2209509 Ontario Inc. operating as Norfolk Fairway Estates v. Greasley et al., 2022 ONSC 1813

Court File Nos.: CV-19-122, CV-19-123 and CV-19-126 (Brantford) Date: 2022/03/22 Superior Court of Justice – Ontario

Re: 2209509 Ontario Inc. operating as Norfolk Fairway Estates, Plaintiff And: Carol Mary Sharon Greasley and The Estate of Barry Wayne Greasley, deceased, Defendants And: 2209509 Ontario Inc. operating as Norfolk Fairway Estates, Plaintiff And: Daron Duwyn, Defendant And: 2209509 Ontario Inc. operating as Norfolk Fairway Estates, Plaintiff And: Irene Rose Townsend and Ernest Victor Townsend, Defendants

Before: Gibson J.

Counsel: Peter Quinlan, Counsel for the Plaintiff Marc Munro, Counsel for the Defendants

Heard: November 24, 2021

Endorsement

Overview

[1] The plaintiff 2209509 Ontario Inc. operating as Norfolk Fairway Estates (“Norfolk”) was a home builder, which constructed new houses for each of the three sets of defendants. In each case, the defendants selected some items such as cabinets, flooring and lighting (“extras”) that exceeded the allowances which had been part of the agreed upon purchase price. The plaintiff asserts that the Agreement of Purchase and Sale (“APS”) required the purchasers to pay the excess over the allowance. The plaintiff used the same contractors on the houses. The plaintiff says that each of the defendants engaged directly with the contractors in making their selections rather than the plaintiff. The contractors rendered their accounts to the plaintiff after the closing of the purchase of the homes.

[2] The plaintiff sold all of the remaining lots in the subdivision around April 2021. Following the sale, the owner of the plaintiff, Antonette Luciani, arranged to have the plaintiff corporation amalgamated with another one of her corporations, and all of the assets were rolled into the amalgamated corporation, 5047256 Ontario Inc.

[3] The parties disagree about what has happened, and who is responsible for paying for the “extras”. The plaintiff commenced this action bearing Court File No. CV-19-122 (Greasley) on March 24, 2020, together with CV-19-123 (Duwyn), and then CV-19-126 (Townsend) two days later. The pleadings all concern the same standard form APS and seek compensation for the so-called “extras” following the closure of these transactions. Each claim is under the Simplified Procedure and each is under $60,000.

[4] The statements of claim were all drafted by the same lawyer, with very similar wording, and although there has been a change of representation, the plaintiff remains represented by a single lawyer in all of the three proceedings. The statements of defence were drafted by the same lawyer with near identical wording. The three defendants remain represented by the same lawyer.

[5] Counsel have acknowledged that the interpretation of the entire agreement clause set out in article 26 of the APS could be determinative of all three actions.

[6] The moving party defendants Greasley, together with the defendants in the other two actions, seek the joinder of the proceedings for the purpose of discovery, and an order for either a trial together or one following the other. The plaintiff opposes any joinder. The moving parties also seek an order for security for costs. The plaintiff made an offer to settle of $50,000 to the defendant Greasley, which was accepted. However, the plaintiff maintains that the offer was not regarding the defendant Greasley alone, but was intended to cover all three proceedings. The defendants disagree. The plaintiff opposes the motion for security for costs.

Law

[7] Pursuant to Rule 5.02(1)(b) of the Rules of Civil Procedure, the court may order the joinder of actions where the plaintiff in multiple proceedings is represented by the same lawyer and the issues raised have common questions of law and fact, and pursuant to Rule 5.02(1)(c) where it appears that their being joined may promote the convenient administration of justice.

[8] Pursuant to Rule 5.02(2)(b) the court may order that two or more persons be joined as defendants or respondents where a common question of law or fact may arise in the proceeding, and pursuant to Rule 5.02(e) where it appears that being joined may promote the convenient administration of justice.

[9] Pursuant to Rule 56.01(1)(d) the court may make such order for security for costs as is just where it appears that the plaintiff or applicant is a corporation and there is good reason to believe that the plaintiff has insufficient assets in Ontario to pay the costs of the defendant or respondent.

Position of the Parties

The moving party defendants

[10] The defendants submit that in this case, the plaintiff commenced three nearly identical actions against purchasers who bought homes around the same time in the same development project. The plaintiff is represented by the same lawyer in all three actions, and the three sets of defendants are represented by the same defence counsel, who is advancing near identical theories of defence in each of the three actions. They submit that, in this proceeding, although there are separate contracts, each of the contracts are standard form industry contracts containing identical entire agreement clauses and prohibitions against allegations of non-written contractual obligations.

[11] The defendants say that they have requested the plaintiff provide proof of exigible assets, but that the plaintiff has provided nothing aside from a statement that it has money in the bank with no assurance that it will remain there.

[12] The defendants say that the plaintiff has failed to demonstrate that it has sufficient assets in Ontario.

Position of the Responding Party Plaintiff

[13] The plaintiff notes that s.179 of the Ontario Business Corporations Act (“OBCA”) makes the amalgamated corporation liable for all debts of the former corporation, and that in this circumstance the amalgamation complies with s.179. It submits that the plaintiff has demonstrated evidence of liquid assets. It submits that the defendants have not met the onus to trigger an inquiry as to security for costs.

[14] With respect to joinder, the plaintiff insists that the three cases are all factually different, and that this case does not fit within Rule 5.02(2). The plaintiff’s choice to have separate lawsuits should not be disturbed. It says that it would be preferable to stay the Townsend and Duwyn cases and to proceed with the Greasley case, to argue the issue of merger, then have a reference or a mini-trial.

[15] The plaintiff requests that both the motion for joinder and the motion for security for costs should be dismissed.

Analysis

Joinder

[16] As the Court observed in Stoneleigh Motors Ltd. v. General Motors of Canada Ltd., 2010 ONSC 1965 at para. 71, “joinder avoids needless expense and delay inherent in a multiplicity of proceedings where there are common parties or questions of fact or law; risk of inconsistent determinations of fact or liability in the cause or common circumstances; and an unnecessary multiplicity of proceedings.”

[17] In this proceeding, although there are separate contracts, each of the contracts are standard form industry contracts containing identical entire agreement clauses and prohibitions against allegations of non-written contractual obligations. There are common issues of law and facts. The plaintiff used the same contractors on all three homes. The witnesses will be largely the same for all three matters. Evidence at discovery with regard to the allegation that the plaintiff failed to bill properly and there was a systemic issue, will be common. There will largely be a common factual matrix. The entire agreement clause at issue cuts across all three claims. The claims are the same in all three cases. The defence is identical in all three actions. The joinder of discovery would promote efficiency so that the same questions don’t have to be asked in all three proceedings.

[18] Joinder in this case would avoid needless expense or delay in a multiplicity of proceedings, and would promote the convenient administration of justice.

Security For Costs

[19] On a motion for security for costs the initial onus is on the defendant to establish that the case comes within one of the branches of Rule 56.01. Once that is established, the onus shifts to the plaintiff to show ordering security would be unjust by demonstrating that (a) the plaintiff has sufficient assets in Ontario; or (b) the plaintiff is impecunious and the claim is not plainly devoid of merit; or (c) the plaintiff is neither impecunious nor has sufficient assets to post security, but does have a good chance of success on the merits: 2311888 Ontario Inc. v. Ross, 2017 ONSC 1295 at para. 17.

[20] In this case, I find that the defendants have proved that there is a good reason to believe that the plaintiff falls within the circumstances set out in Rule 56.01(1)(d). The plaintiff has not sufficiently demonstrated that the amalgamated corporation has exigible assets in Ontario. The assets indicated by the screen shot of the bank account are liquid and easily accessible. The affidavits of Ms. Luciani do not provide information about where the assets are, or other debts and liabilities of the amalgamated corporation. There is little beyond a bald assertion that funds would be available.

[21] The onus then shifts to the plaintiff. It has not demonstrated that ordering security would be unjust on any of the three grounds. The order for security for costs will be granted.

Order

[22] The Court Orders that:

[1] The action in Court File No. CV-19-122 shall be joined with the actions bearing Court File Numbers CV-19-123 and CV-19-126, and the three actions will be tried together. They will proceed under File No. CV-19-122;

[2] The style of cause in the joined action shall be amended to reflect the amalgamation of the plaintiff corporation with another corporation and the attendant consequence of s.179 of the OBCA, to “5047256 Ontario Inc., operating as Norfolk Fairway Estates”; and,

[3] The plaintiff shall pay into Court the amount of $50,000 within 30 days of the date of this Order as security for the defendants’ costs of this proceeding.

Costs

[23] The parties are encouraged to agree upon appropriate costs. If the parties are not able to agree on costs, they may make brief written submissions to me (maximum three pages double-spaced, plus a bill of costs) by email to my judicial assistant at mona.goodwin@ontario.ca and also to Kitchener.SCJJA@ontario.ca. The defendants may have 14 days from the release of this decision to provide their submissions, with a copy to the plaintiff; the plaintiff a further 14 days to respond; and the defendants a further 7 days for a reply, if any. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves. If I have not received any response or reply submissions within the specified timeframes after the defendants’ initial submissions, I will consider that the parties do not wish to make any further submissions, and will decide on the basis of the material that I have received.

M. Gibson, J. Date: March 22, 2022