Court File and Parties

COURT FILE NO.: CV-18-594153-0000 DATE: 2018/08/23 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Sheila Radovancevic, Plaintiff – and – 3Gen Development Group Inc., 2577689 Ontario Ltd., Millie Quigley, Homeward Inc. o/a Real Estate Homeward Brokerage, Defendants

COUNSEL: Peter Carlisi, for the Plaintiff Jamie VanWiechen, for the Defendants 3Gen Development Group Inc. and 2577689 Ontario Ltd. Amy Spagnolo, for the Defendants Millie Quigley, Homeward Inc.

HEARD: August 14, 2018

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] In this action, the Plaintiff, Sheila Radovancevic, sues 3Gen Development Group Inc., 2577689 Ontario Ltd., Millie Quigley, and Homeward Inc. for damages arising from an abortive real estate transaction.

[2] Pursuant to Rule 21, the Defendant 3Gen Development moves for an Order striking out the Statement of Claim as disclosing no reasonable cause of action. In the alternative, pursuant to Rule 21, it moves for a determination that it is no longer a party to the written Agreement of Purchase and Sale and is not vicariously liable for the conduct of the Defendant Millie Quigley.

[3] For the reasons that follow, 3Gen Development’s motion should be dismissed.

B. Facts

[4] The facts are taken from the Amended Statement of Claim, and for the purposes of a motion under Rule 21, these facts are assumed to be true.

[5] Ms. Radovancevic listed her property at 74 Gatwick Avenue, Toronto with Homeward Inc., which carries on business as a Real Estate Homeward Brokerage. Ms. Quigley was the real estate salesperson acting for Ms. Rodovancevic.

[6] On March 2, 2017, Ms. Radovancevic and 3Gen Development signed an Agreement of Purchase and Sale. The sale price was $845,000. 3Gen Development paid a deposit of $50,000. The transaction was scheduled to close on June 1, 2017.

[7] Having an agreement to sell her home at 74 Gatwick Avenue, Ms. Radovancevic, on March 25, 2017, signed an agreement to purchase a house in the Town of Coburg.

[8] On dated May 18, 2017, Alex Nisenker, the real estate agent acting for 3Gen Developments, sent an email message to Ms. Quigley and another agent acting for Ms. Radovancevic requesting an amendment to the Agreement of Purchase and Sale. The email message stated:

Hi Tim & Millie,

My client on 74 Gatwick has set up a stand-alone numbered company in order to develop and build the house. Ownership is exactly the same (same person) just a different company name for their own purpose.

Nothing else changes. Same closing, Lease is till good. Etc. Kindly have your seller sign off and return to me.

Thanks, Alex

[9] On May 22, 2017, Ms. Radovancevic signed the requested amendment by which the parties agreed to delete 3Gen Development as the purchaser and to insert the Defendant, 2577689 Ontario Inc., as the purchaser.

[10] The signing of the requested amendment is the heart of the litigation, and how this event is pleaded is at the heart of 3Gen Development’s motion to strike the pleading. Paragraphs 10 to 15 of the Amended Statement of Claim state:

6. The Plaintiff states and it is a fact that the Defendant, Millie Quigley, requested the Plaintiff Sheila Radovancevic to execute an amendment to the Agreement deleting the Defendant 3GEN as purchaser and substituting the Defendant , 2577689 Ontario Ltd, as purchaser without advising the Plaintiff, Sheila Radovancevic, of the consequences of same or offering the Plaintiff, Sheila Radovancevic, an opportunity to have her lawyer advise her with respect to same which said amendment was executed on the 22nd day of May, 2017 (hereinafter referred to as the "Amendment").

7. The Plaintiff states and it is a fact that the Defendant, Millie Quigley, misrepresented to the Plaintiff that there would be no legal affect upon the Plaintiff executing the Amendment relying on an email from the Defendant 3Gen’s representative.

8. The Plaintiff states that had the Plaintiff been advised that by executing the Amendment the Defendant 3Gen Development Group Inc. would not be allegedly responsible for any breach of the Agreement of Purchase and Sale and that the only entity that would be liable of the Agreement and Purchase and Sale would be the Defendant, 2577689 Ontario Ltd., the Plaintiff would not have executed the Amendment.

9. The Plaintiff states that the Amendment is as a result invalid or alternative was a result of the conduct of the Defendants and all Defendants are liable to the Plaintiff as a result of the execution of the said Amendment notwithstanding its therefore liable to the Plaintiff with respect to the Plaintiff's claims.

10. The Plaintiff Sheila Radovancevic states and it is a fact that at all material times the Defendants, Homeward, 3Gen and Ontario Ltd. were and vicariously liable for the conduct of the Defendant, Millie Quigley.

11. The Plaintiff Sheila Radovancevic states and it is a fact that the Defendants knew or ought to have known that the purpose of the Amendment was to avoid the Defendant, 3Gen, being subject to damages in the event the Agreement was not completed by substituting the Defendant, 2577689 Ontario Ltd., as purchaser and thereby depriving the Plaintiff, Sheila Radovancevic, from obtaining a judgment against the Defendant, 3Gen.

[11] On June 1, 2017, 2577689 Ontario Ltd. refused to close the purchase of the 74 Gatwick Avenue property.

[12] Without the funds from the 74 Gatwick Avenue transaction, Ms. Radovancevic was unable to close the purchase of the property in Coburg.

[13] Ms. Radovancevic claims damages arising from the failure of both transactions to close. She also claims forfeiture of the deposit paid on the 74 Gatwick Avenue transaction.

C. 3Gen Development’s Submissions

[14] While it was conceded during argument that it would be possible in the circumstances of this case, to plead a misrepresentation claim against 3Gen Developments, 3Gen Developments submitted that after two attempts to do so, Ms. Radovancevic had not done so, and, therefore, her claim against 3Gen Developments should be struck.

[15] 3Gen Developments submitted that neither the original nor the amended Statement of claim plead any wrongdoing in the signing of the Agreement of Purchase and Sale nor any wrongdoing by 3Gen Developments with respect to the signing of the amendment.

[16] 3Gen Development submits that the misrepresentations that are alleged to cause harm are those made by Ms. Quigley.

[17] 3Gen Development submits that Ms. Radovancevic does not plead that she relied on any misrepresentation made by 3Gen Development or by its real estate agent.

[18] 3Gen Development pleads that neither it nor its real estate agent were employees of Homeward Inc. and, therefore, there is no basis for a vicarious liability claim.

D. Discussion

[19] In R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at paras. 17-25, the Supreme Court of Canada noted that although the tool of a motion to strike for failure to disclose a reasonable cause of action must be used with considerable care, it is a valuable tool because it promotes judicial efficiency by removing claims that have no reasonable prospect of success and it promotes correct results by allowing judges to focus their attention on claims with a reasonable chance of success.

[20] Where a defendant submits that the plaintiff’s pleading does not disclose a reasonable cause or action, to succeed in having the action dismissed, the defendant must show that it is plain, obvious, and beyond doubt that the plaintiff cannot succeed in the claim. Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 164 D.L.R. (4th) 257 (Ont. C.A.). The court's power to strike a claim is exercised only in the clearest cases. Temelini v. Ontario Provincial Police (Commissioner) (1990), 73 O.R. (2d) 664 (C.A.).

[21] A motions judge is entitled to consider any documents specifically referred to and relied on in the pleading. Web Offset Publications Ltd. v. Vickery (1999), 43 O.R. (3d) 802 (C.A.), leave to appeal dismissed, [1999] S.C.C.A. No. 460; Corktown Films Inc. v. Ontario, [1996] O.J. No. 3886 (Gen. Div.); Montreal Trust Co. of Canada v. Toronto-Dominion Bank, [1992] O.J. No. 1274 (Gen. Div.); Re*Collections Inc. v. Toronto-Dominion Bank, 2010 ONSC 6560. In assessing the cause of action or the defence, no evidence is admissible and the court accepts the pleaded allegations of fact as proven, unless they are patently ridiculous or incapable of proof. A-G. Canada v. Inuit Tapirisat of Canada, [1980] 2 S.C.R. 735; Canada v. Operation Dismantle Inc., [1985] 1 S.C.R. 441; Nash v. Ontario (1995), 27 O.R. (3d) 1 (C.A.); Folland v. Ontario (2003), 64 O.R. (3d) 89 (C.A.).

[22] The elements of a claim of negligent misrepresentation are: (1) duty of care based on a special relationship between the plaintiff and the defendant; (2) an untrue, inaccurate, or misleading representation; (3) the defendant making the representation negligently; (4) the plaintiff having reasonably relied on the misrepresentation; and, (5) the plaintiff suffering damages as a consequence of relying on the misrepresentation. Queen v. Cognos, [1993] 1 S.C.R. 87.

[23] The elements of a claim of fraudulent misrepresentation are: (1) a false statement by the defendant; (2) the defendant knowing that the statement is false or being indifferent to its truth or falsity; (3) the defendant having an intent to deceive the plaintiff; (4) the false statement being material and the plaintiff having been induced to act; and, (5) the plaintiff suffering damages. Parna v. G. & S. Properties Ltd. (1970), 15 D.L.R. (3d) 336 (S.C.C.) at p. 344; Fiorillo v. Krispy Kreme Doughnuts, Inc. (2010), 98 O.R. (3d) 103 (S.C.J.) at paras. 66-67; [Derry v. Peek (1889), 14 App. Cas. 925 (H.L.)](Derry v. Peek (1889), 14 App. Cas. 925 (H.L.)).

[24] The elements of a claim of vicarious liability are: (1) that there must be a close enough relationship between the employer and the tortfeasor that it would be appropriate to impose vicarious liability appropriate; and (2) the tortfeasor’s wrong is so connected with his or her employment that it can be said that the employer has introduced the risk of the wrong. E.D.G. v. Hammer, 2003 SCC 52; M.B. v. British Columbia, 2003 SCC 53; 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 S.C.R. 983; Bazley v. Curry, [1999] 2 S.C.R. 534; Jacobi v. Griffiths, [1999] 2 S.C.R. 570; London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 299; K.L.B. v. British Columbia, 2003 SCC 51.

[25] If Ms. Radovancevic’s Amended Statement of Claim is read strictly, there is traction to 3Gen Developments’ submissions; however, that is not the case, if the Amended Statement is read generously. As she says in her factum for the motion:

In this case the Plaintiff's allegations manifest a cause of action grounded on the conduct of the Defendants who made misrepresentations to the Plaintiff, through their agents, and the Plaintiff relied on those misrepresentations and because of that reliance, sustained damages.

[26] If paragraphs 10 and 11 of Ms. Radovancevic’s Amended Statement of Claim are read generously, so that her references to Ms. Quiley are references to the Defendants collectively (as is the case of the references she makes in paragraphs 12 to 15 of the pleading), then it is manifest that 3Gen Dev has some explaining to do. Visualize:

6. The Plaintiff states and it is a fact that the Defendant Millie Quigley the Defendants requested the Plaintiff Sheila Radovancevic to execute an amendment to the Agreement deleting the Defendant 3Gen as purchaser and substituting the Defendant, Ontario Ltd, as purchaser without advising the Plaintiff Sheila Radovancevic of the consequences of same or offering the Plaintiff Sheila Radovancevic an opportunity to have her lawyer advise her with respect to same which said amendment was executed on the 22nd day of May, 2017 (hereinafter referred to as the "Amendment").

7. The Plaintiff states and it is a fact that the Defendant Millie Quigley Defendants misrepresented to the Plaintiff that there would be no legal affect upon the Plaintiff executing the Amendment relying on an email from the Defendant 3Gen’s representative.

[27] The Amended Statement of Claim is very poorly drafted, but there is enough in the pleading to make one at least suspicious of what motives 3Gen Developments had in requesting an amendment to the Agreement of Purchase and Sale to make 2577689 Ontario the purchaser, especially when the simple and more conventional approach would have been simply to use a direction as to title.

[28] A direction as to title is an everyday occurrence in real estate transactions and no amendment to the agreement is necessary for the purchaser to choose who is to be the registered owner of the property.

[29] If 3Gen Developments’ motive was to trick Ms. Radovancevic – and I am not to be taken to making any finding in this regard – then, albeit very poorly pleaded, read generously, there is enough in Ms. Radovancevic’s pleading to conclude that it is not plain and obvious that she does not have causes of action for negligent misrepresentation, fraudulent misrepresentation, and vicariously liability. I note here for the first time that 3Gen Developments brought its Rule 21 motion after delivering a Statement of Defence that reserved its right to challenge the Statement of Claim. The fact that it was able to plead to the claim goes some distance in showing that Ms. Radovancevic’s pleading manifested a reasonable cause of action.

E. Conclusion

[30] For the above reasons, I dismiss 3Gen Developments’ motion.

[31] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Ms. Radovancevic’s submissions within twenty days of the release of these Reasons for Decision followed by 3Gen Developments’ submissions within a further twenty days.

Perell, J.

Released: August 23, 2018