OVERVIEW

[1] Two actions have been brought with respect to the ownership of a commercial property located at 523 The Queensway, Toronto (the “Property”). The actions involve the Dimakos family; the three brothers, Peter Dimakos (“Peter”), Strath Dimakos (“Strath”) and Nick Dimakos (“Nick”) and their mother, Vasiliki Dimakos (“Vasiliki”).

[2] The legal owner of the Property is 1303150 Ontario Ltd. (“130 Ontario”). 130 Ontario is owned 75% by Peter and 25% by Vasiliki. 130 Ontario purchased the Property in 1998. The purchase was funded in part by a vendor take back mortgage (VTB). In November 2001, a company owned by Nick made a payment to 130 Ontario in the amount of $277,721.80 which was largely used to discharge the VTB. Nick takes the position that for his payment he received a one-third equity interest in the Property. Peter and Strath take the position that the payment was a loan to 130 Ontario.

[3] By Notice of Application dated September 26, 2014, Nick brought a proceeding against 130 Ontario, Peter, Strath and Strath’s management company (the “Original Proceeding”). The Application was converted to an action. The parties exchanged Affidavits of Documents in November 2017. The Defendants’ productions included documentation which provides that Vasiliki owns 25% of the shares of 130 Ontario. On January 25, 2018, following the exchange of documents, Nick amended the Claim to plead, among other things, unjust enrichment. Nick did not amend the claim to add Vasiliki as a Defendant. On July 19, 2019, Nick filed the trial record. On August 13, 2020, he submitted the certification form to set pre-trial and trial dates for the Original Proceeding. The trial is scheduled to begin on May 10, 2021.

[4] In August 2020, Nick’s counsel conducted a further discovery of Strath. Nick takes the position that on the discovery, the Defendants changed their position to state that 130 Ontario is a bare trustee and the Property is owned by Vasiliki and Peter pursuant to an undocumented trust. In his affidavit sworn February 5, 2021, Nick states that this is the first time he learned that his mother was an owner of the Property.

[5] Nick sought to conduct an oral examination of Vasiliki de bene esse. He brought a motion seeking leave to examine Vasiliki. The motion came before Master McGraw in November 2020. Master McGraw was of the view that given the status of the action and the nature of the dispute, case management would be the most efficient and proportionate manner of moving the matter forward. By endorsement dated November 13, 2020, he convened a case conference to schedule and timetable a pre-trial conference. The pre-trial was scheduled for December 2, 2020. In his endorsement dated November 18, 2020, Master McGraw stated that expedited trial dates may be available given the participation of Vasiliki, and the fact that she is 88 years of age.

[6] The pre-trial conference took place on December 2, 2020. Master McGraw completed the trial management report. The trial was booked for 10 days starting May 10, 2021. With respect to Nick’s motion to examine Vasiliki, Master McGraw states that the motion was adjourned. If Nick intends to proceed with the motion, it is to be heard by February 15, 2021 subject to the court’s availability.

[7] Nick did not pursue the examination of Vasiliki. Instead he issued this action against Vasiliki on January 4, 2021 (the “New Proceeding”). The claim was served on Vasiliki on January 5, 2021. Nick seeks a declaration that Vasiliki was unjustly enriched. Nick confirms that the claim in unjust enrichment is the only cause of action being advanced in the New Proceeding.

[8] On January 6, 2021, counsel for Nick wrote to the Defendants’ counsel at the time and provided a copy of the Statement of Claim. He stated that it will be necessary to rely on the time limits set out in the Rules in light of the trial date in May 2021.

[9] On February 3, 2021, Vasiliki brought this motion to dismiss the New Proceeding on the basis that it is an abuse of process. The Plaintiff brought a cross-motion to consolidate the New Proceeding with the Original Proceeding.

[10] Nick swore an affidavit with respect to the motions on February 5, 2021. He was cross-examined on his affidavit on February 19, 2021. The cross-examination was conducted by videoconference. Nick and his counsel, Mr. McGoogan were in a boardroom in the Plaintiff lawyer’s offices. Mr. Du Vernet was in another room in the same office. During a break in the cross-examination, Nick went into Mr. Du Vernet’s office and asked, “what are they doing”. Mr. Du Vernet said, “they have a very technical argument” and “this is a waste of time”. This brief conversation was broadcast over Zoom to the other participants. Once it was determined that there had been a discussion with counsel during the cross-examination, counsel for the Defendant was not prepared to continue with the cross-examination. The Defendant takes the position that the discussion with counsel during the cross-examination is contrary to the rules of cross-examination and professional ethics. The Defendant brought a motion on March 4, 2021 for an order staying the action or in the alternative striking Nick’s affidavit.

[11] The Defendant’s motion to strike the claim on the basis that it is an abuse of process and the Plaintiff’s motion to consolidate were scheduled for April 19, 2021. A case conference was convened to deal with the motions. The case conference was conducted by Justice Akbarali on April 6, 2021. On the case conference, the Defendants argued that the motion for a stay arising out of the cross-examination ought to be heard before the other two motions. The Plaintiff argued that doing so would put the trial date in the Original Proceeding in jeopardy. Justice Akbarali directed that Nick’s cross-examination be completed as soon as possible and be subject to conditions to ensure there can be no unauthorized discussions during the cross-examination. She directed that the three motions are to be heard on April 19, 2021 for a total of two hours.

ANALYSIS

Abuse of Process/Consolidation

[12] The Defendants argue that the New Proceeding brought against Vasiliki covers the same ground as the Original Proceeding and therefore is an abuse of the court’s process and ought to be struck. The Plaintiff denies that the New Proceeding is an abuse of process and moves to consolidate the New Proceeding with the Original Proceeding.

[13] Nick takes the position that in the Original Proceeding he was proceeding on the understanding that the owner of the Property was 130 Ontario. Strath testified on his discovery in August 2020, that 130 Ontario was a bare trustee and that Peter and Vasiliki were the owners of the Property. When Nick learned that the Defendants are taking the position that Vasiliki is an owner of the Property he did not initially bring an action against Vasiliki. He does not believe Vasiliki agreed to purchase the Property. He sought to examine Vasiliki de bene esse. He expected her evidence would be contrary to the evidence of Strath. He was hopeful that her evidence would be of assistance in bringing about a settlement of the action.

[14] The de bene esse motion came before Master McGraw. He ordered case management. In the pre-trial report he directed that if the Plaintiff wishes to proceed with the motion to examine Vasiliki, the motion was to be brought by February 15, 2021. Instead of bringing the motion, Nick brought the New Proceeding against Vasiliki. The Defendants argue that the action was brought solely to obtain an examination of Vasiliki before trial without having to comply with Master McGraw’s case management directions. The Plaintiff denies the action was brought to get around Master McGraw’s directions. He argues that when there was no settlement of the action on the pre-trial conference it was necessary to proceed with the action against Vasiliki. If Strath’s evidence is believed, and she is an owner of the Property, she will be a necessary party at trial.

[15] An abuse of process is the use of the court’s process that, “would be manifestly unfair to a party to the litigation before it or would in some way bring the administration of justice in disrepute”: Abarca v., Vargas, 2015 ONCA 4, at para. 21. The Defendants argue that the New Proceeding involves the same subject matter as the Original Proceeding. The Defendants also argue that there is no valid cause of action as against Vasiliki and therefore the only purpose for the action is to obtain her discovery evidence before trial without having to comply with Master McGraw’s case management directions or satisfy the test for an examination de bene esse.

[16] The Defendants rely on Maynes v. Allen-Vanguard Technologies Inc. (Med-Eng Systems Inc.), 2011 ONCA 125. In that case, the plaintiffs brought an action against Med-Eng and its directors. The plaintiffs sought various relief including an oppression order pursuant to s. 248 of the OBCA. After the close of pleadings, the plaintiffs sought the consent of the defendants to issue a fresh as amended statement of claim which would result in other parties being added as defendants to the action. When the consent was not provided, the plaintiffs did not proceed with a motion for leave to amend and instead initiated a new action against the original defendants and the new defendants. The motions court judge held that the new action was an abuse of process because the claims were virtually identical to the claims asserted in the original action.

[17] The appeal was dismissed. The court held that the plaintiffs effectively circumvented the express procedural requirement that leave of the court is to be obtained to add a non-consenting party to the proceedings after the pleadings closed. The court also states that the new action placed an inappropriate burden on the defendants who have to bring a motion to strike the new action when the onus was on the plaintiff to convince the court that leave should be granted to amend their pleadings in the original action.

[18] Here, counsel for the Defendants argue that the New Proceeding was to circumvent Master McGraw’s case management directions and the test to examine a witness de bene esse. In addition, the Defendants argue that there is substantial overlap with the Original Proceeding. They argue that if the Plaintiff wished to add Vasiliki to the action, a motion ought to have been brought to add her as a Defendant. The Plaintiff states that there are two routes to add Vasiliki to the action; either by adding her as a Defendant to the Original Proceeding or to bring a new action. The Plaintiff chose the latter. If they are wrong, the proportionate remedy is not to strike out the New Proceeding which would have the effect of precluding his right of action against his mother.

[19] The Plaintiff distinguishes the Maynes case on the basis that the new action is fundamentally different from the Original Proceeding because it adds Vasiliki as a Defendant to the action. It does not include the Defendants from the Original Proceeding. The Plaintiff relies on the Court of Appeal decision in Abarca v. Vargas, 2015 ONCA 4. In Abarca, the action arose out of a motor vehicle accident. The plaintiff commenced an action in Newmarket against the responsible driver. The driver’s insurer took an off-coverage position. The insurer added itself to the action as a statutory third party. The plaintiff later brought a motion to add the plaintiff’s own insurer as a defendant pursuant to the underinsured automobile coverage. The matter came before Justice Quinlan to be dealt with in writing. She refused the relief sought and, in her endorsement, states that the motion is to be brought in court on notice to the parties and the proposed defendant. The plaintiff did not pursue the motion on notice, but instead commenced a new action in Toronto. The new action largely duplicated the Newmarket action but added additional parties, including the plaintiff’s own insurer, Economical Mutual. Economical moved to strike the Toronto action on the basis that it was an abuse of process.

[20] The motions court judge found that it was an abuse of process for the plaintiff to start a separate action in Toronto against Economical instead of bringing a motion on notice to add it as a defendant in the Newmarket action. She struck out the claim as against Economical. The Court of Appeal found that starting the new action against Economical was not necessarily abusive. The Court stated that it would have been appropriate for the plaintiff to bring the new action against Economical alone with respect to the underinsured automobile coverage. Economical was not a party in the original action and therefore there was no overlap.

[21] Although the Court of Appeal stated that issuing the new action was not an abuse of process, the Court held that the plaintiff committed an abuse by not complying with the direction of Quinlan, J. to bring the motion to add Economical in the Newmarket action. The Court then considered the appropriate remedy for the abusive conduct. The Court of Appeal stated that in each case the court must assess the gravity of the abuse in determining the severity of its response, bearing in mind the principle of proportionality: Abarca v. Vargas at para. 29. The Court of Appeal stated that in light of the finding that an action against Economical was not abusive, the failure to comply with Justice Quinlan’s direction was at the minor end of the spectrum.

[22] Here the Plaintiff argues that the New Proceeding against Vasiliki is not abusive. In Abarca, the Court of Appeal stated that an action solely against Economical would not be considered abusive. In this case, the new action is brought only against Vasiliki and not the Defendants in the Original Proceeding. The Plaintiff also argues that he did not circumvent Master McGraw’s case management in bringing the action against Vasiliki. The action was not solely to obtain her evidence before trial. If Strath’s evidence is accepted that Vasiliki is the owner of the Property, she is a necessary party to the action. In any event, even if the New Proceeding was considered to be abusive because it was, in part, an attempt to circumvent Master McGraw’s case management, I find that the breach is toward the minor end of the spectrum and the remedy of striking the new action is disproportionate to the abuse.

[23] The Defendants distinguish Abarca on the basis that the claim against Vasiliki is for the same relief as claimed against the other Defendants in the Original Proceeding. In both actions, the Plaintiff seeks a declaration of unjust enrichment. The Defendants also argue that there is no prejudice to the Plaintiff if the claim is struck because there is no valid cause of action in unjust enrichment against Vasiliki. The Defendants argue that to succeed in an action for unjust enrichment the plaintiff must show there was a benefit to the defendant, a corresponding deprivation to the plaintiff and the absence of a juridical reason for any potential enrichment: Maynes, at para. 49. The Defendants argue that Nick’s contract with 130 Ontario to make a payment of $277,721.80 for either an equity interest or as a loan, is a juridical reason for any potential enrichment. The Plaintiff argues that there was no contract between Nick and Vasiliki and therefore there was no juridical reason for the potential enrichment. It is my view that whether there is a juridical reason for the potential enrichment is an issue to be determined at trial.

[24] I am unable to conclude that the New Proceeding is an abuse of process. The action is brought only against Vasiliki. She was not a party in the Original Proceeding and therefore there is no overlap. Although counsel for the Defendants argues that Vasiliki is already “bound up” in the Original Proceeding, I disagree. She is not a party in that proceeding and would not be bound by the result. I am of the view that this action is analogous to the Abarca case in which the Court of Appeal stated that a new action against Economical, which was not a party in the Original Proceeding, was not an abuse of process. I am also unable to conclude that the new claim was brought to circumvent Master McGraw’s case management. Based on Strath’s discovery evidence that Vasiliki is an owner of the Property, I am of the view that she is a necessary party to the action. The New Proceeding was brought to ensure she is involved in the trial of the action and is bound by the result. The New Proceeding was not brought simply to obtain her evidence before trial.

[25] The New Proceeding and Original Proceeding both involve the ownership of the Property and whether the payment by Nick was a loan or an equity investment. The two actions have questions of law and fact in common. I am satisfied that it is necessary for the New Proceeding to be consolidated with the Original Proceeding or tried at the same time, as the trial judge may direct.

[26] The Defendants argue that it will be difficult for Vasiliki to comply with the Rules with respect to oral and documentary discovery before the start of the trial on May 10, 2021. I do not share those concerns. Vasiliki is represented by the same lawyers that represent the Defendants in the Original Proceeding. As a result, the lawyers are up to speed. With respect to the documentary production, I expect the Defendants, in the Original Proceeding, have knowledge of the documentation which may be in Vasiliki’s possession. The oral discovery will be by videoconference and as a result, Vasiliki will not be required to leave her home. I understand Strath is his mother’s caregiver and he can assist his mother in setting up the Zoom call for the discovery. Although he can assist her in setting up the call, he is prohibited from providing any assistance to her during the examination. If he is required to be in the room during the Zoom call he must remain on camera at all times.

[27] Counsel for the Plaintiff proposed a timetable for the pre-trial steps in the New Proceeding to ensure that the action may be consolidated and tried at the same time as the Original Proceeding. He proposes the following:

Statement of Defence to be delivered by April 27, 2021;

Reply to be delivered by April 29, 2021;

Affidavit of Documents to be exchanged by May 2, 2021; and

Examinations for Discovery of Vasiliki and Nick to be completed by May 4, 2021.

[28] It is my view that the proposed timetable is reasonable. If there are any issues with respect to compliance with the proposed timetable, the parties may arrange a case conference with me.

Motion to Stay the Proceedings or to Strike Nick’s Affidavit as a result of his conduct on the Cross-examination

[29] The Defendants argue that the conduct of Nick on his cross-examination on February 19, 2021 is further evidence of his abusive conduct. During a break on the cross examination, Nick spoke with his lawyer. The conversation was broadcast on Zoom to the other participants on the cross-examination. The conversation was contrary to the rules of cross-examination and the Rules of Professional Conduct that there are to be no discussions regarding the matters in issue while a witness is under cross-examination. The Defendants argue that the conduct is deserving of sanction.

[30] The Plaintiff concedes that there was a discussion during the cross-examination. Mr. Du Vernet deposes in his affidavit that he believed the cross-examination had been completed when he spoke with Nick. In any event, he argues that his discussion was innocuous and did not affect the conduct of the examination.

[31] The conduct of virtual court proceedings has the potential for mischief. As noted in Kaushal v. Vasudeva et al., 2021 ONSC 440:

The integrity of the fact-finding process must be maintained. This includes the fact-finding process on virtual cross-examinations. This mischief could only have happened on a virtual examination. In a face-to-face examination, examining counsel has control over who is and is not present at the examination: at para. 60.

[32] I am satisfied that there was a breach of the rules of cross-examination and professional conduct when Mr. Du Vernet spoke with his client during the cross-examination. I accept Mr. Du Vernet’s evidence that he believed the cross-examination was concluded, but it is my view that he ought to have made specific enquiries either of Nick or of Mr. McGoogan to confirm the fact. With video examinations, the onus is on all participants to ensure that the integrity of the proceeding is maintained. This will require extra vigilance and caution as we go forward.

[33] Having found there was a breach, it is necessary to determine the appropriate remedy. The Defendants argue that the appropriate remedy is to stay the proceedings or to strike the affidavit. It is my view that in the particular circumstances of this case the proposed remedy is too harsh. Here there was no significant exchange. There was no discussion of the evidence and nothing of consequence said by Mr. Du Vernet. The conduct in this case does not approach the misconduct in the Kaushel case. In Kausel, the witness’ family members were in the room with the deponent and were prompting him with hand and facial gestures. The issue was compounded by counsel for the witness who stated that no one was in the room at the time of the examination. In Kausel, the court concluded that the evidence on the cross-examination was completely tainted.

[34] I am unable to come to the same conclusion in this case. There was no prompting of answers and no specific questions or answers were discussed. Although the discussion should not have taken place, I find that there was little harm done. In the circumstances, I decline to stay the Plaintiff’s action or to strike the affidavit.

DISPOSITION

[35] I make the following order:

a. The Defendants motion to strike the Plaintiff’s action against Vasiliki because it is an abuse of process is dismissed;

b. The Plaintiff’s motion to consolidate the New Proceeding with the Original Proceeding is allowed;

c. The following timetable is established with respect to the New Proceeding:

i) Statement of Defence to be delivered by April 27, 2021;

ii) Reply to be delivered by April 29, 2021;

iii) Affidavit of Documents to be exchanged by May 2, 2021; and

iv) Examinations for Discovery of Vasiliki and Nick to be completed by May 4, 2021.

d. The Defendants’ motion to stay the Plaintiff’s action or to strike the affidavit as a result of misconduct on Nick’s cross examination, is dismissed.

[36] The trial in the actions are to proceed on May 10, 2021. Costs of the motions are reserved to the trial Judge.

DATE: APRIL 21, 2021

Dimakos v. Dimakos, 2021 ONSC 3248

Case Summary

OVERVIEW

ANALYSIS

DISPOSITION

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Legal Tests 1

Legislation 1