Court File and Parties
COURT FILE NO.: 138/20
DATE: 2020-11-12
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Surinder Kumar, Plaintiff
AND:
Burke Heather, George Corsianos, Corsianos Lee LLP and Royal Canadian Mortgage Investment Corporation, Defendants
BEFORE: Gibson J.
COUNSEL: Tim Gleason and Brett Hughes, lawyers for the Defendants Burke Heather, George Corsianos, and Corsianos Lee LLP
Nando de Luca, lawyer for the Defendant, Royal Canadian Mortgage Investment Corporation
Robert Maki, lawyer for Plaintiff Surinder Kumar
HEARD: August 25, 2020
ENDORSEMENT
[1] The plaintiff is a shareholder of 1835923 Ontario Ltd. (“183”) which owned a property at 3085 Rotary Way in Burlington, Ontario. The defendant Royal Canadian Mortgage Investment Corporation (“Royal”) is a mortgage lender which held a second mortgage granted by 183 and registered on title to 3085 Rotary Way.
[2] The defendants Burke Heather, George Corsianos and Corsianos Lee LLP (“the Lawyer Defendants”) move under Rule 21.01(3)(d) of the Rules of Civil Procedure to dismiss the action as against them as an abuse of process and as frivolous and vexatious. Additionally, they submit, the statement of claim does not disclose an action against them.
[3] The Lawyer Defendants were the lawyers for the litigation adversary of 183, a company owned by the plaintiff, Surinder Kumar. Mr. Kumar is a principal of 183 and the spouse of Dudett A. Kumar. 183 and Ms. Kumar were the defendants in a mortgage action launched by the Defendant, Royal Canadian Mortgage Investment Corporation (“Royal”). The Lawyer Defendants represented Royal in the mortgage action. Mr. Kumar represented 183 in the mortgage action in both the Superior Court of Justice and the Court of Appeal for Ontario.
[4] Justice Miller granted summary judgment in favour of Royal in Court File No. 4119/17, the action by Royal for possession of 3085 Rotary Way against 183 and Dudett Kumar. The appeal of 183 and Dudett Kumar was dismissed by the Court of Appeal on January 28, 2020: 2020 ONCA 55. It held that there was no merit to the argument that Royal acted inappropriately in enforcing its mortgage.
[5] While the power of sale proceeding was before the Court of Appeal, the plaintiff issued his statement of claim in the present action, alleging, amongst other things, that the defendants commenced power of sale proceedings concerning the property at 3085 Rotary Way, Burlington, Ontario, that were improper, and that the defendants’ conduct was fraudulent.
[6] The Lawyer Defendants submit that the action against them has no chance of success for a variety of reasons, including: the statement of claim does not disclose a cause of action against the moving defendants; the plaintiff’s claims are derivative of those of a corporation in which he has a shareholder interest, and are therefore barred by the rule in Foss v Harbottle; the derivative claims of the corporation have themselves been finally determined in previous proceedings, and this action is an abuse of process; and that the action is a frivolous and vexatious proceeding, and should be dismissed.
[7] The Defendant Royal Canadian Mortgage Investment Corporation (“Royal”) also brings a motion to dismiss the plaintiff’s action as against it. It supports the motion of the Lawyer Defendants in the action and the relief they seek, and relies upon the same affidavit of George Corsianos, affirmed June 10, 2020, detailing the history of proceedings in this and prior, related proceedings.
[8] Royal submits that no reasonable cause of action has been pleaded against it, and seeks an order striking the claim under Rule 21.01(1)(b) of the Rules of Civil Procedure. It further submits that the present action is an abuse of process and should be dismissed.
[9] The plaintiff resists the motions of both Royal and the Lawyer Defendants. Mr. Kumar states that he is a director and sole shareholder of 183, and that as such he has a substantial interest in the mortgage contract between 183 and Royal, and is a victim of the negligent action of the defendants. He states in his affidavit dated August 18, 2020, that he now seeks to amend his statement of claim. Counsel for the Lawyer Defendants has replied that it is improper to seek to amend a claim when it is the subject of a pending motion to strike and, further to the Order of Kurz J. made on July 8, 2020, given the plaintiff’s history of delay in proceedings, the motion is peremptory on the plaintiff Mr. Kumar. Mr. Kumar submits that the defendants’ motions should be dismissed and that he should be allowed to amend his statement of claim.
Amendment of the statement of claim
[10] I shall deal first with the plaintiff’s request to amend his statement of claim.
[11] There is no motion before the Court to amend the statement of claim. In any event, a motion to amend the statement of claim should not be entertained while there is a motion pending for an order dismissing or striking out the statement of claim. A plaintiff cannot amend a statement of claim when the sustainability of the pleadings is being challenged by a defendant. A motion for an order striking out a statement of claim precludes such other steps as filing an amended statement of claim: Rooney v. Woodland Park Plaza Partnership, [2011] O.J. No. 5308 at 12. The rights of a moving party are to be determined as they existed on the date that the notice of motion was served: Cosentino v. Dominaco Developments Inc., 2010 ONSC 208, [2010] O.J. No. 61 at 11; Hillier v. Hutchens, 2012 ONSC 5988. An amended statement of claim served after a motion to strike the original claim is a nullity: Raghaven v. Bell Canada, 2011 CarswellOnt 15839 at 26-28; aff’d Raghaven v Bell Canada, 2012 ONCA 370.
[12] Accordingly, the plaintiff’s evidence in his affidavit that he intends to seek to amend his statement of claim is not relevant to the issues on this motion. As stated, there is no motion before the Court seeking leave to amend the statement of claim. Even if there were, I would not grant such leave in this instance.
[13] I turn now to consideration of the Lawyer Defendant’s motion.
The Lawyer Defendants’ Motion
Issues
[14] There are three issues on this motion:
Does the statement of claim disclose a reasonable cause of action against the moving defendants?
Is the action an abuse of process?
Is the action otherwise frivolous and vexatious?
Reasonable cause of action
[15] Rule 21.01(1)(b) provides that a judge may strike out a statement of claim if it does not disclose a reasonable cause of action. The test on a motion to strike a pleading as disclosing no cause of action is whether it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action. Put another way, the test is that the claim has no reasonable prospect of success: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at 17.
[16] The test is focused exclusively on the pleading. It is insufficient to baldly plead a cause of action. A claim that fails to plead material facts to establish the elements of a cause of action must be struck: Auciello v. Mahadeo et al., 2015 ONSC 1267 at 25.
[17] Examination of the statement of claim in this action reveals that it contains no allegations of fact supporting a cause of action against the Lawyer Defendants. There are bald assertions of causes of action against the defendants generally, including breach of contract, fraudulent misrepresentation, negligence and interference with economic relations. But these are unsubstantiated. The statement of claim does not allege any contract between the plaintiff and any of the Lawyer Defendants. The plaintiff states that he is a shareholder of 183. But the rule in Foss v. Harbottle provides that individual shareholders have no cause of action in law for any wrongs done to the corporation and that if an action is to be brought in respect of such losses, it must be brought either by the corporation itself or by way of a derivative action. No cause of action against the Lawyer Defendants in contract is disclosed in the statement of claim. As there is no contract, the allegations of a breach of duties of good faith and honesty in the performance of a contract must also be struck.
[18] The statement of claim baldly alleges fraud and deceit by the defendants generally. It does not identify any misrepresentations, or statements of any kind, by the Lawyer Defendants. A party alleging fraud must plead with particularity the specific facts that in law would constitute fraud: Apotex Inc. v Abbott Laboratories Limited, 2018 ONSC 5199 at 35. The statement of claim alleges no material facts which could establish any of the required elements of fraud. The pleadings of deceit and fraud are inadequate and do not disclose a cause of action against the Lawyer Defendants.
[19] The statement of claim alleges that the defendants generally owed the plaintiff a duty of care. It does not describe any basis for that conclusion.
[20] Lawyers do not owe a duty of care to non-clients, or to litigation adversaries.
[21] The question of whether a duty of care exists is subject to the two-part test from Anns v. London Borough of Merton Council (1977), [1978] A.C. 728 (U.K.H.L.): whether a sufficient relationship of proximity exists to make it reasonably foreseeable that carelessness by one party may cause damage to the other; and, if so, do policy considerations either negative or limit the scope of the duty, the class of persons to whom the duty is owed, or the damages caused by a breach of the duty?
[22] In this case, no facts are pleaded that could establish a relationship of proximity between the plaintiff and the Lawyer Defendants.
[23] In cases of mortgage enforcement, no proximity will be found between a mortgagor and a mortgagee’s lawyers if reasonable reliance is not established: Mayo Holdings Ltd. v. Cunliffe, 1989 CanLII 5239 (BC CA), 1989 CarswellBC 1277 at 47 (B.C.C.A.). Nothing in the statement of claim suggests that the plaintiff relied upon the Lawyer Defendants. I agree with the submission of the Lawyer Defendants that the plaintiff’s assertion that the Lawyer Defendants owed him a duty of care has no basis in law, and cannot be reconciled with the commercial and legal context of mortgage enforcement litigation.
[24] The statement of claim alleges that the defendants intentionally interfered with the economic relations of the plaintiff. It does not describe how.
[25] Bald or vague assertions of intentional tortious conduct are generally struck under Rule 21(1)(b). The pleading of intentional torts must meet a stringent standard of particularity, being pleaded with clarity and precision: Ceballos v. DCL International Inc., 2018 ONCA 49 at 12.
Abuse of Process
[26] Although the statement of claim does not disclose a cause of action against the Lawyer Defendants, the plaintiff submits that it does against Royal, at least by 183. That claim, however, has been finally determined by Justice Miller, whose determination was upheld by the Court of Appeal. The action is therefore an abuse of process.
[27] An abuse of process occurs when litigants are intent on re-litigating or re-defending causes of action or issues that have already been decided.
[28] Moreover, apart from Rule 21.01(3)(d), the Court has the inherent power and discretion to invoke the doctrine of abuse of process to control its own process. Abuse of process applies to foreclose an attempt to re-litigate a claim that has already been determined: Behn v Moulton Contracting Ltd., 2013 SCC 26, as cited in Aba-Alkhail v University of Ottawa, 2013 ONCA 633 at 8.
[29] In this case, the allegations in the statement of claim are substantially identical to those raised by 183 and Ms. Kumar in the power of sale proceedings in Court File No. 4119/17. This claim has been finally determined by this Court and by the Court of Appeal. Permitting further re-litigation of these issues would bring the administration of justice into disrepute.
Frivolous and Vexatious
[30] Rule 21.01(3)(d) of the Rules of Civil Procedure provides that an action may be dismissed on the grounds that the action is frivolous or vexatious or is otherwise an abuse of process. The present action is an abuse of process and also a collateral attack on the previous final determination of the same issues, but it also frivolous and vexatious.
[31] In Currie v Halton Regional Police Services Board, 2003 CanLii 7815 at 11, the Court of Appeal enumerated the hallmarks of vexatious litigation. This action reflects many of the indicia of vexatious litigation. The plaintiff, either himself or through his corporation and spouse, has commenced multiple proceedings concerning the same or overlapping allegations, which have already been conclusively determined.
[32] The action is also frivolous. It does not disclose a cause of action against the Lawyer Defendants. It has no chance of success.
Conclusion in respect of the Lawyer Defendant’s motion
[33] In summary, I find that the action as against the Lawyer Defendants does not disclose a cause of action against them, is an abuse of process, and is frivolous and vexatious.
[34] The Lawyer Defendant’s motion will be granted.
Royal’s Motion
[35] Royal submits that no reasonable cause of action has been pleaded against it, that the present action is an abuse of process and should be dismissed.
Issues
[36] The issues on Royal’s motion are thus:
Has a reasonable cause of action against Royal been pleaded?
Is the action an abuse of process?
Reasonable cause of action
[37] At subparagraph 1(a) of the statement of claim, the plaintiff asserts the following causes of action: breach of contract; fraudulent misrepresentation; negligence; and intentional interference with economic relations.
[38] The only interest and capacity that the Plaintiff advances as plaintiff in the action is indicated at paragraph 3 of the statement of claim: “the plaintiff Surinder Kumar is a shareholder of 183 but is not involved in its day-to-day activities.”
[39] I agree with Royal’s submission that, in light of this indirect interest, none of the plaintiff’s causes of action, as he himself has framed them, can succeed.
[40] Mr. Kumar cannot have a claim for breach of contract for the reason that he was not a party to the only contract with Royal that he engages in the statement of claim, that is, the second mortgage that was entered into between 183 and Royal, which was guaranteed by Dudett Kumar. He has no privity of contract. His position is precluded by the rule in Foss v. Harbottle.
[41] Moreover, the plaintiff’s statement of claim does not include the allegations that are required to substantiate the elements of a cause of action in fraudulent misrepresentation or deceit.
[42] Neither does it satisfy the pleadings requirements required to make out negligence.
[43] The allegation at paragraph 22 of the statement of claim regarding intentional interference with economic relations are baldly pleaded and amount to nothing more than a conclusory statement. This does not satisfy the requirements to make out this intentional tort articulated by the Supreme Court of Canada in A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12 at para. 23.
[44] The statement of claim fails to disclose a reasonable cause of action against Royal.
Abuse of process
[45] Pleadings which seek to revisit determinations that are res judicata, that collaterally attack earlier judicial determinations or that are otherwise an abuse of process, can and should properly be struck: Aba-Alkhail v. University of Ottawa, 2013 ONSC 2127 at paras. 32-45, aff’d 2013 ONCA 633.
[46] For reasons similar to those set out above in respect of the Lawyer Defendants, the claims advanced by the plaintiff have already been considered and dismissed by Miller J. and by the Court of Appeal.
[47] In these circumstances, the present action as against Royal is an abuse of process and a vexatious proceeding.
Conclusion in respect of Royal’s motion
[48] In summary, I find that the present action fails to disclose a reasonable cause of action and is, in any event, an abuse of process. It should be dismissed.
[49] Royal’s motion will be granted.
Order
[50] The Lawyer Defendants’ and Royal’s motions are granted. The plaintiff’s action is dismissed as against both defendants.
[51] In the present circumstances of the COVID-19 pandemic, this Endorsement is deemed to be an Order of the Court that is operative and enforceable without any need for a signed or entered, formal, typed Order. Approval of the form and content of this Order by the plaintiff is dispensed with.
Costs
[52] The parties are encouraged to agree upon appropriate costs. If the parties are not able to agree on costs, they may make brief written submissions to me (maximum three pages double-spaced, plus a bill of costs) by email to my judicial assistant. The Lawyer Defendants and Royal may have 14 days from the release of this decision to provide their submissions, with a copy to the plaintiff; the plaintiff a further 14 days to respond; and the Lawyer Defendants and Royal a further 7 days for a reply, if any. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves. If I have not received response or reply submissions within the specified timeframes after the Lawyer defendants’ and Royal’s initial submissions, I will consider that the parties do not wish to make any further submissions, and will decide on the basis of the material that I have received.
Gibson J.
Date: November 12, 2020