Court File and Parties

COURT FILE NO.: 7880/18 DATE: 2021-03-11 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Donald Bodkin, Applicant AND: John Doe 1 and John Doe 2, Respondents

BEFORE: Kurz J.

COUNSEL: Les O’Connor and Max Skrow, for the Applicant Amelia Phillips, for the Respondents

HEARD: December 3, 2020

Endorsement

(THE PLEADINGS AND ALL DOCUMENTS IN THIS ACTION ARE SEALED AND ALL COURT PROCEEDING ARE HELD IN CAMERA PURSUANT TO THE ORDER OF MILLER J., DATED SEPTEMBER 19, 2018)

Introduction

[1] The Applicant (“Bodkin”) moves for an order under r. 38.10(1)(b) of the Rules of Civil Procedure (“RCP”), converting this application into an action. He states that he erroneously commenced the application rather than an action while he was self-represented. He argues that the application should be converted to an action because:

1. there are highly contested and complex issues of fact, credibility and reliability that require judicial weighing;

2. the fair determination of the issues required in this case require certain processes inherent to an action, such as pleadings and examinations for discovery; and

3. it would be unjust to proceed to determine this case without the right to prove that the facts he asserts are true. In the alternative, Bodkin seeks an order for a trial of an issue, being whether he is entitled to the remaining proceeds of sale of the unit.

[2] The Respondents strongly oppose this motion, They say that:

1. Bodkin, an experienced lawyer, chose this method of proceeding when he commenced it;

2. This application would have been heard already had Covid -19 not intervened to suspend the operation of this court;

3. The issues in this case can be determined as a question of law: the application of the Statute of Frauds to an alleged oral agreement;

4. If this matter would be converted to an action, it would raise a new cause of action and thus violate a limitation period;

5. Finally, the delay that the relief sought would cause would unfairly harm the Respondents, who have already been subjected to Bodkin’s delay tactics. The Respondents are simply waiting to receive the finds to which they are entitled.

[3] For the reasons that follow, I find that the test to convert this application to an action is met and I so order, upon terms.

Background

[4] The Applicant (“Bodkin”) is a long-practicing real estate lawyer. He was called to the bar in 1991. His practice is limited to real estate solicitor‘s work. The identities of the Respondents, John Doe 1 (“JD1”) and John Doe 2 (“JD2”) are anonymized by an order of Miller J., dated September 19, 2018. They are currently in the witness protection programme.

[5] Bodkin claims that in or about May 2006, JD1 approached him about buying two condominium units. They reached an agreement regarding one of those units (“the unit” or “the property”). Bodkin says that the agreement was to buy the unit. He would take possession of it and either reside in it or rent it out. He would pay all of the mortgage payments to JD1 and pay for all other maintenance and upkeep expenses for the unit as they come due.

[6] Bodkin says that he understood that JD1 was negotiating the sale on behalf of himself and his spouse. It turns out that the co-owner was JD1’s brother, JD2.

[7] Bodkin’s narrative continues, stating that JD1 told him that he was leaving for Egypt. JD1 assured Bodkin that they would finalize and formalize the agreement when JD1 returned in about a year’s time. At that time, the purchase price would be based on 2006 market prices. Bodkin moved into the unit and lived there until 2018, making the mortgage payments to JD1.

[8] Bodkin learned through newspaper accounts that JD1 went into the Canadian government’s witness protection programme in 2006. They have had limited contact since then.

[9] This arrangement continued for about 14 years. In April 2018, the mortgagee of the unit, First National Financial Corporation ("First National"), commenced mortgage proceedings regarding the unit. In June 2018, First National advised Mr. Bodkin in writing that it intended to enforce its mortgage and change the locks to the Property on June 27, 2018. Bodkin resisted that attempt while the Respondents appear to have been willing to allow the proceedings to play out.

[10] At one point, Bodkin attempted to pay out the outstanding mortgage, presumably to claim a right of redemption. But as Coats J. wrote in her costs endorsement in First National Financial Corporation v. John Doe, 2020 ONSC 3249, the defendants refused to authorize the mortgagee to accept that payment. Ultimately in 2020 First National succeeded in ousting Bodkin from the unit. It appears that First Mortgage is attempting to have the unit sold.

[11] On July 31, 2018, Bodkin brought this application for an order vesting title to the property to him. As the property was at the time in the process of being sold, he really is seeking the excess proceeds of sale of the unit, after the mortgagee’s claims are paid. If he does not succeed, the Respondents will receive those excess profits.

[12] The Respondents have a very different narrative than that of Bodkin. They claim that it was Bodkin who approached JD1. They say that the parties’ oral agreement was for Bodkin to rent and maintain the unit only. There never was an agreement for him to purchase it. That is why they raise the issue of the Statute of Frauds and its requirement that an agreement for the sale of property be in writing.

[13] Bodkin replies that his claim is an equitable one, rooted in part performance. Part performance is an exception to the Statute of Frauds’s requirement of a written agreement for the sale of real property.

Issues

[14] This motion raises the following issues:

1. Does Bodkin meet the test for the conversion of an application to an action under r. 38(10)(1)(b)?
2. If so, should the court exercise its discretion not to convert this application to an action?
3. If the court chooses not to convert this application to an action, should it order the trial of an issue?

Issue No. 1: Does Bodkin meet the test for the conversion of an application to an action under r. 38(10)(1)(b)?

[15] Under the RCP, the general rule is that proceedings are commenced as actions rather than applications. Under r. 14.02, “[e]very proceeding in the court shall be by action, except where a statute or these rules provide otherwise.”

[16] Under r. 14.05(3), a party may commence an application in certain circumstances. The rule states in part:

(3) Application under rules - A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claims is,

(d) the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in council, regulation or municipal by-law or resolution;

(e) the declaration of an interest in or charge on land, including the nature and extent of the interest or charge or the boundaries of the land, or the settling of the priority of interests or charges;

(h) in respect of any matter where it is unlikely that there will be any material facts in dispute.

[17] The jurisdiction to convert an application into an action and the manner in which that may occur is found in r. 38.10(1)-(3), which reads as follows:

DISPOSITION OF APPLICATION

38.10 (1) On the hearing of an application the presiding judge may,

(a) grant the relief sought or dismiss or adjourn the application, in whole or in part and with or without terms; or

(b) order that the whole application or any issue proceed to trial and give such directions as are just

(2) Where a trial of the whole application is directed, the proceeding shall thereafter be treated as an action, subject to the directions in the order directing the trial.

(3) Where a trial of an issue in the application is directed, the order directing the trial may provide that the proceeding be treated as an action in respect of the issue to be tried, subject to any directions in the order, and shall provide that the application be adjourned to be disposed of by the trial judge.

[18] While the rule speaks of the decision to order that the proceeding be treated as an action at trial, a motions judge has jurisdiction to make the order as well (Keewatin et al. v. Ontario et al., [2003] O.J. No. 2937 (Ont. Div. Ct.) at para. 53-58; Collins v. Canada (Attorney General), [2005] O.J. No. 2317, (S.C.J.) at para 4).

[19] The following factors are relevant in determining whether an application should proceed as an action:

1. whether there are material facts in dispute;
2. the presence of complex issues requiring expert evidence and/or a weighing of the evidence;
3. whether there is a need for the exchange of pleadings and for discoveries; and
4. the importance and impact of the application and of the relief sought.

(Collins v. Canada (Attorney General), at para.5)

[20] I will review those factors in order, below.

1. Are material facts in dispute?

[21] As the Court of Appeal for Ontario set out in 1100997 Ontario Ltd. v. North Elgin Centre Inc., 2016 ONCA 848, at para. 39, where “it is clear that there are and will continue to be material facts in dispute, it is appropriate to direct a trial of the issues in the application and to permit [the applicant] to deliver a statement of claim …”.

[22] Here there can be no question that there are diametrically opposed factual narratives that are likely central to the determination of the issues in this proceeding. If there was an oral agreement that Bodkin will purchase the unit, the court may consider the remaining issues raised in this case. If the agreement is for rent only, that finding would conclude the proceeding.

2. Are complex issues present, which require expert evidence and/or a weighing of the evidence?

[23] The court’s finding as to the substance of the agreement between Bodkin and JD1 is central to the resolution of this case. That issue cannot be determined within the context of an application, where facts are supposed to be non-contentious. Further complicating matters is the fact that there is no written agreement between the parties. That means that a judge will have to determine the credibility of the parties. A judge will be unable to do so other than through a trial.

3. Is there is a need for the exchange of pleadings and for discoveries?

[24] In an application, the notice of application does not plead the relevant allegations of fact. Under r. 38.04 a notice of application is required to state only the precise relief sought, the grounds to be argued and the documentary evidence to be used at the hearing of the application. It is therefore the supporting affidavit that typically sets out the relevant alleged facts. (1100997 Ontario Ltd. v. North Elgin Centre Inc., 2016 ONCA 848, at para. 16-18).

[25] Here, in light of the diverging factual contentions, the exchange of pleadings focussed on the relevant factual allegations would be more helpful than broader, duelling affidavits. Those pleadings could narrow the relevant factual and legal issues that separate the parties.

[26] Further, the process of examinations for discovery would further assist in clarifying and potentially narrowing the factual issues between the parties. The fact that such discoveries could be conducted by Zoom would help to ensure the personal security of the Respondents in light of their status within the witness protection programme.

4. How important and impactful are the application and the relief sought?

[27] This proceeding is an important one. Bodkin lived in the unit for about 14 years. He claims that he understood that he would own it before he was ousted from it. The proceeds after sale and payment of First National’s claims may well be substantial.

Conclusion on the Test to Convert this Application into an Action

[28] Bodkin meets the test for converting this application into an action. However the court retains a residual discretion, as part of its control of the process to determine whether to convert the application to an action.

[29] In considering the exercise of my discretion in light of the Respondent’s objections:

1. the fact that the Applicant chose the form of application rather than an action is not a reason to refuse the relief sought, unless the Respondents can prove prejudice. The only prejudice to which he can point is delay, to which I respond below. Any other concerns may be met with costs;

2. The Respondents claim that converting this application to an action will raise a limitation issue. I frankly do not see that, as the change is strictly procedural;

3. With regard to delay, again I see no prejudice that cannot be compensated for with costs.

[30] In light of my findings above, I find that it is in the interests of justice to exercise my discretion to convert this proceeding from an application to an action.

[31] Accordingly, I order that:

1. This application shall be converted to an action;
2. The Applicant shall be the Plaintiff and the Respondents shall be the Defendants in that action;
3. All prior interlocutory decisions in this proceeding shall remain in full force and effect, including the endorsement of Miller J. of September 19, 2018;
4. The Applicant shall serve his statement of claim upon the Respondent within 14 days of the release of this endorsement;
5. The Respondents may serve their statement of defence on the Applicant within 30 days of service;
6. The parties will exchange affidavits of documents and productions within 90 days of the release of this decision;
7. Each of the Applicant and the Respondents (jointly) are entitled to up to ½ day of examinations for discovery on a date as agreed by the parties;
8. This matter shall be set down for trial by September 10, 2021.

[32] With regard to costs, they would ordinarily follow the cause. However the Applicant has requested an indulgence that arises from his choice to proceed by application rather than action. For that reason, I grant the Respondents their costs in the cause, to be determined by the trial judge.

“ Marvin Kurz J. ”

Electronic signature of Justice Marvin Kurz, Original will be placed in court file

Date: March 11, 2021