Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Antonio Malizia
AND:
Re/Max West Realty Inc. Brokerage and Frank Leo and Alexandro Sclavi
BEFORE: W.D. Black J.
COUNSEL: Robert Lepore, for the Plaintiff (responding party)
Amanda Gibson, for Defendants (moving party)
HEARD: September 7, 2021
ENDORSEMENT
1This is a motion by the defendants for an Order striking the Statement of Claim (the “Claim”), without leave to amend, on the basis that the Claim is an abuse of process and/or estopped (on the basis of issue estoppel).
BACKGROUND FACTS
2The events giving rise to this litigation commenced in April of 2018.
3At that time, the plaintiff, Antonio Malizia (“Malizia” or the “plaintiff”), submitted an offer to purchase a residential property at 1946 Lawrence Avenue West in Toronto (the “Property”). Malizia was represented in that transaction by the defendant, Alexandro Sclavi (“Sclavi”).
4After an exchange of offers, a conditional agreement was reached, with the condition being a home inspection. In connection with the transaction, Malizia provided a deposit in the amount of $25,000.00.
5Malizia obtained a home inspection report advising that there was mold or mildew at certain baseboards within the basement of the home and recommending a further evaluation and cleaning in those areas.
6Malizia maintains that having regard to those findings, he did not sign any document waiving the inspection condition.
7Nevertheless, the vendor received a signed waiver purporting to be signed by Malizia. When Malizia failed or refused to close the transaction, the vendor brought an application to keep Malizia’s deposit. Malizia defended that application on the basis that he did not sign the waiver and that the signature on that document must have been forged.
8During the course of those proceedings, Malizia alleged that it was in fact Sclavi who forged Malizia’s signature to allow the transaction to proceed.
9The application came before Koehnen J. on August 2, 2018. His Honour, after a brief adjournment to permit the filing of additional materials, heard the matter on September 4, 2018, including the viva voce evidence of Sclavi, who was cross-examined in that setting by counsel for Malizia.
10Having reviewed and heard the evidence, and submissions by counsel, His Honour found that Malizia had not satisfied him that the signature on the waiver was a forgery and held that the applicant was entitled to the deposit.
11Malizia did not appeal the decision of Koehnen J.
THE CLAIM
12In April of 2020, Malizia (now the plaintiff) issued the Claim that is the subject of the motion before me.
13A central premise of the Claim is that Sclavi forged Malizia’s signature on the waiver in the underlying transaction – indeed, plaintiff’s counsel candidly concedes that that is the central issue.
14Accordingly, the defendants in their motion argue that the plaintiff is seeking a “second kick at the can” by relitigating issues that have already been determined against him. They argue that issue estoppel precludes the Claim from continuing and that, for these same reasons, the Claim constitutes an abuse of process.
15In the defendants’ factum, there is a helpful chart in paragraph 14 setting out a comparison between the allegations in Malizia’s responding record in the application heard by Koehnen J. and the allegations in the Claim. The inescapable conclusion of that side-by-side comparison is that the core allegations within each proceeding are identical to one another.
LAW RE: ABUSE OF PROCESS
16In support of their submission that the Claim constitutes an abuse of process, the defendants rely on the Supreme Court of Canada’s decision in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77.
17In that case, Arbour J., writing for the majority, wrote, at para. 43:
In all of its applications, the primary focus of the doctrine of abuse of process is the integrity of the adjudicative functions of the courts. Whether it serves to disentitle the Crown from proceeding because of undue delays or whether it prevents a civil party from using the courts for an improper purpose, the focus is less on the interest of the parties and more on the integrity of judicial decision making as a branch of the administration of justice. In a case such as the present one, it is that concern that compels a bar against relitigation, more than any sense of unfairness to a party being called twice to put its case forward, for example. When that is understood, the parameters of the doctrine become easier to define, and the exercise of discretion is better anchored in principle. [Citations omitted.]
18As Molloy J. explained in Kenderry-Esprit (Receiver of) v. Burgess, MacDonald, Martin & Younger (2001), 2001 CanLII 28042 (ON SC), 53 O.R. (3d) 208 (S.C.) the court’s authority to dismiss an action for abuse of process is rooted in its inherent jurisdiction and r. 21.01(3) of Ontario’s Rules of Civil Procedure, R.R.O. 1990, Reg. 194. One of the common situations in which the principle is invoked is to prevent a multiplicity of proceedings or the re-litigation of issues already decided so as to avoid the danger of inconsistent verdicts. It also encompasses a situation in which the party now raising an issue before the court could have raised it in earlier proceedings, but chose not to.
19In Millwright Regional Council of Ontario Pension Trust Fund (Trustees of) v. Celestica Inc., 2016 ONSC 3235, Justice Perell wrote, at para. 38:
The doctrine of abuse of process is a flexible doctrine whose aim is to protect litigants from abusive, vexatious or frivolous proceedings or otherwise prevent a miscarriage of justice, and its application will depend on the circumstances, facts, and context of a given case. The doctrine of abuse of process precludes re-litigation in circumstances where the strict requirements of res judicata are not met, but where allowing the litigation to proceed would nonetheless violate such principles as judicial economy, consistency, finality and the integrity of the administration of justice. [Citations omitted.]
LAW RE: ISSUE ESTOPPEL
20At para. 44, Perell J. went on to say:
Not to put too fine a point on it, a litigant cannot avoid an issue estoppel by atomizing the legal question before the court to find some unexamined atom. If I was wrong in deciding that standing alone the common law misrepresentation did not satisfy the preferable procedure test, the route was to appeal my decision not re‑litigation of whether the common law claim standing alone is certifiable.
21Relying in part on that decision, the defendant here also argues that the circumstances of this case give rise to issue estoppel and that the plaintiff’s proper route was to appeal Koehnen J.’s decision rather than seeking to re-litigate His Honour’s finding concerning the alleged forgery.
22The three requirements for issue estoppel are summarized in the dissenting reasons of Goudge J.A. in Canam Enterprises Inc. v. Coles (2000), 2000 CanLII 8514 (ON CA), 51 O.R. (3d) 481 (C.A.), at para. 43, rev’d 2002 SCC 63, [2002] 3 S.C.R. 307. They are:
(a) That a prior proceeding must have decided the same question as in issue in the subsequent proceeding;
(b) That the decision said to create the estoppel be judicial and final; and
(c) That the parties to the earlier decision be either the same as, or the privies of, the parties in the subsequent proceeding.
23On the scope of the first requirement, the court in Starcevic v. Pavicic, 2010 ONSC 274 wrote, at para. 29:
Regarding the first condition, different causes of action may have one or more material facts in common. Once a material fact has been determined by a court, the same issue cannot be relitigated between the same parties or their privies. The estoppel extends to issues of fact, law or mixed fact and law.
24On the question of who may be a privy, that court said, at paras. 41-42:
A person may be a privy of another by blood, title or interest. There must be a sufficient degree of identification between the two parties in order to establish privity of interest. That finding is necessary in order for this court to find that the decision to which one was a party should be binding in proceedings to which the other is party.
A privy is a person who has a right to participate with the party in a proceeding or, who has a participatory interest in the outcome, which is determined by whether the outcome could affect the liability of that person.
DEFENDANTS’ SUBMISSIONS ON ABUSE OF PROCESS
25On the question of abuse of process, the defendants point in particular to the Manitoba Court of Appeal’s decision in Solomon v. Smith (1987), 1987 CanLII 6962 (MB CA), 49 Man. R. (2d) 252. In that case the plaintiff, Solomon, was the buyer of 24 townhomes. He repudiated the agreement alleging misrepresentation by the seller’s agent. The seller commenced an action and obtained judgment, the court finding that the buyer had not relied on any misdescription in entering into the agreement to purchase and rejecting the defence of misrepresentation. The buyer appealed but the appeal settled. The buyer subsequently commenced an action against the seller’s real estate agent. The real estate agent brought a motion striking the claim on the basis that it was an abuse of process and was successful. The buyer appealed.
26The Manitoba Court of Appeal, in dismissing the appeal and finding that the action against the real estate agent was an abuse of process, held, at p. 252, that the issue before them was: “whether a statement of claim, founded on facts previously adjudicated, should be dismissed as offending against the principle of issue estoppel or abuse of process.” The court considered whether a finding that the buyer was not induced to buy a property by any alleged misdescription should prohibit Solomon from bringing a suit based on the same alleged misrepresentations and concluded that it should.
27The defendants argue that the same analysis should apply here.
28They note that Koehnen J. had before him on the application the plaintiff’s sworn evidence and heard the viva voce evidence of Sclavi, who was cross-examined by the plaintiff’s counsel on the very issue of the alleged forgery.
29Having reviewed that evidence, Koehnen J. held, at paras. 13-15, 33:
The respondent’s evidence has not satisfied me on a balance of probabilities that he is entitled to the return of his deposit.
Mr. Sclavi gave viva voce evidence before me. He testified that the respondent signed the waiver of inspection in front of him on April 5, 2018 at the vendor’s property. On cross-examination, respondent’s counsel tried to suggest that Mr. Sclavi forged the respondent’s signature on the waiver in order to preserve his commission on the purchase.
I do not accept that suggestion. The respondent was at the early stages of his relationship with Mr. Sclavi. Mr. Sclavi had shown him two houses. Many purchasers see 25 or 30 homes before they decide to pursue a property. The concept of losing a particular deal was nothing new to Mr. Sclavi. As he described it, losing a transaction was part of the ordinary course of acting as a real estate agent.
The applicant called Mr. Sclavi to contradict the respondent’s affidavit. I believe Mr. Sclavi’s evidence. The respondent’s affidavit was not persuasive in that it failed to answer a number of questions that should have been addressed.
30Relative to the respondent’s claim that he rejected the property (and therefore did not sign the waiver) because the inspection report revealed mold on the property, Justice Koehnen found, at para. 17, that: “this is not quite what the report says. The report actually states: ‘mold/mildew suspected at the baseboards’ in the basement bedroom. The recommended remediation was ‘further evaluation and clean’ … The mold/mildew noted in the home’s inspection report did not even make its way into the report’s summary, further suggesting that it was a relatively minor issue that could be remedied by simple cleaning.”
31His Honour understood that the minor description of mildew would still have given the respondent a basis to reject the property but noted the minor nature of the issue as part of his overall evaluation of alleged forgery of the waiver.
32In that regard, Justice Koehnen also considered and placed some weight on the events following the home inspection. He said, at paras. 21-25:
The events following the home inspection are curious and cast doubts on the respondent’s position.
The respondent says he never saw Mr. Sclavi again after the home inspection. This is curious for someone who was supposedly looking to purchase a home with Mr. Sclavi’s help and even more curious given the events of the days following the home inspection.
On April 9, 2018, the respondent says he contacted the applicant’s agent to ask that his deposit be refunded because the home inspection was unsatisfactory. It is curious that the respondent would not use Mr. Sclavi to convey that message. The respondent did not explain why he did not use Mr. Sclavi to do so. While the respondent says the letter was faxed to the vendor’s agent on April 9, 2018, the fax confirmation sheet attached to the respondent’s affidavit is dated February 15, 2015. The respondent offered no explanation for the discrepancy.
On April 10, 2018 the respondent signed an agreement of purchase and sale for another residential property that was $270,000 more expensive than the applicant’s property. Counter‑offers were exchanged. The respondent ultimately purchased that property. The respondent did not use Mr. Sclavi for that purchase and did not explain why.
The respondent’s conduct in asking for the return of the deposit himself and purchasing another property without Mr. Sclavi on April 10, 2018 is consistent with the respondent feeling sheepish about involving Mr. Sclavi because he knew he had a firm deal with the applicant but had found another house in the interim which he liked better.
33Justice Koehnen also considered the discrepancies suggested with respect to the respondent’s signatures and specifically found that those discrepancies fell within the range of an individual’s different formation of their signature, depending on the particular circumstances in which they were signing.
34It should be noted that both His Honour and the respondent also turned their minds to the possibility of the respondent obtaining an expert opinion from a handwriting expert. His Honour made it clear, on August 2, 2018, that he would hear viva voce evidence on September 4, 2018, if necessary, on any issues of credibility. He wrote that on September 4, the respondent had sought a further adjournment to retain a handwriting expert, and that His Honour had declined that request since, “[i]f the respondent had wanted to introduce the evidence of a handwriting expert, he had ample time to do so since being served with the materials in June. A party cannot put in responding materials to an application, conduct viva voce cross-examinations at a hybrid application/trial procedure and then decide once the evidence is complete that he would like an adjournment to call further evidence.”: at para. 31.
35Based on this record, the defendants argue that the central issue before Justice Koehnen was whether or not Sclavi forged the waiver of the home inspection condition as alleged by the plaintiff. Justice Koehnen, the defendants say, did not believe this allegation and found that the plaintiff himself signed the waiver.
36They further note that these findings were based on an analysis of the plaintiff’s behaviour; the minor nature of the issue raised in the home inspection report; the failure to explain discrepancies in dates of documents; the allowance for differences in one’s signature depending on what surface one is writing on; and His Honour’s specific acceptance of Sclavi’s viva voce evidence, tested by cross-examination, that he witnessed the plaintiff signing the waiver.
37As noted above, the defendants compare and note the very substantial overlap between the allegations in the respondent’s record and his Claim.
38They say that given all of this, on one hand if the trial results in the same determination, which may well be the case, trying these issues (again) will prove to be a waste of judicial resources and an unnecessary expense for the parties.
39On the other hand, if the result reached is contrary to Justice Koehnen’s finding, based on a consideration of the very same issues, that inconsistency will tend to undermine the credibility of the judicial process and undermine the goals of authority, credibility and finality in that process.
40The defendants also rely on the fact that the plaintiff had the opportunity to appeal Justice Koehnen’s decision and did not do so.
41Overall they argue that to allow this Claim to proceed would constitute a clear abuse of process.
PLAINTIFF’S POSITION ON ABUSE OF PROCESS
42For his part, the plaintiff says that the doctrine of abuse of process does not apply, but that if it did, this case features “special circumstances” recognized by the courts as justifying the court exercising its discretion to permit the matter to proceed to a determination on its merits.
43On the former point, borrowing from his argument on issue estoppel (addressed below), the plaintiff says that the specific issue to be determined in the Claim is not the same as the issue in the underlying application. That is, the plaintiff argues that the underlying application determined entitlement to the deposit, whereas the Claim, in effect, focuses more broadly on the conduct of the defendants in their role advising the plaintiff on the transaction.
44That said, plaintiff’s counsel candidly acknowledged that the Claim may well boil down to the same core elements (i.e., the alleged forgery of the waiver). He says that if that is so, then Justice Koehnen in any event lacked sufficient evidence in the record to make the determination that the plaintiff in fact signed the waiver.
45On the question of whether this alleged deficiency of evidence could have been raised on an appeal, plaintiff’s counsel ultimately acknowledged that Justice Koehnen’s decision was likely correct on the basis of the record before him, but that it did not address the facts now set out in paragraphs 16-20 of the Claim herein.
46While a bit difficult to follow, paragraphs 16-20 of the Claim set out additional discrepancies within the documents that the plaintiff alleges came to his attention when a fuller array of documents prepared in connection with the aborted transaction were provided to him. The problem with this submission, for present purposes, is that paragraphs 16-20 make it clear that these additional anomalies came to the plaintiff’s attention by late April of 2018. As noted above, the application did not first come before Koehnen J. until August 2, 2018 and was not heard until September 4, 2018. As such, there is no basis on which it could be claimed that the information in question, even if one were to accept that it might have made a difference in the outcome (and to be clear, I am not suggesting that it would have), was not readily available to the plaintiff to put into the record before Justice Koehnen well before that record was crystallized.
47In terms of special circumstances, based on plaintiff’s counsel’s submissions and answers to questions, I understand these to be twofold.
48First, there is “fresh, new evidence” in the form of a report of a handwriting expert, whose opinion is that the signature on the waiver is not that of the plaintiff. Leaving aside the fact that the expert’s opinion on this point is untested, it is, more importantly, something that could have been obtained and put before Justice Koehnen at the time of his determination. The question of the authenticity of the signature was squarely before His Honour, so much so that, as set out above, at a stage when it was already too late to be permissible, plaintiff’s counsel specifically requested more time in order to obtain such an opinion. I will not repeat Justice Koehnen’s observations here – they are set out above – but in my view, His Honour’s comments were apposite. Even if one were to accept that the issues in the Claim are broader than those in the Application, which I do not, particularly having regard to plaintiff’s counsel’s concession that the question in each proceeding would likely “boil down” to the alleged forgery, there is no theory on which a handwriting opinion could go to anything other than the alleged forgery.
49The second alleged special circumstance is that there may be an issue with respect to the plaintiff’s capacity, and that the plaintiff was vulnerable, therefore, to alleged manipulation by the defendants. The plaintiff claims that there was an elaborate scheme by the defendants to force the plaintiff to sell his house to the defendants at below market price.
50The only evidence about the plaintiff’s capacity in the record is in the form of a suggestion by the plaintiff in his affidavit that he is easily manipulated; a statement that in January of 2020, the Office of the Public Trustee was concerned about his ability to manage his affairs and became involved in assisting him with managing his finances; a statement that he was assessed in that context and found to be incapable of managing his affairs; and then evidence that the plaintiff therefore retained a lawyer who challenged the assessment leading to a finding that the plaintiff was in fact capable of managing his affairs. Consistent with this, there are exhibits attached to the plaintiff’s affidavit on this motion in the form of two emails in early 2020, suggesting that the plaintiff had undergone an assessment in that time frame and was found to be incapable of managing his finances and then a decision of the Consent and Capacity Board dated April 17, 2020, finding that the plaintiff is in fact capable of managing his property.
51There is no expert opinion in the record as to the plaintiff’s capacity or otherwise at present, and certainly nothing as to his capacity in 2018 when the relevant events took place. So what I am left with is the expression of concern by the Public Trustee about the plaintiff’s capacity to manage his affairs in early 2020 (and an initial conclusion that he lacked capacity), and then a finding by the Consent and Capacity Board in April of 2020, finding that the plaintiff is in fact capable to manage his affairs.
52Plaintiff’s counsel acknowledged the potential importance of an expert capacity assessment and report if these issues are to be considered, but essentially said that funds for such expenditures were limited. That being the case, I have to go on what is in the record and it in no way establishes a definitive problem with the plaintiff’s capacity even now, let alone in 2018.
53In all of the circumstances, I find that the Claim in fact constitutes an abuse of process, and on the basis of that doctrine I am prepared to strike the Claim without leave to amend.
BRIEF OBSERVATIONS RE: ISSUE ESTOPPEL
54Given my finding on the basis of abuse of process, I do not propose to analyze the question of issue estoppel in detail. Suffice it to say that in my view: the core issue is the same as between the two proceedings; that Justice Koehnen’s decision was a judicial one and final; and that Sclavi would qualify as a privy for the purposes of issue estoppel. This latter finding is on the basis that a potential finding that he had forged his client’s signature would have exposed him to liability and more and, additionally, would give him a participatory interest in the outcome of the application.
CONCLUSION
55Finally, I have been given no satisfactory explanation as to why, if he believed that Justice Koehnen’s decision was based on an incomplete record, or believed that Justice Koehnen’s refusal to permit him to file further evidence in the form of an expert handwriting opinion reflected legal error, the plaintiff could not have pursued an appeal. As the cases and common sense confirm, this is the preferred route to address allegedly erroneous decisions and one that was available to the plaintiff.
56For all of these reasons the motion is granted.
57The defendants are entitled to their costs of the motion and of defending the Claim to date. If the parties cannot agree on costs the defendants may provide written submissions, not to exceed pages in length, together with a bill of costs within 14 days of the date of this decision (September 29, 2021). The plaintiff will have seven days to respond, also in the form of a written submission not to exceed 3 pages by (October 6, 2021).
W.D Black J.
Date: September 15, 2021