Court File and Parties

COURT FILE NO.: 13-57421 A1

DATE: 2019/09/20

COURT OF ONTARIO,

SUPERIOR COURT OF JUSTICE

RE: Ozerdinc Family Trust, Muharrem Ersin Ozerdinc, Marion Kathleen Grimes, Site Preparation Limited, Site Preparation Limited Partnership, 1624158 Ontario Inc., 1634159 Ontario Inc. and Ozerdinc Family Trust No. 2, Plaintiffs

AND:

Gowling Lafleur Henderson LLP and Mark Siegel, Defendants

AND:

Raymond Chabot Grant Thornton LLP, Third Party

BEFORE: Mr. Justice Calum MacLeod

COUNSEL: Frances Shapiro Munn, for the Defendants (Moving Party)

Matthew Halpin, for the Third Party (Responding Party)

Katie Black, for the Plaintiff

HEARD: August 21, 2019 followed by written submissions

REASONS FOR DECISION

[1] This is a motion by the defendants for an order that the third-party action be tried by the same judge as the main action as soon as possible following that trial. For the reasons which follow, the motion is dismissed. As I will discuss, the defendant is at liberty to seek an immediate trial date for the third-party action and to request that the same judge be assigned but such an assignment is not a legal right. Judicial assignments are not generally a justiciable issue.[^1]

[2] By way of factual summary, the plaintiffs Ozerdinc and Grimes had retained the defendants to create a family trust in 1990. In 2007 a second trust was established because the plaintiffs did not want distribution of the capital of the first trust to their children to occur until they were older. When the second trust was established, the defendants neglected to warn the plaintiffs about a deemed disposition under the Income Tax Act, and this triggered a substantial tax liability.[^2] The damages flowing from the negligence of the defendants and the manner in which it was subsequently handled are the subject of the main action.

[3] In the main action, the defendant lawyers ultimately conceded that the failure to advise of the tax consequences flowing from the trust structure fell below the standard of care expected of them. They denied responsibility for damages because of issues about causation and also because the plaintiffs had retained accountants. In August of 2013 the defendants issued a third-party claim against the accountants seeking contribution and indemnity. The defendants assert that it was the responsibility of the accountants to track the 21 year deemed disposition and to advise the plaintiffs of strategies to mitigate tax liability. The defendants assert the accountants should, at the very least, share responsibility for the tax liability and resulting damages.

[4] The liability of the accountants and their obligation to contribute to the damages is the subject of the third-party action. It is important to note that the plaintiffs did not sue the accountants and the accountants chose not to defend the main action. The accountants are defending the third-party action only and will not have standing or be participating in the trial of the main action. They may or may not be called as witnesses.

[5] In 2017 there was a motion for summary judgment before my colleague Justice Marc Labrosse. Justice Labrosse granted partial summary judgment finding that the defendants are liable in negligence to the plaintiffs and holding that in this regard there is no genuine issue requiring a trial.[^3] As a consequence the only issues in the trial of the main action will be an assessment of damages and the additional claim by the plaintiffs for punitive damages. That trial is scheduled to begin in November of this year.

[6] On the motion before Labrosse J. the defendants brought a cross motion seeking an order that the third-party proceeding be determined at the same time as the main action and by the same judge. That is of course the presumptive manner of trying a third-party action but it is not mandatory nor is it a substantive right. Rule 29.08 (2) provides that a third-party claim “shall be tried at or immediately following the trial of the main action, unless the court orders otherwise”. By contrast Rule 29.09 provides that a plaintiff is not to be prejudiced or unnecessarily delayed by reason of a third-party claim and permits the court to impose terms or to order that the third-party claim proceed as a separate action.

[7] Labrosse J. dismissed the cross-motion. He found inter alia that in the absence of any motion to join the third party to the main action the plaintiffs were not directly involved in the third-party claim and the third party was not directly involved in the main action. He further held that it would be unjust to delay the trial of the main action and found that the facts giving rise to the main action and to the third-party claim were separate events which occurred at different times. He was of the view that the main action and third-party action “can be argued and tried independently of one another”. None of these findings were appealed and they are binding on the parties.

[8] In the motion before me, the defendants concede that because of this previous determination it is not open to them to demand that the third-party claim be tried together with the main action. They do not seek to delay the November trial. What they do seek is an order that the third-party trial be heard by the same judge and they seek an order from me fixing a date for the trial of the third-party action.

[9] For its part, the third party does not seek an order that the trial of the third-party action be heard by a different judge. It is conceded that the same judge might well be assigned and if and when that occurs, should there be some reason to object to such an assignment, the correct approach would be a recusal motion. No such motion is contemplated at present and it would be premature unless and until there is a basis for a reasonable apprehension of bias. But the third party opposes an order that it must necessarily be the same judge and asks that the defendants’ motion be dismissed.

[10] I agree with the position of the third party. The third-party action has