SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Lazi Ventures Inc. v. Paul Carter and Elaine Lam;
BEFORE: ASSOCIATE JUSTICE C. WIEBE
COUNSEL: Eric Turkienicz for the defendants; Ashta Dhanda for the plaintiff;
HEARD: May 9, 2022.
REASONS FOR DECISION
1This is a construction lien action. The defendants brought this motion originally returnable December 6, 2021 for an order striking the statement of claim and discharging the plaintiff’s claim for lien, or in the alternative for an order reducing the plaintiff’s lien. The motion was brought under the new section 47 of the Construction Action, R.S.O. c. C.30 (“CA”). It is undisputed that the new CA applies.
2One of the original grounds for the motion was that the plaintiff, Lazi Ventures Inc. (“LVI”) was not represented by a lawyer. Instead, its principal, Martin Lazi, purported to act for LVI without court authority. On December 6, 2021 that issue was resolved. LVI sought leave to be represented by Mr. Lazi. I denied that leave and set a schedule for this motion that allowed LVI to retain counsel. The motion was adjourned to March 17, 2022. LVI then retained Ms. Dhanda. On March 17, 2022 Ms. Dhanda could not attend for medical reasons. I adjourned the motion to May 9, 2022.
3The motion grounds now are threefold: the lien and action do not belong to the plaintiff; the quantum of the claim is grossly excessive, rendering the claim frivolous; and the action is brought through an abuse of process and a vexatious process.
Background
4The motion records contain two affidavits of one of the homeowners in this case, Mr. Carter, an affidavit from a lawyer in Mr. Turkienicz’s firm, Ben Tustain, and affidavits from three other homeowners with experience with LVIs. The responding motion record contains the affidavit of Martine Lazi. The following facts are established by these affidavits.
5On November 23, 2015 LVI registered the business name, “Plumbers on Demand.” On June 11, 2020 Mr. Lazi registered under his own name the trademark, “Plumber on Demand.” This trademark registration happened after a lengthy opposition by a company called Plumbers on Demand Inc.
6The defendants own a house at 25 Willingdon Boulevard, Toronto. On May 22, 2021 a toilet on the first floor caused a flood. Mr. Carter did an internet search and located the site under the name “Plumber on Demand.” Mr. Carter called and a plumber from that firm appeared. The plumber advised that dealing with the plumbing problem would cost $1,000. He dealt with the problem and Mr. Carter paid the $1,000.
7The plumber then addressed the water damage problem. He said that Plumber on Demand (“POD”) did this work as well. When Mr. Carter asked about cost, the plumber advised that the homeowners need not be concerned as their insurance would cover the cost. No quotes or pricing were presented. The plumber called Mr. Lazi to start the remediation.
8On May 23, 2021 Mr. Lazi attended at the home with two other workers. They started removing damaged tile and drywall in the bathroom and basement, and set up and ran dehumidifiers, air scrubbers and fans. A crew attended at the house each day until May 27, 2021 and worked. Mr. Cartier stated that when the crew left on May 27, 2021, the work was unfinished. Mr. Carter said that Mr. Lazi advised him to contact another firm to finish the work.
9Each day during the work POD submitted a document to Mr. Carter under the letterhead, “Plumber on Demand.” Each document was called “Water Damage Restoration & Clean Up – Report.” These were essentially invoices. They contained labour and equipment charges. The final invoice, invoice# 4288, summarized the report totals and showed a grand total of $33,518.
10On May 27, 2021, at the request of the defendants’ insurer, TD Insurance, ServiceMaster inspected the site. It completed the repair. On August 16, 2021 ServiceMaster provided an estimate of, what the defendants allege, is the cost of the POD repair work. The estimate was $4,505.04.
11On May 31, 2021 Mr. Carter sent Mr. Lazi a text requesting that he send the POD reports and invoice to TD Insurance. It is not clear whether Mr. Lazi did that.
12On June 17, 2021 LVI registered a claim for lien on the title to the property in the amount of $33,518.06 concerning the work. At that time or shortly thereafter Ms. Lam received a letter with the letterhead “Walker Legal Advisers; Couselling/Organization/Corporation” (“WLA”). The letter contains a seal and is signed by Mr. Lazi. The “re” line refers to invoice #4288. In this letter, “Walker Legal Advisers” advised that, because of the continuous refusal by Ms. Lam and her insurer to pay this account, a construction lien had been registered. The letter then offered a 10% discount and the waiver of legal costs to date if Ms. Lam paid the invoice in five days. The letter ended with the threat of legal action if there was no payment.
13On July 20, 2021 LVI purported to perfect its lien by commencing an action and registering a certificate of action. It did not use a lawyer. Ms. Lam then received another letter from WLA signed by Mr. Lazi. Again there is a seal. The letter gave notice of the statement of claim and enclosed the statement of claim. It asked for payment to POD. It ended with the phrase, “govern yourself accordantly (sic).” On August 19, 2021 the defendants delivered their statement of defence.
14The motion record contains three affidavits from Colin Bird, Ivan Sidorovich and Vanessa Guha. These are homeowners on two other properties who deposed that in the April to July, 2021 period they had very similar experiences with POD concerning emergency flooding and repairs in their homes. No cost estimates and pricing were provided for the remediation. Mr. Lazi advised that the insurer would pay and that the homeowner did not have to be concerned about costs. WLA letters were sent in each case. None of these affidavits refer to claims for lien in those cases.
15The affidavit of Ben Tustain indicates that, pursuant to six complaints to the Law Society about Mr. Lazi, LVI, POD and WLA, the Law Society commenced an application seeking an injunction against those parties. The application was heard on September 13, 2021 by Justice Black. On September 15, 2021 the judge rendered a decision prohibiting Mr. Lazi from holding himself out as someone licensed to practice law. The judge also ordered that WLA be renamed and that its online presence be destroyed. Justice Black made the following findings: Martin Lazi is the sole officer and director of LVI and WLA; the WLA letters were designed to create the false impression that Mr. Lazi and WLA were permitted to practice law; WLA was used to “pressure plumbing customers to comply with Lazi’s demands”; the WLA website and internet presence were designed to create the impression that WLA was a legitimate law firm; and the Law Society had received numerous complaints from customers of POD concerning these activities.
16At the beginning of the argument, Mr. Turkienicz advised verbally that there was now a case management order appointing Justice Sweeney case manager of some 15 Superior Court and Small Claims Court actions involving LVI and Mr. Lazi.
Section 47 test
17A comment about CA section 47. Section 47 motions are brought by defendants and do not require that the plaintiff “put its best foot forward”; see R&V Construction Management Inc. v. Baradaran, 2020 ONSC 3111 at paragraph 47. They are comparable to motions for summary judgment, with the test to be met being whether the defendant has proven that there is no genuine issue for trial; see 1246798 Ontario Inc. v. Sterling, 2000 CanLII 29031 (ON SCDC) at paragraph 12. Keeping in step with the evolving law on motions for summary judgment, the motions judge on a section 47 motion can weigh evidence and draw inferences from the evidence to determine whether there is a genuine issue for trial; see 1140676 Ontario Inc. v. 2650997 Ontario Inc. et al., 2021 ONSC 143 at paragraph 3.
18The validity of a claim for lien can be challenged on a section 47 motion. However, section 47 motions have broader application than just to the factual issues in the case; see M. Fuda Contracting Inc. v. 1291609 Ontario Ltd., 2018 ONSC 4663 at paragraph 27. The court may discharge a lien and dismiss an action where the claim is “frivolous, vexatious or an abuse of process,” or on “any other proper grounds.”
No LVI claim
19The evidence indicates that the lien claimant, LVI, had no contract with the defendants concerning work in issue. LVI has a registered name, “Plumbers on Demand,” that was not used in any invoice or document in this matter. The name, “Lazi Ventures Inc.,” was also not used and does not appear in any invoice or document. The only name that does appear is “Plumber on Demand,” a trademark that was registered to Martin Lazi after a long opposition process.
20In its responding motion record, LVI’s response on this issue was two assertions in Mr. Lazi’s affidavit: that LVI operates under the business name, “Plumber on Demand”; and that LVI made it clear to the defendants that it did so.
21The first assertion is of what amounts to an illegality. The name, “Plumbers on Demand,” is registered to LVI, not the name, “Plumber on Demand.” Again, the name, “Plumber on Demand,” is a trademark registered to Mr. Lazi personally. Business Names Act, R.S.O. 1990, c. B. 17, section 2(1) prohibits a corporation from carrying on business or identifying itself to the public other than through a registered name.
22The second assertion by Mr. Lazi, namely that he made it clear to the defendants that LVI operated through the name “Plumber on Demand,” is not corroborated by the evidence. He presented no document showing that he indicated to the defendants that they were dealing with LVI. On the other hand, the defendants steadfastly denied that they knew of or dealt with LVI. Their evidence clearly showed that they dealt only with POD.
23I note that Mr. Lazi made no assertion of a mistake or misnomer. Furthermore, LVI made no reference to CA section 6(1), the section that specifies that, amongst other things, wrongly naming the lien claimant is a minor error or irregularity that does not invalidate a claim for lien as long as there is no prejudice This leads me to conclude that Mr. Lazi deliberately chose to use the name, “Plumber on Demand,” a name that was not registered to LVI, and that this was either not a minor irregularity or a minor irregularity that created prejudice.
24In Juddav Designs Inc. v. Cosgriffe, 2010 ONSC 6597 Master Albert at trial dismissed the lien and contract actions of a corporate lien claimant where the evidence showed that the contract, invoices and payments all involved the principal of the company, not the corporation itself. She also dismissed the claim of contractual quantum meruit on the same grounds. She stated that to prove a lien a corporation must prove that it, not its principal, is the contracting party. However, she was not prepared to dismiss the claim of unjust enrichment, stating that do so would offend justice.
25I similarly have decided to dismiss the lien claim, contract claim and any pleaded claim of contractual quantum meruit in the case before me. The defendants have established that there is no triable issue concerning these claims in this case. There was no contract with LVI.
26I note that LVI has pleaded a claim of unjust enrichment. As to whether this claim should survive, I move on to the next part of my decision.
Frivolous
27Whether an action is “frivolous” turns on the merits of the case. On a motion for security for costs, Master MacLeod (as he then was) stated in Ilitchev v. Yevstigneev, 2004 CanLII 33021 (ON SC) at paragraph 18 that “in my view a frivolous action is an action that appears so highly unlikely to succeed that it is apparently devoid of practical merit.” In Queenscorp v Windcatcher, 2016 ONSC 871 Master Pope stated that “a frivolous action is one which, on its face, is so unreal that no reasonable or sensible person could bring it.”
28I do not find that the defendants have established that there is no triable issue on this ground. It is undisputed that Mr. Lazi’s forces were in the premises for five days working with equipment. Mr. Lazi’s affidavit contains in addition to the invoices “equipment checkout records” concerning the equipment used and timesheets for labourers. This has the appearance of corroborating the claim.
29What about the defendants’ evidence? In Mr. Carter’s initial affidavit there is an estimate of the work from ServiceMaster dated May 28, 2021 showing an amount of $5,253.94. Mr. Carter initially asserted that this was an estimate of the work done by POD. It is only 15% of the POD claim for lien.
30However, there are questions concerning this evidence. First, ServiceMaster is a firm used by the defendants’ insurer on a regular basis and may therefore not be a credible source of such an assessment. Second, Mr. Carter swore a supplementary affidavit attaching a different ServiceMaster estimate dated August 16, 2021 showing a lower figure of $4,505.04. Mr. Carter deposed that this later document was the real estimate of the POD work and that the earlier ServiceMaster estimate attached to his initial affidavit was a different document.
31This evidence shows a significant issue as to the quantum of the claim. But it does not, in my view, meet the threshold of showing no triable issue as to the claim being “devoid of practical merit.” LVI or Mr. Lazi may have a claim for some amount of money. There are real credibility issues here to be tried. However, this issue does inform the next issue.
Vexatious and abuse of process
32Whether a claim is “vexatious” or an “abuse of process” is more a question of process. In the case of Re Lang Michener and Fabian, 1987 CanLII 172 (ON SC), 59 O.R. (2d) 353 Justice Henry gave a non-exhaustive list of what constitutes a vexatious proceeding. Of note, one of those types of proceedings was an action brought “for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights.” At another point, the judge stated that “in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action.”
33Concerning abuse of process, in the case of Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 SCR 77 the Supreme Court of Canada commented at length about the court’s authority to control abuse of process. The Court in paragraphs 35, 36 and 37 the Court described this jurisdiction as applying to conduct that is “oppressive,” “unfair,” and a violation of the fundamental principles of justice. In paragraph 37 the Court stated that the doctrine of abuse of process engages “the inherent power of the court to prevent the misuse of its procedure, in a way that would . . . bring the administration of justice into disrepute.”
34LVI presented no evidence concerning this issue. In argument, Ms. Dhanda asserted that the defendants had in cross-examination admitted that they had been given a price index. But there was no evidence in support of this position. The defendants’ evidence, on the other hand, was compelling.
35Applying the above noted authority to the evidence in this case, I have concluded that the defendants have established that there is no triable issue that this proceeding is vexatious and an abuse of process. The following are my findings that form the basis pf this conclusion:
a) The conduct of POD in this case formed a pattern with other cases in 2021 in which POD was called in on an urgent basis to remediate water damage from interior flooding.
b) In each case, POD avoided being honest and transparent with the homeowners about its costs at the outset by insisting that the relevant insurance company would pay the costs. This deceptive conduct was intended to and did disarm the homeowners, with the result that POD gained access to the work.
c) During the work and thereafter POD rendered invoices that had all the trappings of grossly excessive charges.
d) The POD forces left before properly finishing the work.
e) Mr. Lazi then misrepresented himself to the homeowners as being one capable of practicing law by sending them letters under the letterhead of WLA. In these letters, Mr. Lazi threatened legal action if the alleged outstanding invoice was not paid. In the case before me there was the threat of a claim for lien and this lien action.
f) Justice Black has found that these WLA letters were nothing but attempts to pressure plumbing customers into complying with LVI’s demands. I note that the WLA letters included an offered discount if the homeowner paid early. This was no doubt for the purpose of getting a quick “settlement” and a quick result.
g) Finally, LVI registered a claim for lien and started this lien action.
36A pattern of conduct like this that uses deceptive tactics to gain access to work and misrepresentations about practicing law to pressure customers into paying the resulting and apparently excessive charges is a pattern of conduct that, in my view, is oppressive and unfair. Allowing LVI to use the legal process to further its plans grounded in such oppressive and unfair practice would indeed bring the administration of justice into disrepute.
37As a result, I find that the LVI claim for lien should be discharged and that the entirety of this action dismissed.
Conclusion
38I, therefore, discharge the LVI claim for lien and dismiss this action.
39Concerning costs, the defendants filed a bill of costs which showed partial indemnity costs of $8,245.05 and substantial indemnity costs of $10,756.47. The plaintiff filed a bill of costs which showed partial indemnity costs of $3,163.44 and substantial indemnity costs of $4,119.42.
40If the parties cannot agree on costs, the defendants may serve and file written submission on costs of no more than two pages on or before June 1, 2022, and the plaintiff may serve and file written submissions on costs of no more than two pages on or before June 10, 2022.
DATE: May 24, 2022
ASSOCIATE JUSTICE C. WIEBE