Court File and Parties

COURT FILE NO.: CV-12-18726 DATE: 20160617 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Ali Fayaz and 1298567 Ontario Inc., Plaintiffs

– and –

1068560 Ontario Limited, 1147160 Ontario Limited, Peaco Construction Ltd., Aliasghar Katebian, Defendants

Counsel: Sheri-Lynn Medaglia, for the Plaintiffs Diana Edmonds, for the Defendants

HEARD: June 13, 2016

Ruling on Motion

Hebner J.:

[1] The plaintiffs in this action have brought a motion requesting the following relief:

1. An order transferring Small Claims Court action bearing court file number SC-12-43332 (“small claims action”) to the Superior Court of Justice in Windsor, Ontario; and
2. An order that the following four actions be consolidated or tried together: a) the small claims action; b) this action (“the main action”); c) Superior Court of Justice action bearing court file number CV-12-17795 (“the Envirotech action”); and d) Superior Court of Justice action bearing court file number CV-12-17471 (“the line of credit action”).

The Actions

[2] All four actions involve two gentlemen, namely Ali Fayaz and Aliasghar Katebian, their wives and corporations owned by the four individuals. Ali Fayaz and Aliasghar Katebian were involved in construction and real estate development. Ali Fayaz alleges that in 1994, he and Aliasghar Katebian entered into a partnership agreement. The alleged terms of the agreement were as follows:

a) Aliasghar Katebian would advance money required to start the construction and development business and for deposits for properties to be purchased. Aliasghar Katebian would be entitled to repayment of any amounts paid up front for the business. b) Ali Fayaz would be responsible for the day-to-day management of the business, including dealing with suppliers and customers. c) Aliasghar Katebian would perform the electrical work required for the properties purchased through his company Envirotech Electric Limited and would be paid for this work at fair market value. d) Ali Fayaz would perform the physical labour and management necessary respecting the business and would be paid for this work at fair market value. e) Any and all profits after expenses would be split 50/50 between Ali Fayaz and Aliasghar Katebian.

[3] The main action was issued December 3, 2012. The plaintiffs are Ali Fayaz and 1298567 Ontario Inc., a corporation owned by him. The defendants are 1068560 Ontario Limited (a corporation owned by Aliasghar Katebian and his wife), 1147160 Ontario Limited (a corporation owned by Ali Fayaz and Aliasghar Katebian), Peaco Construction Ltd. (a corporation owned by Ali Fayaz and Aliasghar Katebian) and Aliasghar Katebian. In this action, the plaintiffs’ claim is for oppression remedies, a 50 percent ownership interest in 1068560 Ontario Limited, an accounting with respect to the three defendant corporations to determine monies owed to the plaintiffs and damages in the amount of $5 million. It is notable that Envirotech is not a defendant in this action.

[4] The small claims action was issued April 27, 2012. The plaintiff is 1068560 Ontario Limited carrying on business as Peaco Construction. The defendants are 1298567 Ontario Inc., Ali Fayaz and his wife. The claim is for the sum of $16,363.25, being an amount invoiced by Peaco Construction to 1298567 Ontario Inc. for labour and material supplied to a construction project.

[5] The Envirotech action was issued April 24, 2012. The plaintiff is Envirotech Electric Limited, an electrical business owned by Aliasghar Katebian. The defendants are 1298567 Ontario Inc., Ali Fayaz and his wife. The amount claimed is $47,021.66 for labour and material supplied by Envirotech to certain construction projects between May 1, 2010 and March 18, 2011.

[6] The line of credit action was commenced February 15, 2012. The plaintiffs are Aliasghar Katebian and his wife. The defendants are Ali Fayaz and his wife. The claim is for the sum of $381,000, being the amount withdrawn by Ali Fayaz from lines of credit secured by mortgages registered against rental properties owned by the parties.

[7] The parties agree that the Small Claims Court action should be transferred to the Superior Court and tried together with the main action. The parties also agree that the line of credit action should be tried together with the main action. Accordingly, on consent, I ordered the transfer of the small claims action to this court and the trial together of those three actions. The parties could not agree on whether the Envirotech action ought to be tried together with the main action, and argument proceeded on that issue.

Analysis

[8] Rule 6.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides as follows:

(1) Where two or more proceedings are pending in the court and it appears to the court that,

(a) they have a question of law or fact in common;

(b) the relief claimed in them arises out of the same transaction or occurrences; or

(c) for any other reason an order ought to be made under this rule,

the court may order that,

(d) the proceedings be consolidated, or heard at the same time or one immediately after the other; or

(e) any of the proceedings be,

(i) stayed until after the determination of any other of them, or

(ii) asserted by way of counterclaim in any other of them.

(2) In the order, the court may give such directions as are just to avoid unnecessary costs or delay and, for that purpose, the court may dispense with service of a notice of listing for trial and abridge the time for placing an action on the trial list.

[9] The decision of Master Dash in 1014864 Ontario Ltd. v. 1721789 Ontario Inc., 2010 ONSC 3306, at paras. 17 and 18, provides a helpful roadmap to follow when determining whether an order ought to be made under section 6.01:

In my view the proper approach on a motion for consolidation or trial together is to first ascertain whether the moving party has satisfied one or more of the three "gateway" criteria set out in rule 6.01(1)(a), (b) or (c) and then consider all relevant factors as well as section 138 of the Courts of Justice Act which directs the court to avoid a multiplicity of proceedings whenever possible, in order to exercise the court's discretion and make such order as is just. I will attempt to set out a list of factors courts have considered on motions for trial together as well as some of the "bifurcation factors" modified appropriately to reflect that this is a motion to try actions together, not sever issues within an action. I point out that the list that follows are considerations for ordering trial together of various actions, which is the relief sought on this motion, and not full consolidation of various actions, for which some different factors may apply.

A non-exhaustive list of some of the considerations on ordering trial together may, depending on the circumstances, include:

(a) the extent to which the issues in each action are interwoven;

(b) whether the same damages are sought in both actions, in whole or in part;

(c) whether damages overlap and whether a global assessment of damages is required;

(d) whether there is expected to be a significant overlap of evidence or of witnesses among the various actions;

(e) whether the parties are the same;

(f) whether the lawyers are the same;

(g) whether there is a risk of inconsistent findings or judgment if the actions are not joined;

(h) whether the issues in one action are relatively straight forward compared to the complexity of the other actions;

(i) whether a decision in one action, if kept separate and tried first would likely put an end to the other actions or significantly narrow the issues for the other actions or significantly increase the likelihood of settlement;

(j) the litigation status of each action;

(k) whether there is a jury notice in one or more but not all of the actions;

(l) whether, if the actions are combined, certain interlocutory steps not yet taken in some of the actions, such as examinations for discovery, may be avoided by relying on transcripts from the more advanced action;

(m) the timing of the motion and the possibility of delay;

(n) whether any of the parties will save costs or alternatively have their costs increased if the actions are tried together;

(o) any advantage or prejudice the parties are likely to experience if the actions are kept separate or if they are to be tried together;

(p) whether trial together of all of the actions would result in undue procedural complexities that cannot easily be dealt with by the trial judge;

(q) whether the motion is brought on consent or over the objection of one or more parties.

[10] As stated by Master Dash, the court is to first ascertain whether the moving party has satisfied one or more of the three “gateway” criteria set out in rule 6.01 (1) (a), (b) or (c). If so, the court “may” make an order under that section, including an order that proceedings be tried together. The court has the discretion to make an order, or not. In considering whether to make an order, the court may consider the non-exhaustive list of factors set out in para. 18 of the decision of Master Dash.

[11] I turn first to rule 6.01 (1) and the three “gateway” criteria listed therein.

(a) Do the proceedings have a question of fact or law in common?

[12] In the Envirotech action, Envirotech claims that it supplied labour and materials to 1298567 Ontario Inc. between May 1, 2010 and March 18, 2011. There are nine specific projects alleged. The total invoiced was $54,838.16. A payment of $7,816.50 was made, leaving an outstanding amount owing of $47,021.66.

[13] In the statement of defence, 1298567 Ontario Inc. admits owing the sum of $14,319.42 to Envirotech for one of the projects. The defendants deny that any monies are owing for the other eight projects, claiming that either Envirotech has been paid in full, Envirotech was not retained to do work, or there were deficiencies. The defendants also plead that there is an alleged partnership agreement between Ali Fayaz and Aliasghar Katebian, the alleged partnership agreement governed the business of 1068560 Ontario Limited, 1147160 Ontario Limited and Peaco Construction Ltd., and, in paras. 12 – 14:

(a) as a result, Ali Fayaz intends to commence an action against Aliasghar Katebian and the 3 named corporations claiming oppression remedies;

(b) before Envirotech’s claim can be resolved, an accounting must first be done respecting the business of the three named corporations; and

(c) the Envirotech action ought to be stayed pending the accounting being completed.

[14] I cannot conclude that the Envirotech action has a question of law or fact in common with the main action. On a review of the pleadings, it seems to me that the Envirotech action is strictly an action for payment owing for the supply of electrical services and materials to projects undertaken by 1298567 Ontario Inc. In the main action, Ali Fayaz and his company claim a 50 percent ownership interest in 1068560 Ontario Limited. The fact that Envirotech is owned by the same person as 1068560 Ontario Limited, namely Aliasghar Katebian, does not mean that there is a question of law or fact in common. Accordingly, the first gateway criteria is not met.

(b) The relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences

[15] The relief claimed in the Envirotech action is payment for specific projects. The relief claimed in the main action is much more complicated. It appears to have nothing to do with Envirotech Electric Limited. No interest is claimed in Envirotech Electric Limited. Envirotech Electric Limited is not a party. The projects referred to in the Envirotech action are not listed nor referred to in the main action.

[16] In an affidavit sworn by Jeb W. Assaf, an associate with Klaiman Edmonds LLP, lawyers for the defendants, the following evidence is given:

On his discovery, Fayaz did not allege any connection between the work done by 129 or Envirotech at the commercial units and 106, and claimed that these jobs were obtained by Fayaz and 129 for their own benefit.

The transactions and occurrences involved in the Envirotech action are separate and distinct from those involved in the Fayaz action.

[17] Although it would have been helpful to have been provided with excerpts from the discovery transcripts, this is the only evidence proffered from either side dealing with a connection, or lack thereof, between the two actions. The lack of a connection referred to in the affidavit is consistent with my review of the pleadings in both of the actions.

[18] Accordingly, I cannot find that the second gateway criteria has been met.

(c) For any other reason an order ought to be made under this rule

[19] In my view, the Envirotech action is a straightforward action by an electrical company for services rendered to specified construction projects undertaken by Ali Fayaz through his company 1298567 Ontario Inc. The action was brought under the simplified procedure provided in Rule 76 of the Rules of Civil Procedure. In my view, the genesis of this motion is that Mr. Fayaz does not want the Envirotech claim litigated before his claim in the main action. If Envirotech obtains a judgment, it would be free to collect that judgment. Mr. Fayaz does not want that to occur until his claim in the main action for an interest in 1068560 Ontario Limited and an accounting is dealt with. Indeed, he said as much in his statement of defence in the Envirotech action. In my view, this does not constitute a “reason an order ought to be made under this rule”.

[20] Accordingly, I cannot find that the third gateway criteria has been met.

[21] Given that the gateway criteria have not been met, the analysis would not move to the factors to consider on whether to order a trial together. However, I note the following:

1. The parties are not the same. Envirotech is not a party to any of the other three actions.
2. The damages are not the same.
3. The damages do not overlap.
4. The issues in the Envirotech action are relatively straightforward compared to the complexity of the main action.
5. The partnership agreement alleged by Ali Fayaz included a term that Envirotech would complete electrical work and would be paid fair market value for work done. That term itself is indicative of Envirotech not being part of the alleged partnership agreement.
6. An order was made by Verbeem J dated June 9, 2015 in the main action containing a timetable. The timetable included “any interlocutory motions to be argued by December 30, 2015”. Similarly, on August 11, 2015, a timetable was submitted on a case conference in the Envirotech action. The timetable was approved by the court. It included “any interlocutory motions are to be argued by December 20, 2015”. Although not determinative, the lateness of this motion is a factor to consider.
7. There is a pre-trial scheduled in the Envirotech action for June 27, 2016. There is a pre-trial scheduled in the main action for August 15, 2016. The main action, given its complexity, will be a long trial. Counsel estimate the main action will require three weeks of trial time. The Envirotech action, given its commencement under the simplified procedure rules and the relatively straightforward issues raised in the pleadings, can be tried in a fraction of that time.

Disposition

[22] For the reasons set out above, the motion for an order that the Envirotech action, bearing court file number CV-12-17795 be consolidated or tried with the other three actions listed herein is dismissed.

[23] Counsel may make brief submissions as to costs, within 20 days, including cost outlines.

Original signed by Justice Pamela L. Hebner Pamela L. Hebner Justice Released: June 17, 2016