Court File and Parties

COURT FILE NOS.: CV-19-419-00 CV-19-419-00A1 CV-20-111-00

DATE: 20201117

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Philip William Crawford and Hailey Brooke Crawford, Plaintiffs

-and-

Standard Building Contractors Limited (Federal Corporation 1115109-6), Standard Paving Limited (Nova Scotia Registry ID #3223128) and Shane Ross, Defendants

-and-

Christopher Misner, Third Party

AND RE: Standard Building Contractors Limited, Plaintiff

-and-

Philip William Crawford, Hailey Brooke Crawford and CIBC Mortgages Inc., Defendants

BEFORE: Mew J.

COUNSEL: Matt Taft, for Philip William Crawford, Hailey Brooke Crawford and CIBC Mortgages Inc. and Christopher Meisner

Paul Portman, for Standard Building Contractors, Standard Paving Limited and Shane Ross

DECISION: 17 November 2020

ENDORSEMENT

(Motion in Writing for Leave to Add a Third Party and Adjourn Trial)

[1] Standard Building Contractors, Standard Paving Limited and Shane Ross (collectively referred to as “Standard Building”), who are the defendants in what I will refer to as the “Main Action”, seek leave pursuant to Rule 29.02(1.2) of the Rules of Civil Procedure to issue a third party claim against Horner General Contracting Inc. operating as Horner Workx (“Horner”). Because a trial of the existing actions between the parties is scheduled to commence on 23 November 2020, if the motion for leave to issue a third party claim is granted, the moving parties also seek an adjournment of the trial.

[2] Philip William Crawford and Hailey Brooke Crawford, the plaintiffs in the Main Action and defendants in related construction lien proceedings (CV-20-111-00), oppose the relief sought and, to the extent that it would precipitate an adjournment of the trial, ask that the motion be dismissed. CIBC Mortgages Inc. and Christopher Meisner (incorrectly titled “Christopher Misener” in the third party claim, take no position (save as to costs, in the case of Mr. Meisner).

[3] Standard Building notified the other parties and the court of its intention to seek leave to issue a new third party claim and for an adjournment of the trial by an email on 9 November 2020 which also requested an urgent case conference. At a case conference convened that afternoon, I directed the parties to provide written submissions. While the formalities of a motion record or affidavits were dispensed with, the parties were at liberty to refer to the substantial body of evidence already gathered in various motions filed by the parties and in preparation for trial.

[4] Standard Building’s submissions were received on 10 November; the responding parties’ submissions on 13 November.

Background

[5] In July 2019, a residence in Clarendon Station, Ontario, owned by the Crawfords was substantially damaged by fire. Standard Building were hired to demolish the remnants and build a new home at the property.

[6] Although the demolition occurred, the new home has not yet been built. The Crawfords seek to recover $137,690.50 which they say they advanced to Standard Building as well as injunctive relief to prevent the dissipation of advances made to the Standard Building which, they claim, are impressed with a trust in their favour. They also seek damages for mental distress, aggravated damages and punitive damages.

[7] The Crawfords acknowledge that they terminated their contract with Standard Building when it was discovered that Mr. Ross had submitted forged documents to the local authority in support of the Crawfords’ building permit application. Mr. Ross claims he did not know the documents were forged when he submitted them. No building permit was ever obtained by Standard Building, and no construction (as opposed to excavation) was commenced.

[8] On 20 December 2019, the Crawfords obtained an interim Mareva injunction restraining Standard Building from dissipating assets.

[9] Standard Building have defended and counterclaimed and Standard Building Contractors Limited has also instituted construction lien proceedings in a separate action.

[10] On 23 January 2020, Standard Building moved unsuccessfully before MacLeod-Beliveau J. to discharge the Mareva injunction (reasons released on 31 January 2020 and reported at 2020 ONSC 687).

[11] Standard Building issued a third party claim on 23 January 2020 against Christopher Miesner (incorrectly spelled “Misner” in the title of proceedings). Mr. Meisner is described in the third party claim as a “freelance designer” who was hired to prepare home design drawings for the Crawfords’ new home build. In his third party defence, Mr. Meisner pleads that he was formerly a close friend of Shane Ross, that he has no design, construction or engineering experience whatsoever, and that he is employed as a track and field coach, having lived in British Columbia since 2017.

[12] The Crawfords brought motions for summary judgment and for contempt (arising from alleged breach of the Mareva injunction). At a case conference before me on 25 June 2020, I directed that these motions would be heard on a date to be set by the Trial Coordinator during the weeks of 10 August or 17 August 2020 for a one day hearing. A timetable was also set for the delivery of motion materials as well as other steps in the proceeding.

[13] After that case conference, and prior to the next one, which had been scheduled for 8 July 2020, Standard Building’s solicitors brought a motion to be removed from the record. An order removing the solicitors was made by me on 8 July 2020 and amendments made to the timetable. The next case conference was scheduled for 17 August 2020.

[14] On 9 July 2020, pursuant to Rule 37.15, the Regional Senior Justice for the East Region directed that all motions in this matter and the related construction lien action bearing court file no. CV-20-111 (Standard Building Contractors v Crawford) are to be heard by me.

[15] At the case conference on 17 August 2020, it was reported that Standard Building had not delivered an affidavit of documents by the date specified in the scheduling order and that no notice of appointment of lawyer had been received from new lawyers acting on behalf of the Standard Building parties. Mr. Ross informed the court that he had retained a new lawyer approximately two weeks previously and that an affidavit of documents was almost ready. A further case conference was set for 20 August 2020 and directions given.

[16] On 19 August 2020, a notice of appointment of lawyer was received from the current solicitors for Standard Building. At the case conference on 20 August, a further case conference date of 27 August 2020 was set. Further directions were given. A date was set for the hearing of a motion by the Crawfords to amend their statement of claim and to continue the action (including the counterclaim) under the simplified procedure in Rule 76.

[17] The motion was heard by telephone conference on 9 September 2020. For reasons provided in my endorsement of 23 September 2020 (reported at 2020 ONSC 5767), I ordered that the proceeding would henceforth be conducted under the simplified procedure.

[18] At the next case conference on 16 October 2020, the court raised the possibility of conducting an expedited summary trial instead of conducting separate motions for security for costs, contempt and summary judgment. The parties were advised that four days in November had recently become available as a result of another case resolving. After taking instructions, the parties confirmed their consent to a summary trial under Rule 76.12 of all issues in these actions (including the third party proceeding and the related Construction Act proceeding CV‐20‐111) for four days on 23‐26 November 2020.

[19] The parties also consented to me serving as the trial judge notwithstanding my case management role in these matters to date.

[20] At a further case conference on 19 October 2020, an expedited timetable was agreed upon by the parties. That timetable includes the completion of discovery and the delivery of the affidavits that will serve as the evidence in chief of the witnesses at trial. The trial record is to be filed by 17 November 2020.

Relief Sought by Standard Building

[21] Standard Building seeks orders:

a. permitting them to serve and file a third party claim against "Horner General Contracting Inc. o/a Horner Workx" c/o Kyle Horner;

b. for substituted service of the third party claim on Mr. Horner at his last known email address; and

c. for a further case conference to be held to determine the timeline for response and further steps (e.g. examinations for discovery, response for undertakings, as well as the mode of final determination: summary judgment motion (long motion) or summary trial in 2021).

[22] The Crawfords and the third party oppose the motion and request that the trial proceed as scheduled on 23 November 2020.

Standard Building’s Position

[23] In their motion submissions, Standard Building do not provide an explanation of what they previously believed the role of Horner to be. Nor have they provided a draft of their proposed third party claim. What they do say is this:

… the Defendants had been pushing for global examinations for discovery for some time and were put on a timeline for the November trial sittings with very short notice. It was agreed upon at the time with the qualification of examining Mr. Meisner. That examination did not reveal the information needed by the Defendants to make full answer and defence and/or argue contribution and indemnity … but did reveal that Horner had more to do with this than originally anticipated. It was previously thought that the allegations of Horner engaging in misconduct was speculation or ‘gas-lighting’ by the Plaintiffs, now (after examinations) the Defendants think otherwise.

[24] For the purposes of determining whether leave to issue a third party claim should be granted, the correct application of Rule 29.02(1.2) is that leave “shall” be granted unless the plaintiff would suffer prejudice. Prejudice is defined as something more than simply inconvenience to or added work for the opposing party: Pickering Harbour Co. v. Barton, 2006 CanLII 37135 (ON SC) at para 14.

[25] Applying the principles outlined in Fisher v. Amherstburg, 2007 CanLII 16822 (ON SC) and Farrell v. Costco Wholesale, 2015 ONSC 7783, leave should be given. To decide otherwise would result in a multiplicity of proceedings. Referring to Pugliese v. National Capital Comm. (1981), 1981 CanLII 1619 (ON SC), 32 O.R. (2d) 264 (Div. Ct.) at para. 10, even if it is determined that the motion for leave could and should have been brought sooner, the delay in applying for leave had to be weighed against the benefits to be derived from third-party proceedings, in particular, the avoidance of a subsequent action involving retrial of the same issues. The real issue is the question of prejudice to the plaintiff and if this can be compensated by costs, then the third-party claim should be allowed to proceed to avoid a duplication of the proceedings.

[26] Reliance is also placed on Facey Produce Ltd. v. Chemagro Ltd. (1985), 4 C.P.C. (2d) 315 (Ont. Dist. Ct.), where it was held that having set an action down for trial was not an absolute bar to order adding a third party.

Responding Parties’ Position

[27] The responding parties (principally the Crawfords) assert the existence of significant prejudice if the trial is delayed. Noting that had an expedited trial not become available, they would have brought their motion for summary judgment, the Crawfords also reference the earlier finding of MacLeod-Beliveau J. that they have been left homeless and without the means to rebuild their home. The Crawfords (including a toddler and a large dog and a second baby due in February 2021) continue to live in a trailer pending resolution of their case. Their alternative accommodation expenses coverage terminates on 9 December 2020; they are still paying a mortgage on their burnt-down house and their insurers will not advance further funds.

[28] By contrast, there is arguably no prejudice to Mr. Ross if the trial were to proceed as scheduled, and certainly no prejudice that was not entirely of Mr. Ross’s own making.

[29] In that regard, the Crawfords refer to Standard Building’s claim that, during the examination of Kyle Horner on 2 November 2020, Mr. Ross was able to compare Mr. Horner’s voice with the voice on a voicemail left for the Chief Building Official by someone impersonating engineer Frank Anrep (whose forged stamp was placed on documents submitted to the local authority). Mr. Ross claims this was, in effect, a revelation, justifying the adjournment of the trial and a third-party claim against Horner.

[30] Far from being a revelation, however, the Crawfords argue that the voicemail in question was disclosed the Standard Building in June 2020 and was referred to in an earlier affidavit sworn in December 2019 in support of the Mareva injunction.

[31] The Crawfords assert that the contention by Standard Building that Horner is a “rogue subcontractor” is a recent one. In an affidavit which he swore on 14 January 2019, Mr. Horner described himself as an “employee” of Mr. Ross’ corporations. And in emails to Mr. Dillon (Chief Building Official for the Township of Central Frontenac), Mr. Horner identified himself as a “superintendent” with Standard Paving Limited.

[32] According to the Crawfords, this is not the first time that Mr. Ross has attempted to deflect blame to someone else. In his original statement of defence and counterclaim, Mr. Ross blamed an at that time unnamed designer. In response to a demand for particulars, on 22 January 2020 he identified the third party designer as “Christopher Misner” and provided an Ottawa address for Christopher Misner that the Crawfords’ solicitors readily linked to Kyle Horner through an internet search.

[33] The Crawfords also ask the court to be mindful of findings already made by MacLeod-Beliveau, albeit on a different record and in relation to Standard Building’s motion to set aside the Mareva injunction. In her endorsement of 31 January 2020, she wrote, at para. 15:

The plaintiffs have, I find, established a very strong prima facie [case] as to the fraud committed on them by the defendants and it is the clear inference that I draw from the evidentiary record filed before me supporting the dissipation of assets by the defendants. Nothing in the defendants’ materials, which are now fully before the court, persuades me otherwise. The defendants make nothing more that bald generalizations of denial in their materials unsupported by other evidence which would be in their possession in the ordinary course of business. There are valid concerns raised, as expressed by the plaintiffs, that the third-party claim is part of the fraudulent scheme to deflect attention away from the defendants as perpetrators of the fraud on the plaintiffs. The plaintiffs are innocent victims of the defendants.

Analysis

[34] I accept the submission by Standard Building that the relevant factors to be taken account of on this motion are set out in Fisher v. Amherstburg and Farrell v. Costco Wholesale. Two of those factors having particular relevance to the present circumstances are:

a. there must be evidence that the plaintiff would suffer undue prejudice over and above the additional inconvenience and work involved when a third party is added; where the plaintiff fails to establish such prejudice, Rule 29.02(1.2) is mandatory and the court is obliged to grant leave to issue the third party claim; and

b. the court must also consider the avoidance of multiplicity of proceedings and the risk of conflicting decisions, and as a policy matter, all issues should be tried at one time even if that means some delay in proceeding to trial.

[35] In Farrell, at para. 35-36, Price J. stated:

In my view, to say that delay does not amount to prejudice is contrary to the express opinion of the Supreme Court on this issue. It would be more correct, in my view, to say that delay can result in prejudice but the existence of prejudice is not determinative of the outcome of a motion for leave to issue a third party claim.

The test for granting leave to issue such a claim after ten days following the close of pleadings can be plainly and simply stated. If the granting of leave to issue a third party claim would not prejudice the plaintiff, then the court must grant leave. If the granting of leave would prejudice the plaintiff, then the court must exercise its discretion as to whether to do so. In exercising its discretion, the court must have regard to all the circumstances, weighing the prejudice that granting leave would cause the plaintiff against the desirability of having the issues in the main action and those giving rise to the third party claim determined at the same trial. When the court finds that the prejudice is “undue”, it is simply another way of saying that in all of the circumstances, the prejudice to the plaintiff outweighs the desirability of determining all the issues at a single trial.

[36] On the issue of prejudice, it is clear from the uncontested evidence provided that the Crawfords are in dire straits, as to their finances, their living arrangements and their physical and mental wellbeing. Whether or not Standard Building are responsible for the Crawfords’ circumstances remains to be seen. But I find that the prejudice that would result from the trial being delayed goes well beyond the realm of additional inconvenience and work resulting from the addition of third party proceedings.

[37] In Farrell, one of the factors which led Price J. to decline leave to issue third party proceedings, after the plaintiff’s action had almost run its course, having been set down for trial and approaching a pre-trial conference, was the substantial delay that would result in the ultimate determination of the defendant’s liability and of the plaintiff’s entitlement to compensation.

[38] In the present case, it is clear that even a few months’ delay could be very detrimental. The “undue” prejudice asserted by the Crawfords would, if their allegations against Standard Building are correct, in my view, be significant and compelling.

[39] As for the avoidance of multiplicity of proceedings, in the absence of a draft third party claim and, hence, an understanding of how the claim against Horner General Contracting Inc. o/a Horner Workx will be framed, it is difficult to gauge the extent to which declining leave to issue a third party claim could run the risk of conflicting decisions or duplication of evidence and legal resources. The assertion by Standard Building “that Horner had more to do with this than originally anticipated” is hardly compelling and gives little insight into the basis for a claim.

[40] Furthermore, the proposed claim would apparently be asserted against Mr. Horner’s company but not Mr. Horner personally. That is an unusual approach given Standard Building’s assertion that it now believes that Mr. Horner engaged in misconduct.

[41] In Siket v. Milczek (1993), 23 C.P.C. (3d) 204 (Ont. Ct. Gen. Div.), in refusing leave to commence third party proceedings just over a month before the trial sittings in which the main action was scheduled to be tried, West J. noted, at para. 7, that:

The plaintiffs are required to repay certain rents which they have collected and face the prospect of additional claims being raised by other tenants and former tenants. The amount of permissible rents collected each month is less than the carrying charges on the property. It appears that this situation is the direct result of the actions of the defendant-vendors. In these circumstances, it would be unjust to further delay the plaintiffs in their pursuit of the remedies available to them. While the denial of leave may result in multiplicity of proceedings, responsibility for that situation must rest with the defendants-moving parties for not having pursued their remedy earlier. [Emphasis added]

[42] I find that the underlined passage above is applicable to the present case. The explanation for the late-breaking epiphany that further third party proceedings may be warranted is underwhelming.

[43] Furthermore, there is a basis in fact for the Crawfords’ suspicions that the proposed third party proceedings are a contrivance to frustrate the expedited trial arrangements that all parties agreed to.

Disposition

[44] The motion for leave to commence third party proceedings against Horner General Contracting Inc. o/a Horner Workx is denied. This is without prejudice to Standard Building commencing a separate action against that party.

[45] As a result, there is no basis for an adjournment of the trial.

Costs

[46] I agree with the submission by the Crawfords that this was a late-breaking and entirely avoidable request for an adjournment and indulgence by Standard Building that “has sapped precious resources from the Crawfords on the eve of trial”. The Crawfords and the third party are entitled to their costs of this motion, payable forthwith, albeit on a partial indemnity, rather than the substantial indemnity scale that they requested. I fix those costs as follows:

a. $1,750 to the Crawfords;

b. $350 to Mr. Meisner.

[47] To the extent that it is necessary to permit payment of these awards, I would vary the Mareva injunction order.

Mew J.

Date: 17 November 2020