects claimed by Mr. Kakoutis do not reach the level required to be independently actionable. They appear to be the physical manifestations of ordinary and transient upsets that come with hotly contested litigation.
[29] Hence, it is plain and obvious that this claim cannot succeed.
[30] Had I not dismissed the claim for the reasons stated above, I would have struck the Kakoutis’ action, with leave to amend. With respect to the causes of action claimed of abuse of process, harassment and intentional infliction of emotional harm, I agree with the Bank that with each of these causes of action, the Plaintiffs have failed to plead the facts relating to some essential element of each of them. This, however, could have been cured by an amendment.
Costs:
[31] The parties may address who should pay whom costs, and in what amount, in writing. The Bank’s submissions are due ten business days after the release of these reasons and the Kakoutis’ submissions are due five business days thereafter. Submissions are limited to three pages, excluding bills of costs and cases.
Trimble J.
Date: April 5, 2016
CITATION: Kakoutis v. Bank of Nova Scotia, 2016 ONSC 2300
COURT FILE NO.: 582/15
DATE: 2016 04 05
ONTARIO
SUPERIOR COURT OF JUSTICE
Louis Kakoutis and Effie Kakoutis, Plaintiffs
AND:
The Bank of Nova Scotia, Defendant
Reasons for Judgment
Trimble J.
Released: April 5, 2016