CITATION: Gahazi-Daryani v. Gibsons LLP, 2016 ONSC 694
COURT FILE NO.: 08-CV-43115/10-49948
DATE: 20160128
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Masoumeh Ghazi-Daryani, Applicant/Plaintiff
AND
Gibsons LLP and D. Kenneth Gibson, Respondents/Defendants
BEFORE: Mr. Justice Robert N. Beaudoin
COUNSEL: John J. Cardill, for the Applicant/Plaintiff
John Parr Telfer, for the Respondents/Defendants
HEARD: January 25, 2016
ENDORSEMENT
[1] On the first day of trial, the Plaintiff, Masoumeh Gahazi-Daryani (Masoumeh), sought to amend her Statement of Claim to advance a claim for damages in the amount of $240,000. The Defendants oppose the amendments as being out of time.
Background
[2] Masoumeh is the mother of Mazdak Anvari (Anvari) who had been a long-time client of the Defendant, D. Kenneth Gibson (Gibson), a partner of the Defendant, Gibsons LLP (Gibsons). Anvari operated a travel agency, 1091873 Ontario Inc. (109).
[3] A number of loans were advanced to 109 from Trevway Holdings Ltd. (Trevway). Trevway was also a client of Gibsons. In September 2005, Anvari assigned an Ottawa taxi plate, registered in his name, as collateral security for his indebtedness to Trevway.
[4] 109 ran into business difficulties and in April 2006, another General Security Agreement (GSA) was executed between 109 as debtor and Gibsons as creditor. This GSA secured debts to Gibsons for legal services. Anvari defaulted on his loan, was ultimately charged with offences under the Travel Industry Act, 2002, closed his travel agency business in November 2006, and fled Canada as an absconding debtor.
[5] Gibsons sold the taxi plate in October 2008 and applied the proceeds of sale to satisfy Anvari’s debts. The Plaintiff claims that Anvari held the plate in trust for her. There is a live issue as to whether Gibson had any knowledge of the alleged trust before selling the plate.
Procedural History
[6] These proceedings were originally commenced as an application issued on November 5, 2008 and styled APPLICATION UNDER: The Solicitors Act, R.S.O. 1990, c. S.15. The application was brought under rule 14.05 (2) (Application under statute ) and sought an order for a reference pursuant to section 9 of the Act which provides:
Assessment where a party not being the principal, pays a bill of costs
- (1) Where a person, not being chargeable as the principal party, is liable to pay or has paid a bill either to the solicitor, his or her assignee, or personal representative, or to the principal party entitled thereto, the person so liable to pay or paying, the person’s assignee or personal representative, may apply to the court for an order referring to assessment as the party chargeable therewith might have done, and the same proceedings shall be had thereupon as if the application had been made by the party so chargeable. R.S.O. 1990, c. S.15, s. 9 (1).
What special circumstances may be considered in such case
(2) If such application is made where, under the provisions hereinbefore contained, a reference is not authorized to be made except under special circumstances, the court may take into consideration any additional special circumstances applicable to the person making it, although such circumstances might not be applicable to the party chargeable with the bill if he, she or it was the party making the application. R.S.O. 1990, c. S.15, s. 9 (2).
[7] Documents not previously disclosed were given to the Defendants on the morning of the commencement of the trial. These include correspondence from the Plaintiff’s former solicitor, Mark Mossey, and James Barnes, who had been successful in a previous assessment against the Defendants. From this correspondence, it is evident that Mr. Mossey was seeking advice from Mr. Barnes and he considered an action for damages against Gibson. All material facts about the possible cause of action against the Defendants were known at that time. It appears that the Plaintiff chose to first assess Gibsons’ accounts and use any funds resulting from a reduction of the accounts to fund future litigation against the Defendants.
[8] Since Masoumeh had not paid the Gibsons’ account, she needed to bring herself within the provisions of section 9 of the Act of to have Gibsons’ account assessed. She had to plead special circumstances.
[9] On September 14, 2009, the Defendants brought a motion to pay the balance of the funds received from the sale of the taxi plate into court. On February 1, 2010, the Plaintiff made a motion for an order that those funds be paid out to her, which order was granted on consent. The Defendants brought a cross-motion for directions under Rule 38.10 to convert the application and to allow a trial of the issue of Masoumeh’s entitlement to have the account assessed.
[10] On consent, Kane J. ordered that the Applicant deliver a Statement of Claim, the Respondent deliver a Statement of Defence, and that the action proceed through discovery. The Application was then treated as an action but it remained an Application under the Act wherein the issue was Masoumeh’s entitlement to have the Gibsons’ accounts assessed. For some reason, a Fresh Statement of Claim with a new court file number was issued on November 18, 2010. This appears to have been issued in error as no new fresh action was required to give effect to Kane J.’s Order.
[11] The new Statement of Claim seeks “an assessment” rather than an “order for assessment as the party chargeable” and claims a declaration that the funds from the taxi plate are “beneficially owned by the Plaintiff in trust for the Plaintiff.”
[12] The drafting leaves much to be desired, but it nevertheless makes it clear that the issue is whether or not the surplus belonged to the son or to the mother, and if the latter, whether she was entitled to the order under the Act. There were no claims for damages.
[13] When the Statement of Claim was served some nine months after the Order of Kane J., the Defendants pleaded the Limitations Act, but throughout the remaining procedures, the Defendants assumed that the proceeding was continued as an action to allow a trial of the issue. At Gibson’s discovery, his counsel refused the delivery of Gibson’s file as being premature since the Plaintiff had yet to obtain an order for the assessment.
[14] In January 2013, the Defendants brought a motion for summary judgment. The only issue was whether the Plaintiff could show the ownership of the taxi plate on the basis of an unregistered trust document. If the funds from the sale of the plate were hers, could she then obtain an order that Gibson’s accounts be assessed?
[15] Master MacLeod’s Endorsement of March 20, 2014 reads as follows:
The issue is this. Is it plausible that the plaintiff can show the funds used by Mr. Gibson to pay his account were ultimately her funds and therefore she is effectively paying the bill so as to qualify within section 9 of the Solicitors Act.
[16] He concluded that it was probable that the Plaintiff could show that the Defendants had knowledge of her interest in the plate and he dismissed the motion for summary judgment. The matter was then scheduled for trial, and there were no new developments until this motion to amend the Statement of Claim was presented on the first day of trial with little notice to the Defendants. I adjourned the motion in order to give the Defendants an opportunity to respond.
[17] The Plaintiff delivered an Amended Motion Record which contains the affidavit of a senior law clerk from the offices of the Plaintiff’s solicitors. This is not the best evidence, but in any event, it simply repeats counsel’s argument that the amendments in the new prayer for relief do not raise any new cause of action, and they simply particularize the relief claimed which arises out of the same facts, transactions, and occurrences that are pleaded and upon which all examinations have been conducted.
[18] In argument, the Plaintiff maintained that the claim for damages was simply an alternate claim on the basis of facts already pleaded. When pressed, counsel could not identify the cause of action giving rise to a claim in damages other than to claim that Gibson owed a duty of care to the Plaintiff as she was a former client and he could not prefer his interests before those of a former client. None of this is pleaded in the amended claim.
[19] I suggested that the only claim that appeared possible on the basis of the pleadings as drafted would be a claim in conversion, at which point counsel agreed. The Plaintiff relies on the decision of Healey J. in Beauchamp (Litigation guardian of) v. Gervais 2015 ONSC 5848. After reviewing the case law, she concluded at para. 23:
The preceding authorities establish that in order to qualify as something other than a new cause of action the proposed amendments must, in substance, be: (i) an alternative claim for relief, or a statement of different legal conclusions based on no new facts or not going beyond the factual matrix from which the original claim arose; (ii) better particulars of the claims already made; (iii) a correction of errors in the original pleading; or (iv) the assertion of a new head of damage arising from the same facts. If the amendments cannot be characterized in one of these ways, the amendments should not be permitted, in order to not deny a defendant the right to rely upon a limitations statute.
[20] I agree with this statement of the law, but in Beauchamp, and in all the cases cited by Healey J., there was an existing cause of action and a claim for damages generally founded in a claim in negligence of some form.
[21] In this case however, there was never an action or a claim for damages or any cause of action ever pleaded. The only proceeding before this court is an application for narrow relief pursuant to a specific statute and Masoumeh had to provide evidence of special circumstances. In the usual course, the Solicitors Act allows a client to obtain an order on requisition from a local registrar for the delivery of the assessment of a solicitor’s bill. The procedure which follows is a reference pursuant to Rules 54 and 55. A reference is not an action within the meaning of the Rules. Accordingly, a simple application made under the Solicitors Act, which merely allows a non-client who has paid the bill to stand in the shoes of the actual client, cannot become an action.
[22] Notwithstanding that Rule 38.10 provides that the application shall thereafter be treated as an action in respect of the issue to be tried, an order pursuant to Rule 38.10 does not retroactively convert an application into an action from the date of the commencement of the proceedings. The proceeding continues to be an application which is henceforth to be treated procedurally but not substantively as an action. The parties in this case agreed to exchange pleadings to identify the issue to be tried. This type of application is not an action which is amenable to the mandatory operation of Rule 26 which applies to proceedings commenced by Statement of Claim.
[23] The evidence before me discloses that the Plaintiff knew she had the option of seeking damages in 2008 and that she or her counsel chose not to do so. The anticipated proceeds from this application were expected to fund subsequent litigation.
[24] This new claim for damages is a fresh action commenced long after the two year limitation period prescribed in the Limitations Act. For these reasons, the motion to amend is dismissed. The parties may make brief submissions with respect to costs within 15 days of the release of this decision.
Mr. Justice Robert N. Beaudoin
Date: January 28, 2016
CITATION: Gahazi-Daryani v. Gibsons LLP, 2016 ONSC 694
COURT FILE NO.: 08-CV-43115/10-49948
DATE: 20160128
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Masoumeh Ghazi-Daryani, Applicant/Plaintiff
AND
Gibsons LLP and D. Kenneth Gibson, Respondents/Defendants
BEFORE: Mr. Justice Robert N. Beaudoin
COUNSEL: John J. Cardill, for the Applicant/Plaintiff
John Parr Telfer, for the Respondents/Defendants
ENDORSEMENT
Beaudoin J.
Released: January 28, 2016