COURT FILE NOS.: CV-18-133985 and CV-19-139511
DATE: 20190903
ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO. CV-18-133985
BETWEEN:
REZA HASSIM TABRIZI
Plaintiff
-and-
MAJESTY DEVELOPMENT GROUP INC., XIANG QUAN WANG, YU SHENG XIAO, and CENTURY 21 SOUTH BREEZE REALTY INC.
Defendants
Yeganeh Pejman, for the Plaintiff
Kenneth MacDonald, for the Defendants, Majesty Development Group Inc., Xiang Quan Wang and Yu Sheng Xiao
Lauren Rakowski, for the Defendant, Century 21 South Breeze Realty Inc.
AND BETWEEN:
COURT FILE NO. CV-19-139511
REZA HASSAN ZADEH TABRIZI
Plaintiff
– and –
JASON KATZ, ALYSSA GAYLE COHEN, FARZANEH HEIDARIAN, FOREST HILL REAL ESTATE INC., MAY YOUNG and CENTURY 21 SOUTH BREEZE REALTY INC.
Defendants
Yeganeh Pejman, for the Plaintiff
Joseph Juda, for the Defendants, Jason Katz, Alyssa Gayle Cohen, Farzaneh Heidarian and Forest Hill Real Estate Inc
Lauren Rakowski, for the Defendants, May Young and Century 21 South Breeze Realty Inc.
HEARD: August 23, 2019
reasons for decision
CHARNEY j.:
Introduction
[1] This motion involves two separate actions. Reza Tabrizi is the plaintiff in both actions. In this motion Mr. Tabrizi is seeking to have one of the actions turned into a third party proceeding, or have the two actions consolidated, heard at the same time or heard one immediately after the other.
[2] The motion is opposed by the defendants in both actions, who argue that the motion should not be heard until after their summary judgment motions are heard on December 13, 2019.
Facts
[3] In the first action Mr. Tabrizi has sued Majesty Development Group Inc. (“Majesty”) and its officers, Xing Quan Wang and Yu Sheng Xiao, for breach of contract relating to an Agreement of Purchase and Sale (“APS”). On March 11, 2017, Mr. Tabrizi entered into an APS with Majesty. The transaction did not close, and Mr. Tabrizi alleges that the defendants breached the terms of the APS.
[4] Mr. Tabrizi alleges that the defendants were obligated to cooperate with him in relation to the severance of the property before the transaction closed, and as a result of their failure to cooperate, he could not get financing to close the agreement. He alleges that the defendants breached the APS on September 21, 2017, when Majesty confirmed that it would not be providing its written authorization and cooperation for the zoning related changes. The sale did not close on December 15, 2019. The plaintiff is seeking the return of his $150,000 deposit and damages. For ease of reference I will refer to this claim as the “Majesty action”.
[5] The defendants to the Majesty action filed a Statement of Defence and brought a counterclaim against Mr. Tabrizi for damages, alleging that he had breached the APS by failing to close the transaction. They assert that Majesty had no obligation to cooperate with Mr. Tabrizi with respect to the severance of the property. The defendants seek the release of the $150,000 deposit and unspecified damages for the difference between the price Mr. Tabrizi agreed to pay for the property and the final sale price of the property.
[6] In response to the defendants’ counterclaim, Mr. Tabrizi wanted to bring a third party claim against his own real estate agents – Jason Katz, Alyssa Cohen, and Farzaneh Heidarian - and their broker –Forest Hill Real Estate – and the real estate agent and broker who acted for Majesty – Mae Young and Century 21 South Breeze Realty Inc. Mr. Tabrizi seeks contribution and indemnity from those parties with respect to any amounts awarded in favour of the defendants (plaintiffs by counterclaim) in the Majesty counterclaim. He alleges that these agents and brokers failed to protect his interests. For ease of reference I will refer to this action as the “Katz action”.
[7] Third party claims are governed by Rule 29 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The relevant rules provide:
29.01 A defendant may commence a third party claim against any person who is not a party to the action and who,
(a) is or may be liable to the defendant for all or part of the plaintiff’s claim;
(b) is or may be liable to the defendant for an independent claim for damages or other relief arising out of,
(i) a transaction or occurrence or series of transactions or occurrences involved in the main action, or
(ii) a related transaction or occurrence or series of transactions or occurrences; or
(c) should be bound by the determination of an issue arising between the plaintiff and the defendant.
29.02 (1) A third party claim (Form 29A) shall be issued within 10 days after the defendant delivers a statement of defence, or at any time before the defendant is noted in default.
(1.2) A third party claim may be issued at any time with the plaintiff’s consent or with leave, which the court shall grant unless the plaintiff would be prejudiced thereby.
TRIAL OF THIRD PARTY CLAIM
29.08 (1) After the close of pleadings in the third party claim it shall be listed for trial as an action as provided in Rule 48 without undue delay and placed on the trial list immediately after the main action.
(2) The third party claim shall be tried at or immediately after the trial of the main action, unless the court orders otherwise.
PREJUDICE OR DELAY TO PLAINTIFF
29.09 A plaintiff is not to be prejudiced or unnecessarily delayed by reason of a third party claim, and on motion by the plaintiff the court may make such order or impose such terms, including an order that the third party claim proceed as a separate action, as are necessary to prevent prejudice or delay where that may be done without injustice to the defendant or the third party.
[8] Mr. Tabrizi did not commence the third party claim within 10 days after delivering his statement of defence to the counterclaim, as required by Rule 29.02(1). The plaintiff claims that the information relevant to the third party claim was not known to him until the discoveries in November 2018.
[9] On March 8, 2019, Mr. Tabrizi issued a Notice of Action against the defendants in the Katz action.
[10] By email dated March 11, 2019, the plaintiff sought the defendants’ consent to issue the third party claim pursuant to Rule 29.02(1.2). By reply email dated March 20, 2019, the defendants indicated that they did not consent to the plaintiff issuing the third party claim, which they described as “a delay tactic”.
[11] Rather than simply bringing a motion for leave of the court to commence the third party claim under Rule 29.02(1.2), the plaintiff took the position that he would issue a statement of claim against the proposed third parties and move to consolidate the two actions. The Statement of Claim was issued on April 8, 2019.
[12] The defendants in both actions argue that proceeding in this way, rather than just bringing a motion under Rule 29.02(1.2), was an abuse of process, see: Attayee v. City of Pickering, 2015 ONSC 7701, at paras. 50 - 55. The plaintiffs cannot circumvent the express procedural requirement of obtaining leave under Rule 29.02(1.2) by commencing duplicative proceedings.
[13] The plaintiff argues that he proceeded in this way because the limitation period was approaching. I note, however, that s. 18 of the Limitations Act, 2002 S.O. 2002, c. 24, provides that the limitation period for claims for contribution and indemnity does not begin to run until the date that the defendant is served with the claim in respect of which contribution and indemnity is being sought. In this case, the counterclaim against the plaintiff was dated February 8, 2018. As such, the limitation period for any third party claim would not expire until February 8, 2020.
[14] Moreover, if expiration of the limitation period were imminent, the plaintiff could have put the third parties on notice and served a motion for leave to bring the third party proceedings before the limitation period expired.
[15] That said, I am satisfied that the plaintiff did not intend to circumvent Rule 29.02(1.2) by issuing the Statement of Claim in the Katz action, because the plaintiff issued the statement of claim and then, on June 10, 2019, brought this motion under Rule 29.02(1.2) to have the Katz action turned into a third party claim. The plaintiff did not try to circumvent Rule 29.02(1.2), but took a circuitous route to the same end.
[16] The defendants in the Majesty action and the defendants in the Katz action have each brought motions for summary judgment against the plaintiff. There are three summary judgment motions: one brought by the Majesty Defendants, the second brought by Katz, Cohen, Heidarian, and Forest Hill Real Estate, and the third brought by Young and Century 21 South Breeze Realty Inc. The motions are all returnable on the same day: December 13, 2019.
[17] The defendants all take the position that the plaintiff’s motion to turn the Katz action into a third party proceeding is premature. Depending on how the motion for summary judgment is decided, the plaintiff’s motion to turn the Katz action into a third party proceeding may be moot.
[18] In any event, the defendants argue, if their respective motions for summary judgment are not successful and the case must proceed to trial, the judge who hears the summary judgment motions will be in the best position to decide this motion. Rule 20.05 of the Rules of Civil Procedure give the judge who hears the motion for summary judgment broad discretion to give such directions, or impose such terms as are just if the case is ordered to proceed to trial. This would include the order sought by the plaintiff on this motion.
[19] The defendants are concerned that granting the plaintiff’s motion at this stage will lead to the delay of their respective summary judgment motions.
Analysis
[20] In my view, it is preferable that this issue be resolved in advance of the motions for summary judgment. The judge hearing those motions should have the benefit of knowing whether the action against the Katz defendants is a third party claim or a distinct action.
[21] Rule 29.02(1.2) provides that leave to issue a third party claim shall be granted “unless the plaintiff would be prejudiced thereby”. In this respect, Rule 29.02(1.2) is substantively similar to Rule 26.01, which deals with amendments to pleadings and provides:
26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
[22] The use of the word “shall” means that amendments are presumptively approved (Marks v. Ottawa (City), 2011 ONCA 248, at para. 19). In Klassen v. Beausoleil, 2019 ONCA 407, the Court of Appeal stated, at para. 25:
The rule [26.01] is framed in mandatory terms: the court must allow the amendment, unless the responding party would suffer non-compensable prejudice, the proposed pleading is scandalous, frivolous or vexatious, or the proposed pleading fails to disclose a reasonable cause of action…
[23] Rule 29.02(1.2) uses the same mandatory language as Rule 26.01.
[24] The question then is whether permitting the Katz action to continue as a third party claim will prejudice the defendants in the Majesty action (who are the plaintiffs in the counterclaim that gives rise to the third party claim). It is difficult to see how the defendants in the Majesty action will be prejudiced since the Katz action already exists as an independent claim. Moreover, and to their credit, the defendants in the two actions recognize that their respective motions for summary judgment should be heard together because the claims arise from the same set of facts.
[25] The defendants in the Katz action have already filed a Statement of Defence, and there is no suggestion that granting leave to proceed as a third party claim will delay the summary judgment motions that are currently scheduled for December 13, 2019, or any proceedings that may be continued after that date.
[26] Furthermore, granting leave to continue the Katz action as a third party claim does not bind the hands of the trial judge (or the summary judgment motion judge), who will still have the discretion under Rule 29.08(2) to decide whether the third party claim will “be tried at or immediately after the trial of the main action”, or require that “the third party claim proceed as a separate action” under Rule 29.09.
[27] The plaintiff’s action against the Katz defendants is, in substance, a third party claim seeking contribution and indemnity if the Majesty counterclaim is successful. It should have been commenced as a third party claim originally, and should not have been commenced as a separate proceeding. Granting the plaintiff’s motion to turn the Katz action into a third party claim simply corrects this error, and puts the action back on the right track should any part of the plaintiff’s claim survive the motions for summary judgment (an issue on which I offer no opinion).
Conclusion
[28] Accordingly, the plaintiff’s motion to turn action CV-19-139511-00 into a third party claim to action CV-18-133985-00 is granted.
[29] This motion is granted on the understanding that it will not delay the summary judgment motions scheduled for December 13, 2019.
[30] If the parties cannot agree on costs, the plaintiff may file costs submissions of no more than 2 pages plus costs outline and any offers to settle within 20 days of the release of this decision, and the defendants may file responding submissions on the same terms within 15 days thereafter.
Justice R.E. Charney
Released: September 3, 2019
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
REZA HASSIM TABRIZI
Plaintiff
-and-
MAJESTY DEVELOPMENT GROUP INC., XIANG QUAN WANG, YU SHENG XIAO, and CENTURY 21 SOUTH BREEZE REALTY INC.
Defendants
AND BETWEEN:
REZA HASSAN ZADEH TABRIZI
Plaintiff
– and –
JASON KATZ, ALYSSA GAYLE COHEN, FARZANEH HEIDARIAN, FOREST HILL REAL ESTATE INC., MAY YOUNG and CENTURY 21 SOUTH BREEZE REALTY INC.
Defendants
REASONS FOR DECISION
Justice R.E. Charney
Released: September 3, 2019