Court File and Parties

COURT FILE NO.: CV-13-481063 MOTION HEARD: 2017-06-07

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Riva Plumbing Limited et al, Moving Party Plaintiffs AND: Anthony Ferrari et al, Responding Party Defendants

BEFORE: Master Jolley

COUNSEL: T. Gordner, Counsel for the Moving Party Plaintiffs W. Ross MacDougall, Counsel for the Responding Party Defendants Anthony Ferrari and 531302 Ontario Inc. J. Maggisano, Counsel for the Responding Party Defendants Icon Plumbing, Mike Ladisa and Joseph Ferrari G. Cobham, Counsel for the Responding Non Party, Aleem Aziz, Plaintiff in the action sought to be consolidated

HEARD: 7 June 2017

Reasons for Decision

[1] The plaintiff brings this motion to consolidate this action with a wrongful dismissal action brought against it by a former employee Aleem Aziz (the “Aziz Action”).

[2] The threshold test for a consolidation order is set out in Rule 6.01(1) of the Rules of Civil Procedure. The two actions must appear to have a question of law or fact in common or claim relief arising out of the same transaction or series of transactions or occurrences.

[3] If that threshold is met, there are a number of factors to then be assessed to determine whether consolidation should be ordered. These were articulated by Master Dash in his decision of 1014864 Ontario Ltd. v. 1721789 Ontario Inc., 2010 ONSC 3306 and include an assessment of whether the proposed consolidation would avoid a multiplicity of proceedings, per section 138 of the Courts of Justice Act. As an overarching principle the court must also determine whether consolidation would achieve the just, most expeditious and least expensive determination of the proceedings on their merits (Rule 1.04).

[4] This action (the “Riva Action”) is grounded in a dispute between former shareholders, Luca Montanaro and Anthony Ferrari. It is alleged that Ferrari, along with a combination of the other defendants, started a competing business in violation of a shareholders’ agreement and a settlement agreement reached between Ferrari and Montanaro that left Montanaro with ownership of Riva Plumbing (“Riva”). Riva and Montanaro allege not only breach of that settlement agreement but also breach of fiduciary duties, unlawful interference with economic relations, inducing breach of contract, conspiracy and unjust enrichment. The plaintiffs allege in various paragraphs of the statement of claim that the defendants solicited employees of Riva, which the defendants deny. The plaintiffs seek $5,000,000 in damages, which they propose to increase to $10,000,000, along with an accounting and a forensic audit of the defendants’ competing business.

[5] The Aziz Action was commenced in Newmarket under the Simplified Rules. In his statement of claim, Aziz alleges that he was wrongfully dismissed from his employment with Riva. He pleads that Riva did not have cause to fire him and that it did so as a reprisal for testimony he gave that favoured Ferrari in the earlier shareholder dispute. Riva denies that this was the basis for it terminating Aziz’ employment. It pleads that Aziz was insubordinate and was conducting himself in a manner to force Riva to fire him. Riva has brought a counterclaim against Aziz for $50,000 alleging Aziz breached his duties to Riva and breached his contract. For its counterclaim, Riva relies on the allegations contained in its defence. They range from allegations of theft of inventory to dishonesty about Aziz’ performance but they do not allege that Aziz was somehow involved in the actions of Ferrari in allegedly breaching his non-compete and inducing customers or employees to leave Riva. While Riva argued that the solicitation of Riva employees was a common fact between the Riva Action and the Aziz Action, it is not an issue raised in the Aziz pleadings.

[6] While there are “facts” in common, I do not find that there are “questions of fact” and certainly not questions of law in common in these actions. Nor are any common facts material.

[7] The facts and issues in question in the Aziz Action are straightforward: did Riva have cause to terminate Aziz’ employment; if Aziz was terminated without cause, what is the applicable notice period and what are his damages; did Aziz breach his contract with Riva in conducting himself as alleged in the statement of defence and counterclaim; if so, did Riva suffer damages. As noted, Riva does not rely on any action taken by Aziz in the earlier shareholders’ dispute as the basis for cause. While it argues that Aziz’ poor conduct may have been motivated by his allegiance to the departed shareholder Ferrari or even encouraged by the defendants in the Riva Action so that he could freely join their business after his employment was terminated, the motivation for his conduct is irrelevant to the Aziz Action and not a “question of fact” in dispute. Aziz’ conduct, regardless of its motivation, will either constitute cause and/or a breach of his contract or it will not.

[8] Solicitation of Riva employees is not a common question of fact between the actions as Riva does not allege that Aziz was involved in soliciting or was, in fact, solicited himself. If Aziz were solicited by Ferrari to join the defendants, that may be evidence against Ferrari in the Riva Action. However, in terms of the Aziz Action, it would only impact any damages award as the income earned by Aziz at the alleged Ferrari business would be deducted as mitigation if it occurred within the applicable notice period. The source of any income Aziz earned – be it with the Ferrari business or an entirely different business - is irrelevant. The quantum is what is relevant to his wrongful dismissal damages claim.

[9] If there were any common issues or questions of fact, I find they are not of sufficient importance in relation to the other facts or issues at play to warrant consolidation on that basis (Canadian National Railway v. Holmes, 2011 ONSC 4837 at paragraph 43; Drabinsky v. KPMG, [1999] O.J. No. 3630 at paragraph 33).

[10] Even if the plaintiff were to meet the threshold test in Rule 6.01, I find the considerations set out in 1014864 Ontario Ltd. do not support consolidation.

[11] While there may be some overlapping facts, the issues are not interwoven. Aziz is not accused of participating in any solicitation of Riva’s customers. At best, Aziz may be a witness in the Riva Action on the issue of solicitation of employees as it is alleged he eventually joined the defendant Icon as an employee (I note, however, that all parties agree that Riva terminated Aziz’ employment and the Icon materials indicate that Aziz did not become employed by Icon until some 20 months after that termination). It is also suggested that Aziz might have information about the events leading to Ferrari’s alleged establishment of the competing Icon business.

[12] This is not the case of the same parties making a tactical decision to bring multiple actions against each other arising out of the same occurrence. The defendants in the Riva Action are not parties to the Aziz Action. Aziz is not a party to the Riva Action. Only Riva is a party to both actions. Aziz will be brought into a much more complex matter where discoveries will take days, not hours (as in his present Simplified Rules action) and where many complicated causes of action are raised.

[13] Similarly I find no risk of inconsistent findings. Whether or not Aziz was terminated for cause will have little or no bearing on the Riva Action. The cause alleged for Aziz’ termination does not implicate him in the allegations that Ferrari breached the settlement agreement and the non-compete in the shareholders’ agreement. Similarly, whether Ferrari breached his non-compete agreement in the shareholders’ agreement and the settlement agreement will have no bearing on the Aziz Action.

[14] While it is not determinative, I note that the Aziz Action is brought under Rule 76. The advantage to him having done so (and having waived his claim for damages in excess of $100,000) would be lost were his action to be consolidated with an action as lengthy and complex as the Riva Action is likely to be. Rather than keeping the “pre-trial discovery costs within some manageable range”, as was a rationale for consolidation in Canadian National Railway v. Holmes, above at paragraph 50, those discovery costs would increase exponentially for Aziz with no corresponding decrease for the Riva Action parties. Rather than adjudicating the Aziz Action in the most expeditious and cost effective manner, the opposite result would be achieved and no advantage would be gained in the Riva Action. This, I find, would not be a just outcome.

[15] I do not find that consolidation of these actions would achieve any of the policy considerations underlying the consolidation rule, namely to avoid a multiplicity of proceedings, to promote expeditious and inexpensive determinations of disputes or to avoid inconsistent judicial findings. As a result, the motion is dismissed.

[16] Counsel for Aziz prepared the largest portion of the responding materials as the stakes were arguably the highest for his client. Aziz shall have his costs on a partial indemnity basis in the amount of $10,000.00 inclusive of HST and disbursements. The defendants Anthony Ferrari and 531302 Ontario Inc. shall have their partial indemnity costs in the amount of $4,000.00 inclusive of HST and disbursements. I also fix the partial indemnity costs of the defendants Icon Plumbing, Mike Ladisa and Joseph Ferrari at $4,000.00 inclusive of HST and disbursements.

Master Jolley Date: 12 June 2017