Court File and Parties
Court File No.: CV-20-00647005-0000 Date: 2021-02-12 Ontario Superior Court of Justice
Between: Jeffrey Feldberg, Plaintiff And: David Andrews, Cristal Pools Ltd. and 3-D Exteriors Ltd., Defendants
Counsel: Elliot Birnboim and Michael Crampton, for the Plaintiff Robert Stewart, for the Defendants Andrew Winton and Jasmine K. Landau for the Proposed Intervenor, Steve (Uziel) Igel
Heard: February 9, 2021
Before: Papageorgiou J.
Nature of the Motion
1Steve (Uziel) Igel (“Igel”) seeks leave to intervene as an added party in this matter pursuant to Rule 13.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Background
2On September 9, 2020, the plaintiff Jeffrey Feldberg (“Feldberg”) commenced this action against David Andrews (“Andrews”) and his companies Cristal Pools Ltd. and 3-D Exteriors Ltd. (the “Andrews Action”). Although he did not name the moving party, Igel as a defendant, Feldberg pleaded causes of action against the defendants that are based on alleged misconduct attributed to Igel. The Andrews Action relies on alleged facts and legal issues which are the same as those being litigated in a separate action between Igel and Feldberg that commenced in November 2017 (the “Igel Action”). The Igel Action is scheduled to go to trial on April 19, 2021, on the Commercial List and Andrews will be a material witness at that trial. The Igel Action has been case managed since 2018.
3Upon receiving the Andrews Action Statement of Claim, the defendants brought a motion to strike the proceeding as an abuse of process. Igel sought the parties’ consent to intervene in the motion to strike. The defendants consented to Igel’s intervention, but Feldberg denied his request. As a result, Igel has brought this motion for leave to intervene as an added party to the Andrews Action before the motion to strike, which is scheduled to be heard April 1, 2021. He wants to intervene in the entire proceeding, but at a minimum wishes to intervene in the Rule 21 motion.
4Subrule 13.01(1) provides as follows:
Leave to Intervene as Added Party
13.01 (1) A person who is not a party to a proceeding may move for leave to intervene as an added party if the person claims,
(a) an interest in the subject matter of the proceeding;
(b) that the person may be adversely affected by a judgment in the proceeding; or
(c) that there exists between the person and one or more of the parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding. R.R.O. 1990, Reg. 194, r. 13.01 (1).
(2) On the motion, the court shall consider whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the proceeding and the court may add the person as a party to the proceeding and may make such order as is just. R.R.O. 1990, Reg. 194, r. 13.01 (2).
5A party seeking leave to intervene must satisfy one element of r. 13.01(1) as a threshold matter. Thereafter, the Court may exercise its discretion on whether or not to add the person as a party based upon whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the Andrews Action: Render v. ThyssenKrupp Elevator, 2018 ONSC 3182 at para 23.
6In the exercise of their discretion Courts have taken into account the following additional factors:
a. the nature of the case;
b. the issues which arise; and
c. whether the party seeking to intervene will be able to make a useful contribution to the resolution of the case without causing injustice: Render v. ThyssenKrupp Elevator, 2018 ONSC 3182 at para 7 citing Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd., [1990] O.J. No. 1378 (Ont.C.A.), and at para 23.
7Leave to intervene in a private lawsuit is only granted in rare cases and the burden on the proposed intervenor in a private dispute is higher than those cases where broad constitutional issues are involved: Render v. ThyssenKrupp Elevator, 2018 ONSC 3182 at paras 10 and 23.
8Courts should ensure that orders made pursuant to r. 13 do not render proceedings “unduly ponderous, onerous and unwieldy by the admission of parties whose interests are illusory, insubstantial or excessively difficult to identify.” Peel (Regional Municipality) v. Greater Toronto Airport, [1999] OJ 1921 (ONSC), at para 8 quoting Adler v. Ontario (1992), 8 O.R. (3d) 200 at p. 205.
9I will review r.13.01(1) factors in a different order than they are set out because it makes more sense to an understanding of this case to do so.
13.01(1)(c): There is a question of law or fact in common with one or more of the questions in the proceeding
10Mr. Feldberg concedes that Mr. Igel has satisfied r. 13.01(c), but it is important to review the common issues of law and fact involved to have a full appreciation of this ground for this motion.
11As noted above, Igel and Feldberg are already litigating a claim, the Igel Action, that involves many of the same issues raised in the Feldberg Action.
12On November 1, 2017, Igel commenced a proceeding against Feldberg, his former real estate development partner, and others for, among other things, damages for oppression, breach of contract and intentional interference with economic relations. This claim was in respect of a joint venture which Igel and Feldberg had entered into to develop properties under a group of companies known as the Magnum Opus Group. Essentially, Feldberg would provide the financing and Igel would provide the work to develop the properties.
13On January 17, 2018, Feldberg filed his statement of defence, counterclaim and crossclaim to the Igel Action (the “Feldberg Counterclaim”).
14The Feldberg Counterclaim alleges that Igel committed breaches of duty in relation to the Magnum Opus Group. These allegations are serious allegations of dishonest conduct. They go beyond allegations that he misappropriated a corporate opportunity and assert undue influence (para 25), unconscionable conduct (para 134), deliberate use by Igel of his family companies as a vehicle to breach his fiduciary duties (para 142) double drawing of a salary by Igel (para 143), and self-dealing by payments to his family members and misappropriation of materials (para 143).
15The Feldberg Counterclaim also names several other defendants by counterclaim and alleges that several suppliers to the joint venture participated in or benefitted from Igel’s alleged breaches of duty, and that Igel and the suppliers improperly participated in a kickback scheme that harmed Feldberg and his companies.
16At paragraph 146 of the Feldberg Counterclaim, he specifically names “3D Landscaping”, one of the defendants in this case, the Andrews Action, as an example of a supplier that benefitted from kickbacks. Andrews, another defendant in this case, is one of the principles of 3D Landscaping.
17The Andrews Action contains the following allegations:
a. That Andrews introduced Feldberg to Igel (para 6);
b. That a friendship subsequently developed between Feldberg and Igel which Feldberg ultimately learned was a ruse to exert control over Feldberg’s business interests and engage in related tortious behaviour including breaches of fiduciary duty (para 7);
c. That Igel and Feldberg entered into a commercial venture whereby Igel was to develop and construct various residential real estate projects under a group of entities known as Magnum Opus Group (para 8);
d. That the commercial venture consisted of an agreement whereby Feldberg would provide funding for real estate projects which would be developed by Igel (para 9);
e. That Igel exercised great power over Feldberg and Magnum Opus Group and that Feldberg placed enormous trust in Igel (para 10);
f. That in the course of this commercial development, Feldberg retained the defendants on various Magnum Opus Group projects (para 12);
g. That the defendants knew or ought to have known of the duties owed by Igel to Feldberg and that they were complicit with Igel in breaches of duty (para 16);
h. That Igel committed gross and dishonest breaches of his fiduciary duties to Feldberg and that the substance of such breaches is the subject of the Igel Action and included contracting for overpriced services to be performed by the defendants in respect of the joint venture without obtaining comparative quotes, facilitating imprudent and commercially unreasonable terms in respect of payment of the defendants and arranging for kick-backs from the defendants to Igel (para 17);
i. That the defendants were not merely passive bystanders but actively participated in Igel’s breaches because of an express arrangement between them (para 18); and
j. That the defendants engaged in knowing assistance of Mr. Igel’s breaches (para 19).
18The essence of the Andrews Action is a claim that Andrews and his companies knowingly assisted in the various alleged breaches of duty committed by Igel, which are asserted in the Feldberg Counterclaim. There is no question that the Andrews Action, the Igel Claim and the Feldberg Counterclaim arise out of the same events and that there exists between Igel and the parties in the Andrews Action many questions of law and fact in common.
19Feldberg concedes this and asserts that if the Igel Action had been at an earlier stage, he would have moved to amend to include the defendants in this action, in the Igel Action. He also submits that were the Igel Action and Feldberg Counterclaim does not close to trial, he would consent to the intervention sought. In my view, this admission speaks volumes as to the appropriate order in this case.
13.01(1)(a): Mr. Igel has an interest in the subject matter of the Andrews Action
20It is accepted law that the Court should take a liberal approach in interpreting clause 13.01(1)(a): Butty v. Butty (2009), 98 OR (3d) 713 (ONCA) at para 8.
21Courts have recognized that reputational interests are sufficient to constitute an interest in a proceeding for the purposes of r. 13.01(a): Render v. ThyssenKrupp Elevator, 2018 ONSC 3182, at paras 14-22; Peel Region v. GTAA, [1999] OJ 1921 at paras 19-20; Butty v. Butty (2009) at paras 8-9; Trempe v Reybroek.
22In Butty, LaForme J.A. stated, at para 8 “the proposed intervenor’s integrity can be sufficient to engage the provisions especially where there is no evidence that these interests would be advanced by the parties.”
23In Render, at para 51 the Court stated:
Although the burden on a proposed intervenor is heavier in a case arising from a private dispute such as this one, the issue of the protection of an individual’s integrity is as likely to arise in the context of a private dispute as in one giving rise to a broader constitutional issue. The fact that a dispute is a private one, rather than one of a more public nature, is therefore not a bar to the granting of intervenor status to protect the intervener’s integrity.”
24Igel argues that he has an interest in the subject matter of the Andrews Action because it alleges significant impropriety. He asserts an interest in protecting his integrity from Feldberg’s allegations of conspiracy and breaches by Igel of his contractual and fiduciary duties to Feldberg. His counsel argues that Igel’s reputation for honesty, hard work and integrity among his close colleagues and in the construction industry more broadly would be seriously affected if the Andrews Action proceeded without his participation and there is no reason to think that these interests would be advanced by any of the parties in the Andrews Action.
25Feldberg argues that there is always the potential that findings may be made against individuals who are witnesses in proceedings and the mere fact that that could occur is not grounds for every witness to intervene: Render v. ThyssenKrupp Elevator, 2018 ONSC 3182 at para 10.
26In my view, Igel is not a mere witness in this proceeding. His conduct is central to the allegations made against Andrews and indeed the bulk of the Statement of Claim in the Andrews Action references Igel’s conduct. Although Igel did not swear an affidavit attesting to his reputational concerns, given the nature of the pleaded assertions against him in the Feldberg Counterclaim, I accept that he has a reputational interest in this litigation—although in my view, this factor alone is not a very strong one given the absence of evidence on the issue and the heavy burden on a proposed intervention into private litigation.
13.01(1)(b): Igel may be adversely affected by a judgment in the Andrews Action
27As noted above, there is currently a motion to strike the Andrews Action as an abuse of process which is scheduled for April 1, 2021.
28In Trempe v. Reybroek (2002), 57 OR (3d) 786, this Court held that an interlocutory motion, which could result in judgment disposing of an action, is sufficient to qualify as a “judgment” for the purpose of this factor.
29Igel asserts that his interests may be adversely affected by the outcome of the defendants’ r. 21 motion; if the motion is dismissed, Igel faces the prospect of having his dealings with Feldberg litigated twice: first in the Feldberg Counterclaim, which is scheduled to proceed to trial in two months, and again in the Andrews Action.
30Feldberg asserts that given that the trial in the Igel Action/Feldberg Counterclaim is scheduled to proceed on April 19, 2021, barring unforeseen circumstances, there is no possibility that the outcome of the Andrews Action could affect Igel. Either:
a. The Igel Action/Feldberg Counterclaim will proceed to trial and Igel will be found to have breached his fiduciary duty to Feldberg – in which case this essentially becomes a background fact to Feldberg’s separate allegation that Andrews knowingly assisted in Igel’s breach; or,
b. Igel will not be found to have breached his fiduciary duties to Feldberg – in which case Feldberg’s action against Andrews would still proceed, but only on the basis of Andrews’s contractual breach for failure to complete work paid for in advance by Feldberg.
31Feldberg says there is no risk to Igel’s reputation in either scenario and that, accordingly, he will have nothing to add. Given the timetable of the Igel Action/Feldberg Counterclaim, Igel’s intervention in this action is premature.
32In my view, Igel may be adversely affected by the outcome of the Rule 21 motion but Feldberg’s logic with respect to the Andrews Action is sound.
33There was argument before me as to how the issues in the Igel Action/Feldberg Counterclaim could result in res judicata in respect of some of the issues in the Andrews Action, but there was insufficient argument or case law presented from which I could draw any conclusions on this issue.
Conclusion re r. 13.01(1)
34I am satisfied that Igel has satisfied all of the threshold requirements of r. 13.01(1), even though he need only satisfy one.
Will there be any undue prejudice or delay to the Andrews Action or r. 21 motion if Igel is permitted to intervene?
35An intervener cannot introduce new issues or claim new relief and must only address issues already contained in the pleadings: Hydro One Networks Inc. v. Ontario Energy Board, 2019 ONSC 3763 at para 24. In this case, Igel does not intend to claim new relief or add new issues to the Andrews Action. He only seeks to intervene in the r. 21 motion to present his unique perspective on the abusive nature of the Andrews Action, and, if necessary, he seeks to participate in the Andrews Action as a party to respond to the allegations against him that are already contained in the Andrews Action Statement of Claim.
36Although Feldberg argues that the addition of Igel will increase the time it takes for Feldberg to get on with this action, and that it will double the discovery rights and add delays while the parties coordinate schedules, there is no evidence before me on this issue. Feldberg argues that intervention orders must be carefully crafted but does not propose any particular terms.
37With respect to the action, it is true that adding a party will always add to the time it takes for parties to complete discovery and other steps. This fact, on its own is not a bar.
38With respect to the r. 21 motion, it has already been scheduled to accommodate Igel’s participation should he succeed in this motion. That motion is the next step in the Andrews Action, and so no step in the Andrew Action will be delayed or prejudiced by Igel’s participation in that motion.
39In my view, the possible prejudice or delay is not a significant factor in this case.
The Nature of the case and the disputed issues
40This lawsuit is a straightforward claim that builds upon allegations in the Igel Action. Having prosecuted this case for almost three years, and approaching trial, Feldberg is well versed in this matter. Intervention of a party who Feldberg has already been litigating the same matter with for many years should not create any undue hardship on him.
Will Igel be able to make a useful contribution?
41Feldberg says that Igel has nothing useful to add to either the action, or to the argument of the r. 21 motion. I disagree for the most part.
42The grounds for the r. 21 motion are that the Andrews Action is substantially identical to the Igel Action/Feldberg Counterclaim and is a flagrant attempt to claim similar remedies to those claimed by Feldberg in that action, but against the defendants in this case. The defendants say that they could have been named as defendants to the Feldberg Counterclaim, but at no time did Feldberg attempt to add them. The motion also claims that the Andrews Action appears to be an attempt to intimidate Andrews, who is a material witness in the Igel Action/Feldberg Counterclaim.
43Igel has referenced the following facts with respect to the way in which the Igel Action/Feldberg Counterclaim have proceeded in support of the proposition that the Andrews Action is an abuse of process:
a. Feldberg has amended his Defence and Counterclaim three times and has added new parties twice but has never sought to add Andrews or his companies as parties to the Igel Action/Feldberg Counterclaim, even though it was clear that Feldberg believed these defendants had participated in the alleged breaches in the Feldberg Counterclaim.
b. At the examination for discovery of Igel conducted on February 27, March 2, and June 15, 2020, Feldberg’s counsel asked many questions about Andrews. After this examination, on July 23, 2020, Feldberg brought a motion to amend the Feldberg Counterclaim to add new allegations against existing parties and to add a new claim against the trustee of 2012 JRJT Trust, an Igel family trust. He did not seek to add Andrews or the other defendants as parties at that time;
c. On September 8, 2020 the Case Management Judge heard a full-day conference in the Igel Action/Feldberg Counterclaim which included adjudication of refusals related to Andrews and these refusals were resolved at that time. Feldberg did not raise with the Case Management Judge any need to add Andrews and the other defendants to the Igel Action/Feldberg Counterclaim;
d. Instead, on September 9, 2020 Feldberg commenced this action without notice to Igel or to the Case Management Judge even though there is a heavy overlap in the two cases; and
e. On October 27, 2020 the parties to the Igel Action/Feldberg Counterclaim agreed to a timetable for the steps leading up to the trial of the Igel Action/Feldberg Counterclaim, which was approved by the Case Management Judge. At that time Feldberg did not alert the Court to the existence of this claim or raise any issue as to adding any more parties to the Igel Action/Feldberg Counterclaim.
44In their materials, Feldberg has raised various aspects of the progression of the Igel Action/Feldberg Counterclaim relating to the way in which Igel has conducted himself with respect to disclosures of the Andrews Action to the Case Management Judge. As well, during the motion, counsel for Feldberg made assertions about the Igel Action/Feldberg Counterclaim which Igel’s counsel submitted were inaccurate. Without deciding whether counsel’s submissions were inaccurate or not, it is clear that the defendants in this case do not know the ins and outs of the Igel Action/Feldberg Counterclaim or the details of everything that has occurred and which could be relevant to the r. 21 motion. Igel will have a clear contribution to make on the issue which is central to the r. 21 motion, which is whether the Andrews Action is an abuse of process because of the similarity between the two actions and the way in which the Igel Action/Feldberg Counterclaim has proceeded.
45I agree that there should be someone there, other than Feldberg who has a clear interest in opposing the r. 21 motion, who is familiar with the Igel Action to assist the Court with any factual disputes which may arise regarding the way in which that action has proceeded.
46With respect to the request to intervene as a party in the entire Andrews Action, given the fact that the Igel Action/Feldberg Counterclaim will likely be completed well before anything happens in the Andrews Action, I agree that it may be premature to add Igel as a party. As I said above, while both parties asserted that the principle of res judicata operated in their favour on this point, there was insufficient argument and case law on this issue to determine how the resolution of the Igel Action/Feldberg Counterclaim would impact any reputational or other interest which Igel may have in the Andrews Action afterwards. If the r. 21 motion is dismissed, and/or the trial does not proceed, that issue can be revisited.
47This is an unusual situation, one which is dissimilar to any of the cases before me. However, I am satisfied that in all the circumstances Igel should be permitted to intervene as in the r. 21 motion.
Motion to strike pursuant to r. 25.11
48Feldberg also brought a short motion to strike out certain paragraphs and Exhibits from the Affidavit of David Andrews sworn November 29, 2020 from the Andrews Action pursuant to r. 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
49As a general rule, motions to strike out affidavits should be brought before the Judge hearing the main motion: 1196303 Ontario Inc. v Glen Grove Suites, 2012 ONSC 758 at para 19. However, the parties scheduled this motion to deal with the intervention issue and agreed this motion re striking out paragraphs could proceed at the same time. I see no reason why I ought not deal with it.
50With respect to paragraph 8 and Exhibit “C”, these reference and form part of the settlement negotiations that Feldberg was pursuing and are protected by settlement privilege: Pine Valley Developments Corporation v. Marsh at paras 4-5.
51Counsel for the defendants (the Andrews Group), argues that there is an exception to this privilege if the communication contains a threat. I have reviewed the communication and it does not. Accordingly, paragraph 8 and Exhibit “C” are struck out.
52With respect to paragraph 9 and Exhibit “D”, the defendants (the Andrews Group), consent to the striking out of these paragraphs.
Costs
53Igel requests costs in the amount of $16,559 on a substantial indemnity basis and $11,066 on a partial indemnity basis. Feldberg says that he seeks $4,500 if successful. He argues that the matter was not complex, there were thin materials on both sides, no examinations for discovery and that the motion did not last a whole day.
54I see no basis for an award of substantial indemnity costs. In my view, taking into account the principle of indemnity, fixing an amount that is fair and reasonable, and the reasonable expectations of the parties, I award Igel $10,000 in respect of this motion on a partial indemnity basis.
55With respect to the costs of the Motion to Strike brought by Feldberg, this was a very straightforward matter with few materials and took up approximately 10 minutes of court time. Feldberg claims $5,000 on a substantial indemnity basis and $4,000 on a partial indemnity basis. I see no basis for a substantial indemnity award and in my view, the $4,000 claimed is excessive. In all the circumstances I award Feldberg $1,500 in respect of the costs of the motion to strike out.
Conclusion
56I Order as follows:
a. Mr. Igel, as defined herein, is given leave to intervene in the r. 21 motion pending in the Andrews Action;
b. The motion to add Igel as a party to the Andrews Action is dismissed without prejudice to Igel’s right to bring that motion again after determination of the r. 21 motion, and I am seized of this matter subject to my availability on the civil list;
c. With respect to the r. 21 motion, Igel will have all the usual rights of a party including the right to file materials, conduct cross-examinations and present oral argument;
d. The following paragraphs shall be struck from the affidavit of David Andrews sworn November 29, 2020: paragraph 8 and Exhibit “C” and paragraph 9 and Exhibit “D”;
e. Feldberg shall pay to Igel costs in the amount of $10,000 in respect of the intervention motion within 15 days of these reasons;
f. Andrews shall pay to Feldberg costs in the amount of $1,500 in respect of the motion to strike within 15 days of these reasons.
g. The parties shall prepare an order and attempt to settle it. If they cannot, they may make submissions on any issues. Otherwise, it may be forwarded to my assistant to be signed.
Papageorgiou J.
Released: Feb 12, 2021