COURT FILE NOS.: CV-15-527243; CV-12-446798; CV-13-473170

MOTION HEARD: 20211028

REASONS RELEASED: 20211210

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

GORDON IVANY, PETER SEDGE and P.S. FABRICATING LTD.

Plaintiffs

• and-

NENAD SUBOTIC, SVETISLAV SUBOTIC (a.k.a. “STEVE SUBOTIC”) and DIN’S ACCOUNTING & CONSULTING SERVICES INC.

Defendants

BEFORE: ASSOCIATE JUSTICE McGRAW

COUNSEL: A. Conte E-mail: a.conte@contelaw.ca -for the Defendants Svetislav Subotic (a.k.a. “Steve Subotic”) and Din’s Accounting & Consulting Services Inc. (the “Defendants”)

A. Bouchelev E-mail: arkadi@bouchelevlaw.com -for the Plaintiffs

REASONS RELEASED: December 10, 2021

Reasons For Endorsement

I. Introduction

[1] By order dated April 26, 2019 (the “2019 Order”), I directed that the actions in court file numbers CV-12-446798 (the “2012 Action”) and CV-13-473170 (the “2013 Action”, collectively, the “Loan Actions”) be tried together or one after the other at the discretion of the trial Judge. The Defendants now bring a motion seeking to have the action in court file number CV-15-527243 (the “2015 Action”) tried together with the Loan Actions. A 5-day trial of the 2015 Action is currently scheduled to commence during the week of January 10, 2022.

II. Background

[2] Peter Sedge (“Sedge”) is the principal of P.S. Fabricating Ltd. (“PSF”). Gordon Ivany is an employee of PSF. Din’s Accounting & Consulting Services Inc. (“Din’s”) was the accountant for PSF, Ivany and Sedge. Svetislav Subotic (a.k.a. “Steve Subotic”)(“Svetislav”) is the principal of Din’s. Nenad Subotic (“Nenad”) is Svetislav’s son and an employee of Din’s.

[3] In the 2012 Action, Ivany and PSF claim Judgment in the amount of $211,800 and $56,500 respectively, as sums due and owing, breach of contract and restitution, $50,000 in aggravated damages and $100,000 in punitive damages from Nenad, Svetislav, Din’s, Inter-Cor Security Ltd. (“ICSL”), Neven Bozovic (“Neven”) and Denisa Stamkovska (“Denisa”). Neven and Denisa are the principals of ICSL.

[4] Ivany alleges that in 2010 he advanced funds to Nenad and Svetislav based on a “risk free” investment scheme proposed by Nenad. The funds were to be loaned on a short-term basis to clients of Din’s and personally guaranteed by Nenad and Svetislav. Ivany alleges that he entered into two written agreements which Nenad signed purportedly on behalf of ICSL. PSF alleges that it advanced funds to Nenad based on Nenad’s suggestion that him borrowing and holding onto the funds would reduce PSF’s taxable income. The plaintiffs allege that, among other things, the defendants conspired to defraud them.

[5] In the 2013 Action, Sedge is the sole plaintiff and the defendants are the same as in the 2012 Action. Sedge claims $249,500 as a sum due and owing, or in the alternative, breach of contract or restitution and $50,000 in aggravated damages and $100,000 in punitive damages. Sedge alleges that in 2009-2010 he advanced loans to Nenad in substantially the same manner as Ivany and PSF. In the Loan Actions, the plaintiffs claim that they are unsophisticated parties who relied on Din’s, Nenad and Svetislav and did not obtain independent advice.

[6] In the 2015 Action, the Plaintiffs claim $300,000 from Nenad, Svetislav and Din’s as a sum due and owing and/or damages for breach of contract, breach of fiduciary obligation, fraud, fraudulent and/or negligent misrepresentation, conspiracy to commit fraud, unjust enrichment and loss of economic opportunity plus $50,000 in aggravated damages and $100,000 in punitive damages. The Plaintiffs allege that between 2007 and 2010 they advanced a total of $89,211.16 to Din’s for the payment of PSF’s corporate income taxes, payroll deductions and Din’s fees. After the Loan Actions were commenced, the Canada Revenue Agency (“CRA”) advised PSF’s new accountant that Din’s had not filed or paid PSF’s taxes. The Plaintiffs allege that the Defendants misappropriated the funds.

[7] On September 4, 2020, Plaintiffs’ counsel sent Defendants’ counsel the Certification Form to Set Pre-Trial and Trial Dates for the 2015 Action. Defendants’ counsel did not raise any objections and the Certification Form was filed. Defendants’ counsel was also copied on Plaintiffs’ counsel’s correspondence to schedule an attendance at trial scheduling court with respect to the 2015 Action. Again, no objections were raised. Counsel attended trial scheduling court on June 7, 2021 before Wilson J. For the first time, Defendants’ counsel advised that the Defendants were opposed to scheduling trial dates for the 2015 Action as they intended to bring the current motion. Notwithstanding this position, Wilson J. scheduled a pre-trial conference for November 1, 2021 and a 5-day trial commencing the week of January 10, 2022.

[8] The parties have appeared before me on numerous telephone case conferences, most recently on September 3, 2021. One of the primary ongoing issues has been the Plaintiffs’ outstanding motion to compel the defendants in the Loan Actions to produce documents related to undertakings and refusals. Case management was provided at the close of submissions on this motion with respect to approximately 12 remaining refusals and the Defendants were directed to make further inquiries with respect to outstanding tax and bank documents. The motion remains adjourned sine die. The Defendants brought this motion on September 8, 2021.

III. The Law and Analysis

[9] Section 138 of the Courts of Justice Act (Ontario)(the “Act”) provides that, as far as possible, multiplicity of legal proceedings shall be avoided.

[10] Rule 6.01 states:

“(1) Where two or more proceedings are pending in the court and it appears to the court that,

(a) they have a question of law or fact in common;

(b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or

(c) for any other reason an order ought to be made under this rule,

the court may order that,

(d) the proceedings be consolidated, or heard at the same time or one immediately after the other; or

(e) any of the proceedings be,

(i) stayed until after the determination of any other of them, or

(ii) asserted by way of counterclaim in any other of them.

(2) In the order, the court may give such directions as are just to avoid unnecessary costs or delay and, for that purpose, the court may dispense with service of a notice of listing for trial and abridge the time for placing an action on the trial list.”

[11] The parties agree that the applicable approach for this motion was summarized by Master Dash (as he then was) in 1014864 Ontario Ltd. v. 1721789 Ontario Inc., 2010 ONSC 3306:

7 In my view the proper approach on a motion for consolidation or trial together is to first ascertain whether the moving party has satisfied one or more of the three "gateway" criteria set out in rule 6.01(1)(a), (b) or (c) and then consider all relevant factors as well as section 138 of the Courts of Justice Act which directs the court to avoid a multiplicity of proceedings whenever possible, in order to exercise the court's discretion and make such order as is just. I will attempt to set out a list of factors courts have considered on motions for trial together as well as some of the "bifurcation factors" modified appropriately to reflect that this is a motion to try actions together, not sever issues within an action. I point out that the list that follows are considerations for ordering trial together of various actions, which is the relief sought on this motion, and not full consolidation of various actions, for which some different factors may apply.

18 A non-exhaustive list of some of the considerations on ordering trial together may, depending on the circumstances, include:

(a)the extent to which the issues in each action are interwoven;

(b)whether the same damages are sought in both actions, in whole or in part;

(c)whether damages overlap and whether a global assessment of damages is required;

(d)whether there is expected to be a significant overlap of evidence or of witnesses among the various actions;

(e)whether the parties the same;

(f)whether the lawyers are the same;

(g)whether there is a risk of inconsistent findings or judgment if the actions are not joined;

(h)whether the issues in one action are relatively straight forward compared to the complexity of the other actions;

(i)whether a decision in one action, if kept separate and tried first would likely put an end to the other actions or significantly narrow the issues for the other actions or significantly increase the likelihood of settlement;

(j)the litigation status of each action;

(k)whether there is a jury notice in one or more but not all of the actions;

(l)whether, if the actions are combined, certain interlocutory steps not yet taken in some of the actions, such as examinations for discovery, may be avoided by relying on transcripts from the more advanced action;

(m)the timing of the motion and the possibility of delay;

(n)whether any of the parties will save costs or alternatively have their costs increased if the actions are tried together;

(o)any advantage or prejudice the parties are likely to experience if the actions are kept separate or if they are to be tried together;

(p)whether trial together of all of the actions would result in undue procedural complexities that cannot easily be dealt with by the trial judge;

(q)whether the motion is brought on consent or over the objection of one or more parties.” (101 at paras. 7-8; 1623242 Ontario Inc. v. Great Lakes Copper Inc., 2013 ONSC 2548 at paras. 15-17; Aziz v. Blue Cross Life Insurance Company of Canada, 2019 ONSC 5020 at para. 11).

[12] Having considered the relevant factors and s. 138 of the Act, for the reasons that follow, I conclude that it is just in the circumstances to dismiss the Defendants’ motion.

[13] I am not satisfied that the Defendants have met the “gateway criteria”. The 2015 Action does not arise out of the same transaction or occurrence or series of transactions or occurrences as the Loan Actions. The 2015 Action arises from funds advanced by the Plaintiffs for the payment of amounts to CRA and professional fees while the Loan Actions arise out of the loans allegedly advanced as investments and tax deferral strategies. Further, while the 2015 Action has some facts in common with the Loan Actions, it cannot be said that there are common questions of fact. In this respect, I adopt the distinction made by Master Jolley in Riva Plumbing v. Ferrari et al., 2017 ONSC 3614 that although there are certain facts in common (such as the identity of the plaintiffs and some of the defendants and the background to the parties’ relationship), there are no questions of fact in common or any common facts material to the determination of the 2015 Action and the Loan Actions (Riva at para. 6). Further, although some of the causes of action are the same, given the separate transactions, there are no common questions of law.

[14] However, even if I were to conclude that the Defendants satisfied any of the “gateway criteria”, I cannot conclude that a consideration of the other relevant criteria supports the relief they seek. At first glance, it may appear that, given the requirement to avoid a multiplicity of proceedings as much as possible and some common parties, the Loan Actions should proceed together with the 2015 Action. However, a closer consideration of the relevant factors favours dismissal of the Defendants’ motion.

[15] The fact that the lawyers are the same and there is an overlap of all but the 3 ICSL parties together with the requirement to avoid a multiplicity of proceedings where possible supports joining the Loan Actions with the 2015 Action. However, both substantively and procedurally, the collective weight of the relevant factors militates against having the Loan Actions proceed together with the 2015 Action.

[16] The 2015 Action arises from the advance of funds by the Plaintiffs to Din’s for the payment of amounts owing to CRA and professional fees. Din’s and Svetislav admit in their Statement of Defence that the funds were deposited into Din’s bank account. By contrast, the Loan Actions relate to the alleged advance of loans by the plaintiffs as investments and a tax deferral strategy involving 3 additional defendants and the defendants deny receiving the funds. In my view, the issues in the 2015 Action are discrete, straightforward and less complex than the Loan Actions, largely limited to who is liable for the non-payment of the CRA amounts and if any professional fees should be repaid. Conversely, in the Loan Actions, the court must decide if the funds were advanced and if so, where they went and which defendants are liable. There are no material facts which tie the proceedings together and the damages sought are unrelated without overlap with no requirement that damages be assessed globally. The fact that the Statement of Claim in the 2015 Action makes reference to the Loan Actions or that some causes of action are the same does not alter the distinct and separate underlying issues and damage claims related to the separate transactions made for different purposes involving some different parties.

[17] I reject the Defendants’ submissions that there is a risk of inconsistent findings or outcomes if the proceedings are not joined. The Defendants have provided no particulars or explanation as to how, based on the disputed issues, this could occur. Given the nature of the transactions at issue and the damages sought, the court could decide in favour of different parties in the 2015 Action and the Loan Actions without making contradictory findings.

[18] The timing of this motion and the status of the proceedings are also problematic. The Defendants could have brought this motion as far back as 2019 after the 2019 Order was granted. In fact, in my Endorsement dated April 26, 2019, I directed the parties to continue discussions about trying the 2015 Action at the same time as the Loan Actions. At the very least, the Defendants could have advised the Plaintiffs that they intended to seek the joinder of the Loan Actions with the 2015 Action prior to the filing of the Certification Form or at any time before the trial scheduling court attendance. However, they raised no objections until counsel attended trial scheduling court in June 2021. This was over 2 years after the 2019 Order and 9 months after the Certification Form was filed. The Defendants have provided no explanation for this delay.

[19] Due in part to the Defendants’ failure to raise any objections or bring this motion sooner, the trial of the 2015 Action is now ready to proceed and scheduled for the week of January 10, 2022. I reject the Defendants’ submission that the Loan Actions could be completed together in the same 5 days scheduled for the 2015 Action or with minimal additional time. Given the outstanding undertakings and productions and the fact that there has been no pre-trial, the Loan Actions are not ready for trial and it is not clear how much time they will require. Even if they were to be joined with the 2015 Action, it would likely result in an adjournment of the 2015 Action to allow the Loan Actions to “catch up” leading to a longer trial at some unknown time in the future. In my view, this is not reasonable or appropriate in the circumstances, would unnecessarily delay the 2015 Action and is contrary to the requirement in Rule 1.04(1) that the Rules be liberally construed to achieve the most expeditious, least expensive determination of every proceeding on its merits (Aziz at para. 10).

[20] The Defendants further submit that Svetislav’s serious health issues may prevent him from participating in the trial of the 2015 Action in January 2022. Given the uncertainty with respect to these health issues, in my view, this is not a factor which should affect the result of the current motion. Any issues with respect to his participation should be addressed with the trial Judge or, if necessary, spoken to on an urgent attendance before trial.

[21] Considering all of the circumstances and the Plaintiffs’ opposition I am satisfied that it is just in the circumstances to dismiss the Defendants’ motion.

III. Disposition and Costs

[22] Order to go dismissing the Defendants’ motion.

[23] If the parties cannot agree on the costs of this motion they may file written costs submissions with me not to exceed 3 pages (excluding Costs Outlines) on a timetable to be agreed upon by counsel.

Released: December 10, 2021

Associate Justice McGraw