CITATION: Bastien v. Egalite, 2016 ONSC 7652

COURT FILE NO.: 15-66790

DATE: 2016/12/02

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Marie France Bastien and Alex Bastien

Plaintiffs (Responding Parties)

– and –

Jim Egalite, Jonathan Collings, Stephane Langlois, Edward Bliss, Katheryn Chinkiwsky

Defendants

Self- Represented

Ashley L. Barber, counsel for Egalite

Heather J. Williams, counsel for the Defendants (Moving Parties), Jonathan Collings and Stephane Langlois

HEARD: October 25, 2016

REASONS FOR DECISION

R. Smith J.

Overview

1The three defendant lawyers, Egalite, Collings and Langlois, have brought motions under Rule 21.01(1)(b) and Rule 21.01 (3)(d) to dismiss the action and to strike out the claim against them without leave to amend.

2The plaintiffs have claimed $700,000 against Mr. Egalite, $500,000 against Mr. Collings and $300,000 against Mr. Langlois, alleging that they were all negligent and incompetent. The plaintiffs allege that all three lawyers who represented them were negligent because they failed to take the required steps to rescind or cancel the purchase of their condominium unit after closing had occurred. They wanted to have their purchase rescinded because they discovered that their condo had suffered extensive water damage when they took possession.

3The three defendant lawyers submit that the plaintiffs have only made bald allegations of negligence but have not pleaded any material facts to support their allegations. Further, they submit that the claim has no chance of success because the plaintiffs have not suffered any damages attributable to their actions or failure to take action as it was not possible to rescind the purchase without the vendors’ consent, which was refused.

Uncontested Facts

4After the plaintiffs had signed the Agreement of Purchase and Sale for their condominium, they retained Mr. Egalite to act on their behalf to complete the purchase and to ensure they obtained a valid title to their condo unit.

5The purchase of the plaintiffs’ condominium was closed at 2:30 p.m. on January 3, 2014. Unfortunately, when they took possession at approximately 6:00 p.m. that day, they discovered extensive water damage, to their condominium due to burst water pipes.

6The purchasers advised the vendors, through their lawyer Mr. Egalite, that they wanted to rescind or annul the purchase of their condo unit. The vendors offered either a monetary settlement or to carry out the required repairs to the unit. The plaintiffs refused the vendors’ offer and insisted on rescinding the transaction. Mr. Egalite attempted to negotiate a rescission of the purchase with the vendors as instructed by the plaintiffs. He was not successful in his attempted negotiations because the vendors refused to consent.

7After being advised of the water damages on January 3, 2014, Egalite contacted a contractor on their behalf to attend at the property in an attempt to mitigate the damages. The plaintiffs left their key to the property with the contractor. However, the contractor was not engaged to perform the repairs.

8At no time did Egalite advise the plaintiffs that they would be successful in rescinding the transaction. Egalite told the plaintiffs on January 6, 2014, that the vendors of the property would compensate the plaintiffs or renovate the property but they did not agree to rescind the sale.

9On February 6, 2014, the plaintiffs advised Mr. Egalite that they had retained a litigation lawyer, named Jonathan Collings, to assist them with their claims arising from the water damage to their condominium unit. No limitation periods were missed in the 30 days following the closing and Mr. Egalite did not invoice the plaintiffs for any of his efforts attempting to negotiate rescission of the transaction after it had closed.

Allegations against Mr. Collings

10In early February of 2014, the plaintiffs retained Mr. Collings to prosecute a claim against the vendors, Mr. Egalite and an insurance company. The retainer was signed on February 14, 2014. Mr. Collings sent an invoice on February 25, 2014 for $1,394.99 ($750 was paid from funds held in trust). A further invoice was sent on March 31, 2014 for $1, 361.09. Mr. Collings refused to take any further steps until his invoices were paid. The plaintiffs did not pay his invoices and so he withdrew as counsel. The assessment officer subsequently assessed his accounts at their full amounts.

Allegations against Mr, Langlois

11In July of 2014, the plaintiffs consulted Mr. Langlois to assist them with respect to the water damage to their condominium unit. They paid him a $1,000 retainer on their credit card. Langlois also attempted to negotiate a rescission of the purchase of the condominium. He sent them an invoice on July 31, 2014 for $316.40 and a further invoice on September 30, 2014 for $590.43. Both invoices were paid from funds in trust. Mr. Langlois returned the sum of $93.17 to the plaintiffs on January 9, 2015 and sought further instructions. He also wrote the plaintiffs on April 17, 2015 stating that as he had not received further instructions, he would close his file unless further instructions were received. No further instructions were provided to him by the plaintiffs and he closed the file.

12The plaintiffs allege that Mr. Egalite, Mr. Collings and Mr. Langlois were all negligent and incompetent for failing to obtain a rescission of the purchase of their condominium without pleading any other material facts.

Analysis

Legal Principles Applying to Rule 21.01(3)(d) of the Rules of Civil Procedure

Frivolous, vexatious, and abuse of process

13The terms frivolous, vexatious and abuse of process were defined in the decision of Currie v. Halton Regional Police Services Board et al., 2003 CanLII 7815 (ONCA), the Court of Appeal stated as follow at paras. 14-18:

14. Black's Law Dictionary defines "frivolous" as: "Lacking a legal basis or legal merit; not serious; not reasonably purposeful".²

15. In Foy v. Foy (No. 2) (1979), 1979 CanLII 1631 (ON CA), 26 O.R. (2d) 220 at 226, Howland, C.J.O. considered the meaning of "vexatious" under the Vexatious Proceedings Act, R.S.O. 1970, c. 481:

• The word "vexatious" has not been clearly defined. Under the Act, the legal proceedings must be vexatious and must also have been instituted without reasonable ground. In many of the reported decisions the legal proceedings have been held to be vexatious because they were instituted without any reasonable ground. As a result the proceedings were found to constitute an abuse of the process of the Court. An example of such proceedings is the bringing of one or more actions to determine an issue which has already been determined by a Court of competent jurisdiction: Stevenson v. Garnett, [1898] 1 Q.B. 677 at pp. 680-1; Re Langton, [1966] 3 All. E.R. 576.

16. In discussing the inherent power of the court to invoke the doctrine of abuse of process, apart from rule 21.01(3)(d), Finlayson J.A. for the majority in Canam Enterprises Inc. v. Coles (2000), 2000 CanLII 8514 (ON CA), 51 O.R. (3d) 481 (C.A.), rev'd on other grounds (2002), 2002 SCC 63, 220 D.L.R. (4th) 466, [2002] S.C.C. 63 at para. 31 stated:

• The court can still utilize the broader doctrine of abuse of process. Abuse of process is a discretionary principle that is not limited by any set number of categories. It is an intangible principle that is used to bar proceedings that are inconsistent with the objectives of public policy.

Goudge J.A. for the minority in the same case, stated at paras. 55 and 56:

• The doctrine of abuse of process engages the inherent power of the court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine un-encumbered by the specific requirement of concepts such as issue estoppel. See House of Spring Gardens Ltd. v. Waite, [1990] 3 W.L.R. 347 at p. 358, [1990] 2 All. E.R. 990 (C.A.).

17. It is apparent that there is a degree of overlap in the meaning of the terms frivolous, vexatious and abuse of process. What I take from the authorities is that any action for which there is clearly no merit may qualify for classification as frivolous, vexatious or an abuse of process. (Emphasis added)

18. I am mindful that when the court invokes its authority under rule 21.01(3)(d) or pursuant to its inherent jurisdiction to dismiss or stay an action, it does so only in the clearest of cases. See Sussman v. Ottawa Sun, [1997] O.J. No. 181 (Gen. Div.) at paragraph 21.

14The characteristics of a vexatious proceeding were set out in Lang Michener Lash Johnston v. Fabian, 1987 CanLII 172 (ON SC), 1978 CarswellOnt 378, 59 O.R. (2d) 353 Henry J. of the Ontario High Court of Justice included the following:

• Where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;

• 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;

• 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; [emphasis added]

• In determining whether proceedings are vexatious, the Court must look at the whole history of the matter and not just whether it was originally a good cause of action, and

• The failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious.

Legal Principles Applicable to Rule 21.01(2)(b)

15Rule 21.01(2)(b) states that a pleading may be struck on the grounds that it discloses no reasonable cause of action. No evidence is admissible on a motion to strike under this rule.

16In R. v. Imperial Tobacco, 2011 SCC 42 the Supreme Court off Canada stated that “in order to succeed, the moving party must show that it is plain and obvious that the claim has “no chance of success.”

17The principles that apply to a Rule 21.01(2)(b) motion were set out in Trillium Power Wind Corporation v. Ontario (Natural Resources), 2013 ONCA 683 at paras. 30-31 the Court of Appeal Stated that:

The analytical framework for assessing whether to strike out a pleading on the ground that it discloses no reasonable cause of actual under Rule 21.01(1)(b) of the Rules of Civil Procedure, is set out by Paul M. Perell and John W. Morden in The Law of Civil Procedure in Ontario, 1^st ed. (Markham: LexisNexis Canada Inc., 2010), at p. 445:

The following principles apply to a Rule 21 motion to strike a pleading for failing to disclose a reasonable cause of action or defence: (a) the material facts pleaded must be deemed to be proven or true, except to the extent that the alleged facts are patently ridiculous or incapable of proof; (b) the claim incorporates by reference any document pleaded and the court is entitled to read and rely on the terms of such documents as if they were fully quoted in the pleadings; (c) novelty of the cause of action is of no concern at this state of the proceeding; (d) the statement of claim must be read generously to allow for drafting deficiencies; and if he claim has some chance of success, it must be permitted to proceed.

The test is not in dispute: the claim will only be dismissed where it is “plain and obvious” that it has no reasonable prospect of success: Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959; Imperial Tobacco, at paras. 17-19; Taylor v. Canada (Attorney General), 2012 ONCA 479, 111 O.R. (3d) 161 at para 22. While the court must accept as true the material facts as pleaded, this obligation does not extend to bald conclusory statements of fact, unsupported by material facts. (Emphasis added)

18In 1317424 Ontario Inc. v. Chrysler Canada Inc., 2015 ONCA 104 at para. 8, the Court of Appeal held that where a cause of action has “certain defined, long-standing characteristics, which courts have considered essential to the cause of action,” a claim will have no reasonable chance of success if, on the facts pleaded, one of the essential characteristics of the cause of action is missing.

19In Aristocrat Restaurants Ltd. V. Ontario, 2003 CarswellOnt 5574Ontario, 2003 CarswellOnt 5574 at paras. 18-19 the court stated that a claim should be struck when “either the allegations it contains do not give rise to a recognized cause of action or it fails to plead the necessary legal elements of an otherwise recognized cause of action.” Vague allegations are also impermissible and should be struck.

20In Mustapha v. Culligan of Canada Ltd., 2008 SCC 27, [2008] S.C.R. 114 (SCC) at para. 3 the Supreme Court held that for a plaintiff to succeed in an action in negligence, he or she must prove the following four necessary elements:

a. that the defendant owed him a duty of care;

b. that the defendant’s behavior breached the standard of care;

c. that the plaintiff sustained damage; and

d. that the damage was caused, in fact and in law, by the defendant’s breach.

21In Williamson v. Toronto Police Service, 2001 Carswell Ont. 2226, at para. 51, the Court held that a pleading which merely asserts a tort, without alleging the material facts capable of supporting it discloses no cause of action. In this case, the plaintiffs merely allege that the defendants, Egalite, Collings and Langlois were negligent and incompetent without setting out any material facts to support the necessary elements of the tort of negligence.

Issue #1: Is the Plaintiffs’ action against the Defendants Egalite, Collings and Langlois Frivolous Vexation or an Abuse of Process?

22The plaintiffs’ complaint about the conduct of the three defendant lawyers is that they failed to obtain a rescission or cancelation of the purchase of their condominium after the closing had occurred. The plaintiffs appear to believe that the lawyers they retained had the ability to unilaterally rescind or cancel the closing of a real estate transaction, without obtaining the vendor’s consent. This is clearly not the case as the rescission of a completed real estate transaction could only be accomplished with the consent of the vendor or by way of a judge’s order after a hearing, provided the legal and factual basis for the remedy of rescission was established.

23The plaintiffs are upset with all three defendant lawyers for failing to meet their request that they obtain the remedy of the rescission of their completed purchase of a condominium unit. Because all three lawyers failed to obtain the result they requested, they allege in their claim that they were negligent and incompetent. In addition, the plaintiffs failed to pay Mr. Collings’ account and failed to provide further instructions to both Mr. Collings and Mr. Langlois to proceed to commence a legal action to obtain remedy they were demanding.

24The plaintiffs have only established two of the four necessary elements to prove a claim in negligence. The plaintiffs have established that the three lawyers they retained owed them a duty of care and that they have sustained damages. However, the plaintiffs have failed to plead any material facts to demonstrate that any of the three defence lawyers’ actions or inactions breached the required standard of care or that their actions or inaction caused them any damage.

25In particular, the plaintiffs do not plead that because any of the three defendant lawyers failed to cancel the purchase of the condominium unit, that they have lost the right to obtain this remedy; or that any limitation period was missed which might negatively affect their claim; or that any of the defendant lawyers advised them that such remedy was possible without obtaining the vendor’s consent.

Allegations against Mr. Egalite

26With regards to Mr. Egalite’s actions or inactions, the plaintiffs have not identified any error or negligent conduct or advice provided to them by Mr. Egalite. He took the required steps to complete his retainer and ensure that the plaintiffs’ obtained valid title to their condo unit. He was not involved in preparing or providing advice regarding any terms in the Offer to Purchase. As a result, the plaintiffs have not pleaded any material facts which could support a claim for any negligent actions or allege any material facts that any negligent advice was given to them.

27The plaintiffs do not allege that Mr. Egalite made any error in ensuring that they acquired valid title to their condominium unit, or that he failed to prepare all the required documents or to close the transaction on the agreed date. The plaintiffs have not identified any error, negligent action, or inaction on the part of Mr. Egalite that fell below the required standard of care to complete the work he was retained to perform.

28The plaintiffs are upset at Mr. Egalite for not rescinding or canceling their purchase of the condo unit as requested, after closing had occurred. However, it is not possible for any solicitor to unilaterally rescind a closed real estate transaction, as the vendors consent or a court order is required. While Mr. Egalite did attempt to negotiate a rescission or cancelation of the purchase, he was unable to do so because the vendor refused to consent to the rescission.

29There is also no evidence that Mr. Egalite’s actions of attempting to negotiate rescission or accepting the plaintiffs’ allegation that he arranged to have a contractor attend the condo to assess the damages were negligent or caused any damages to the plaintiffs. The plaintiffs have not pleaded any material facts that could possibly support a finding that they have suffered any damages that were caused by any action or failure to act by Mr. Egalite.

30In the Statement of Claim, the plaintiffs also allege that Mr. Egalite closed the transaction without ensuing that the required insurance was in place. Assuming that it was Mr. Egalite’s responsibility and not the purchaser’s responsibility to arrange insurance coverage for their condo, the plaintiffs stated that the damages to their condominium unit had occurred before the date of closing. As a result, if insurance had been in place on January 3, 2014, the policy would not have covered the loss in any event. As a result, the plaintiffs have not suffered any damage as a result of insurance only being placed on January 4, 2014 as opposed to on the closing date of January 3, 2014.

31The Plaintiffs allege that Mr. Egalite did not attend the property after they discovered the flooding in their condo. In the unlikely event that Mr. Egalite’s non-attendance at the property, following the occurrence of the flood, were found to fall below the standard of care, no damages were caused as a result in any event.

32The Plaintiffs allege that Mr. Egalite did not tell the Plaintiffs that a different contractor than the one originally retained was being used. As stated above, in the unlikely event this was found to amount to a breach of the standard of care, no damages were caused as a result of a different contractor being sent, because the contractor did not proceed with any repairs and the plaintiffs have not incurred any expenses with any contractor.

33The plaintiffs have not been interested in having the damages repaired as they refused the vendor’s offer to complete the repairs; they also refused the vendor’s offer of a cash settlement and they have not taken any steps to have the repairs completed to date.

34The plaintiffs have insisted on obtaining the remedy of rescission. In addition, the plaintiffs have not alleged that any of the three lawyers advised them that they had reasonable possibility of obtaining the remedy of rescission from the vendors, as opposed to obtaining an award of damages.

Allegations against Mr. Collings

35The allegations of negligence and incompetence made against Mr. Collings are similar to the allegations against Mr. Egalite. The plaintiffs have not pleaded any material facts supporting their allegation that Mr. Collings breached the standard of care. In fact, in cross-examination on her affidavit filed under R. 21.01 (3)(d) the plaintiff stated that she was happy with Mr. Collings’ services except that he did not obtain the remedy of rescission or cancellation of their purchase as requested. In any event, on the Rule 21.01(1)(b) analysis, the plaintiffs have not pleaded any material facts that would establish a breach of the standard of care by Collings or that his actions or inactions caused any damage to the plaintiffs. As a result, the plaintiff’s Statement of Claim against Mr. Collings merely alleges negligence but it is plain and obvious that their cause of action has no reasonable chance of success.

36Mr. Collings did not have an obligation to continue representing the plaintiffs when the plaintiffs had not paid his invoices and where no prejudice was caused to the plaintiffs by his withdrawal. The litigation had not been commenced and there was no imminent limitation date pending. In addition to not being paid, Collings’ retainer agreement permitted him to withdraw.

Allegations against Mr. Langlois

37The plaintiffs’ claim for damages against Mr. Langlois is made on the same basis as against Mr. Collings, namely, that he failed to obtain the remedy of a rescission or cancellation of the purchase of the condominium and was therefore negligent and incompetent. The plaintiffs have not pleaded any material facts to establish that Mr. Langlois’ conduct failed to meet the standard of care other than that he failed to obtain the remedy of rescission or of their purchase as sought.

38Langlois gave the plaintiffs an estimate of the costs to take further steps on their behalf but he did not receive any further instructions to take any further proceedings and closed his file after giving written notice to the plaintiffs.

39The plaintiffs’ complaint about Mr. Langlois’ conduct is that he used their deposit money to pay his invoices but failed to provide any services that were of any value to them because he failed to obtain the remedy of rescission which they sought. The Plaintiffs complaint about the value of Mr. Langlois’ services could possibly be determined by assessing his account.

40The plaintiffs have not pleaded any material facts to support a breach of the standard of care by Mr. Langlois nor have they pleaded Mr. Langlois’ unsuccessful attempt to obtain the remedy of rescission or cancellation of the sale caused any damage to the plaintiffs.

41For the above reasons, I find that it is “plain and obvious” that the plaintiffs claim has no reasonable possibility of success against Egalite, Collings or Langlois because they failed to plead any material facts to establish that their conduct fell below the required standard or caused the plaintiffs any damages.

42The action against their three former lawyers, where it is obvious that their action cannot possibly succeed is also consistent with characteristics of a vexatious procedure, identified on the Lang Mitchener case. I find that their action against Egalite, Collings, and Langlois is completely lacking in legal merit and has been instituted without reasonable grounds. As a result, I find that the claim against them is frivolous and vexatious and is struck on this basis without leave to amend.

Issue #2: Should the Plaintiffs’ Claims against Egalite, Collings, and Langlois be struck for failing to disclose a reasonable cause of action?

43For the same reasons that I have given for finding that the plaintiffs’ action against the three defendant lawyers is frivolous and vexatious except for relying on any evidence referred to in the affidavit filed under Rule 21.01 3(d), I find that the claim discloses no reasonable cause of action as the plaintiffs have only pleaded bald conclusory allegations of negligence and incompetence unsupported by any material facts.

44I find that it is “plain and obvious” that the plaintiffs’ claim has no reasonable chance of success against these three defendants because they have failed to plead any material facts to support their allegation that the three defendant lawyers’ conduct fell below the required standard of care or that their actions or failure to act, or advice given caused then any damages. These are two of the essential elements needed to establish a claim for negligence.

Disposition of Issue #2

45For the above reasons, I find that the plaintiffs’ claim against Egalite, Collings and Langlois discloses no reasonable cause of action and their claim is struck without leave to amend.

Costs

46If the defendants are seeking costs they may make brief submissions within 10 days. The plaintiffs shall have 10 days to respond.

R. Smith, J.