Court File and Parties
CITATION: 990114 Ontario Ltd. v. Champion Products Corp., 2016 ONSC 7102
COURT FILE NO.: CV-15-22068
DATE: 2016-11-16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 990114 Ontario Ltd., operating as Paradise Bingo and Michael Duval, Plaintiffs
AND:
Champion Products Corp., Ashok Sood, Munsee-Delaware Nation, Patrick Waddilove, Jody Waddilove and Carmen Dolson, Defendants
BEFORE: Carey J.
COUNSEL: Raymond G. Colautti, for the Plaintiffs Sean C. Flaherty, for the Defendants Munsee-Delaware Nation, Patrick Waddilove, Jody Waddilove and Carmen Dolson
HEARD: October 24, 2016
Endorsement
[1] The defendants, Munsee-Delaware Nation, Patrick Waddilove, Jody Waddilove and Carmen Dolson say that there is no cause of action disclosed in the plaintiffs’ statement of claim against them and it should be struck. They also argue the action is frivolous, vexatious and an abuse of process. In any event, the action should be stayed until the outstanding costs order against the plaintiffs has been paid. Finally, they assert that the proposed amended statement of claim will not make things any better and the amendment should not be allowed.
[2] In asserting that there is no reasonable cause of action in either the statement of claim or the proposed amended statement of claim, the defendants make three points. First of all, there is no action that arises out of an allegation that a defence was unfounded or fraudulent. Secondly, that any allegations alleging a wrongful breach of a lease will not succeed because the leasing question was void pursuant to the Indian Act, R.S.C. 1984, c. I-S, as amended. Finally, the claims advanced are barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B.
[3] The defendants say the statement of claim and the proposed amended statement of claim are frivolous and vexatious and amount to an abuse of process because the cause of action they advance has already been dismissed by the court for delay. That decision was upheld by the Court of Appeal.
[4] The responding plaintiffs counter that the subject lease was valid and that the defendants were in breach of that lease when they sought to terminate it. They state that the lease was drafted by the lawyer acting on behalf of the Munsee-Delaware Nation and the named defendants and that they, therefore, cannot rely on its non-compliance with the Indian Act. Furthermore, they say that the plaintiffs should receive a declaration that any profits to the Munsee-Delaware Nation through the continued operation of the bingo hall that they established and furnished should be held in a constructive trust for the plaintiffs. They assert that the dismissal in 2008 is not a bar to their action as there was no hearing on the merits. They also argue that the applicable time limit for their action is not the two years under the Limitations Act, 2002, but rather the ten-year limitation period that is contained in s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15.
Factual Background
[5] These same plaintiffs started an action against the moving party defendants on June 6, 2008 (CV-08-1238-00CM) (“first action”). The claim in the first action was for damages for breach of contract, conversion and negligent representation from a claim that these defendants (MDN) wrongfully terminated a lease for a charitable bingo hall on the Munsee-Delaware First Nation reserve lands. The misrepresentation claim alleged that the plaintiffs “relied upon the representations made by the individual defendants as to what lawful arrangements could be made with the band.” A statement of defence filed on July 28, 2008, pleaded the lease was terminated for multiple reasons, including arrears of rent owing, failure of the plaintiffs to remit prescribed percentage of profits to the charitable organization and numerous failures to comply with the Gaming Control Act, 1992, S.O. 1992, c. 24. MDN defendants also pled that the lease was void and unenforceable for non-compliance with s. 28 of the Indian Act.
[6] The action was dismissed following a status hearing held March 27, 2015, by Mitchell J. Her reasons dated April 20, 2015, are found at tab 2C of the moving parties’ record. Those reasons set out in detail the inaction of the defendants and their former counsel (not Mr. Colautti). See: 990114 Ontario Ltd. v. Munsee-Delaware Nation, 2015 ONSC 2588.
[7] After establishing in her analysis that rule 48.14(13) puts the onus on the plaintiff to demonstrate there was an acceptable explanation for the delay supported by the evidence, Her Honour found that there was not (para. 46). The motions judge found at para. 38 that the plaintiffs, after failed mediation, “did little, if anything, to move this action forward”. At para. 39 and 40, there was a finding that the timetable established by the local master was ignored as well as the defendants’ efforts from time to time to establish a discovery plan. “No explanation as to why these efforts were ignored is before me in the evidence.”
[8] After dealing with the plaintiffs’ argument that post-mediation delay was caused by the plaintiffs dealing with another related action, the motions judge found no explanation for “the stagnation of this action” after the defendant in the other action made an assignment in bankruptcy. She concluded that what was being done for the entire year between September 2013 and September 2014, “remains a mystery. The only development during that time was the court’s issuance of the Second Status Notice. It appears that only the threat of dismissal spurs the plaintiffs into action and then for only a brief period.” (Para. 42.) In concluding the plaintiffs had failed to satisfy their onus under subrule 48.14(13) and dismissing the action, Her Honour found, “[t]he plaintiffs were given a lifeline at the First Status Hearing in the form of a Timetable. Aside from setting the matter down for trial to avoid a Second Status Notice, the Timetable was ignored.” (Para. 44.)
[9] In dismissing the appeal on December 18, 2015, after argument, the Ontario Court of Appeal found no errors that would justify their interference with the judge’s discretionary decision. Further, they agreed with Justice Mitchell’s conclusion, “that the only thing throughout the six-year history of this action that has spurred the appellants into action was the issuance of status notices.” See 990114 Ontario Ltd. (Paradise Bingo) v. Munsee-Delaware Nation, 2015 ONCA 923.
[10] Significantly, at para. 6, the court dealt with an argument advanced by the plaintiffs before me:
We do not agree that the fact that the respondents took the position that Danny Branoff had drafted the lease provided the appellants with an excuse for failing to move this action forward. That allegation did not amount to a new defence but rather was evidence of a defence already pleaded, namely, that the appellants did not rely on representations made by the respondents.
[11] In dismissing the action with costs fixed at $7,500, the Court of Appeal, at para. 8, concluded “[t]he motion judge carefully considered the history of this case and she weighed the relevant factors. We see no error in fact or principle.”
Analysis
[12] I agree with the moving parties that this second action is an abuse of process. It is an attempt to re-litigate the issues alleged in the first action. I agree with the defendants that it matters not who drafted the lease. Section 28 requires a mandatory consent of the Crown that was not forthcoming here. The lease is void ab initio. I agree with the Court of Appeal in its characterization of the allegation about Mr. Branoff’s drafting the lease as not being a new defence but evidence of a defence already pleaded.
[13] This is not a case where the 10-year period in the Real Property Limitations Act is applicable. There is no claim for recovery of land or rent. This is a straight breach of contract claim and, therefore, subject to the two-year limitation period in the Limitations Act, 2002.
[14] Rule 24.05(2) does not give the responding party plaintiffs an answer to the defendants’ claim that the action is an abuse of process. As in Mintz v. Wallwin, 2009 ONCA 199, to allow the plaintiffs to proceed with what is essentially the identical action as the one dismissed, would, in my opinion, bring the administration of justice into disrepute.
[15] The plaintiffs’ motion is granted dismissing the statement of claim, without leave to amend.
[16] Costs submissions were provided by both parties. Costs to the moving party defendants fixed at $5,000.
Original signed by Justice Thomas J. Carey
Thomas J. Carey
Justice
Date: November 16, 2016