COURT FILE NO.: CV-14-513870
DATE: 2022-07-07
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
VITO AUCIELLO and NETWORK CASH MART LTD.
Vito Auciello, on his own behalf and on behalf of Network Cash Mart Ltd.
Moving Parties/Plaintiffs
- and -
THAN QUANG LA
Marshall Reinhart, for the Responding Party/Defendant
Responding Party/Defendant
HEARD: January 25, 2022
ASSOCIATE JUSTICE: D. MICHAEL BROWN
REASONS
[1] The Plaintiffs bring this motion seeking leave to amend the Statement of Claim more than 7 years after commencing this action on October 9, 2014.
[2] At the time the Statement of Claim was issued, the Plaintiffs and the Defendant owned adjoining properties of mixed commercial and residential use. The Plaintiffs' property is a one-story building (the Plaintiff Property) whereas the property that was owned by the Defendant is two stories (the "Defendant Property"). The Plaintiff's claim focuses on the second story exterior wall (the "Wall") of the Defendant Property which abuts the Plaintiff Property and overlooks the roof of the Plaintiff Property.
[3] In the Statement of Claim, the Plaintiffs seek damages for nuisance and trespass in relation to a satellite dish and two exhaust vents allegedly installed in the Wall by the Defendant, which the Plaintiffs claim encroach on the Plaintiff Property and "infringes on the air density of the Plaintiff's property". The Plaintiffs also plead that "the Defendant has wrongfully caused to issue and proceed from the said exhaust vents unwholesome vapours onto the Plaintiff's property." The Plaintiffs further claim that the Wall is a "firewall" and that the exhaust vents were improperly installed in it contrary to the building code, rendering it dangerous. They claim that the Defendant trespassed on the Plaintiff Property in performing the installation causing damage to the roof of the Plaintiff Property.
[4] The Plaintiffs plead in the Statement of Claim that all of the foregoing has interfered with their use and enjoyment of the roof of the Plaintiff Property both in its current use and in their future planned use of the space as a rooftop patio and yoga studio. They further plead that the aforementioned "infringement of the Plaintiffs' air density" has prevented them from developing the Plaintiff Property resulting in a loss of property value. The Statement of Claim seeks damages in the amount of $500,000, an injunction restraining the Defendant from continuing the wrongful acts complained of, and a mandatory injunction requiring the Defendant to remove the two exhaust vents. In the alternative, the Statement of Claim seeks $100,000 for loss of enjoyment of the Plaintiff's lands.
[5] The Defendant served a Statement of Defence and Counterclaim on or about October 28, 2014. Notably, the Defendant pleads that both the satellite dish and the two exhaust vents were removed from the Wall by the Defendant in October 2014, shortly after service of the Statement of Claim. The counterclaim is also in nuisance, seeking damages from the Plaintiffs in relation to water leaking into the basement of the Defendant Property which the Defendant alleges was caused by construction work done by the Plaintiffs. On November 15, 2016, the Plaintiffs lawyers obtained an order removing them as solicitors of record. The Plaintiff, Vito Auciello, subsequently served a Notice of Intention to Act in Person. On January 6, 2017, Auciello was granted leave to represent the Plaintiff, Network Cash Mart Ltd.
[6] Examinations for discovery were conducted August 23, 2018. On December 6, 2019, the action was administratively dismissed by the Registrar for delay. The action was restored on a motion by the Plaintiffs on January 20, 2020. There was a refusals motion scheduled for March 20, 2020 that was adjourned as a result of the pandemic and adjourned again on July 22, 2020 to allow the parties to attend mediation, which was conducted on September 16, 2020. The refusals motion was eventually heard and determined on August 16, 2021. Based on the record before me, it appears that, but for this motion, the action would be ready to proceed to trial.
[7] The Plaintiffs now seek extensive amendments to the Statement of Claim, which are reflected in the proposed Fresh as Amended Statement of Claim filed on the motion (the "Proposed Amended Claim"). If leave is granted the Plaintiffs' pleading will grow from three and half pages to approximately ten pages in length (not including the cover and back pages). The Plaintiffs assert that the amendments were necessitated by the Defendant's sale of the Defendant Property in December 16, 2020, which they assert they did not learn of until after the sale had closed. However, as I discuss below, many of the amendments they propose appear to be related to events and conduct that occurred long before the sale, while the Defendant still owned the Defendant Property.
[8] In addition to amending the body of their pleading, the Plaintiffs propose to amend the statement of Claim to add a further plaintiff to the action, Vito Auciello Real Estate Corporation. They also seek to amend the name of the Defendant in the style of cause to correct a typographical error.[^1] The Plaintffs further seek to amend their general claim for damages to seek damages under the following heads: punitive damages, loss of rental income, loss of business income, loss of personal income and devaluation of the Plaintiffs lands. The balance of the proposed amendments are difficult to summarize as they are marked by a lack of clarity and focus, consisting largely of a series of disparate complaints about the Defendant's conduct with little or no connection to any discernible cause of action. The bulk of the amendments appear to relate to the presence of certain windows on the Defendant Property.
[9] In support of this motion the Plaintiffs filed an affidavit sworn by the Plaintiff, Vito Auciello. After providing a brief history of the proceedings, the Auciello affidavit focuses primarily on the Defendant's recent sale of the Defendant Property and the Defendant's failure to advise the Plaintiff of the sale until after closing in December 2020. Other than vague assertions that the proposed amendments are "a result of the sale" or are required "primarily because of the actions of the Defendant" the affidavit contains no evidence as to the reason for any particular proposed amendment and no evidence as to why the amendments are only being sought now, over 7 years later.
[10] The Auciello affidavit also contains no evidence as to whether the specific allegations and claims contained in the proposed amendments were disclosed to, or known to, the Defendant in advance of this motion or whether those claims or allegations were addressed on discovery. Finally, the Plaintiffs have filed no evidence relating to the prejudice, or lack thereof, to the Defendant. As such, other than providing a history of the proceedings, the Plaintiffs' affidavit evidence is of limited relevance to the issues to be decided on this motion.
[11] Although the Plaintiffs did not originally file a factum, they did upload a Reply Factum on Case Lines two days before the motion. It does not appear that the Reply Factum was properly filed with the Court. The Reply Factum is a not a proper factum. It contains little or no argument or submissions on the matters at issue on this motion and instead consists largely of unsworn evidence that is not otherwise properly before the court on this motion. The Reply Factum also contains a number of unfounded and improper assertions of misconduct against both the Defendant and his counsel. The Defendant objects to the form and content of the Reply Factum on this basis. While I have accepted the Plaintiffs' submission of the Reply Factum for the purpose of the motion, given its contents, I did not find it helpful and I have not relied on it in my decision.
[12] The Defendant opposes the Plaintiffs' motion except for the following proposed amendments:
the correction to the spelling of the Defendant's name in the style of cause;
the withdrawal of the claims for injunctive relief in paragraphs 1(b) and 1(c) of the Statement of Claim;
the amendments to the descriptions of the Plaintiffs, as reflected in paragraphs 2, 3 and 4 of the proposed Fresh as Amended Statement of Claim; and
the amendments to the descriptions of the Plaintiff Property and Defendant Property in paragraphs 10 and 11 of the proposed Fresh as Amended Statement of Claim.
[13] The Defendant objects to the remaining proposed amendments to the Statement of Claim on the following grounds:
a) The amended pleadings offend the rules of pleading to a significant extent and that to allow the pleading to stand would be an abuse of the court's process;
b) The Defendant will suffer non-compensable prejudice because he has already conducted the examination for discovery of the Plaintiffs and he no longer owns the Property;
c) The amended pleadings disclose no reasonable cause of action against the Defendant; and
d) Any new claims against the Defendant are statute-barred.
Analysis
[14] Rule 26.01 of the Rules of Civil Procedure provides as follows:
On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by cost or an adjournment.
[15] The principles that apply on a motion for leave to amend under Rule 26.01 are well established:
The rule is mandatory. The court must allow the amendment, unless the responding party would suffer non-compensable prejudice, the proposed pleading is scandalous, frivolous or vexatious, or the proposed pleading fails to disclose a reasonable cause of action: Klassen v. Beausoleil, 2019 ONCA 407, at para. 25.
The expiry of a limitation period is one form of non-compensable prejudice. A party cannot circumvent the operation of a limitation period by amending their pleadings to add additional claims after the expiry of the relevant limitation period: Klassen at para. 26; Frohlick v. Pinkerton Canada Ltd, 2008 ONCA 3, at para. 24
An amendment will be statute-barred if it seeks to assert a new cause of action after the expiry of the applicable limitation period. In this regard, the case law discloses a "factually oriented" approach to the concept of a "cause of action", namely, a factual situation the existence of which entitles one person to obtain from the court a remedy against another person: Klassen, at para. 27; 1100997 Ontario Ltd. v. North Elgin Centre Inc., 2016 ONCA 848, at paras. 19-23, 33
An amendment does not assert a new cause of action, and therefore is not impermissibly statute-barred, if the original pleading contains all the facts necessary to support the amendments such that the amendments simply claim additional forms of relief, or clarify the relief sought, based on the same facts as originally pleaded. Klassen, at para. 28, North Elgin, at 20-21.
The court may refuse an amendment where it would cause non-compensable prejudice. The prejudice must flow from the amendment and not some other source. At some point, the delay in seeking an amendment will be so lengthy, and the justification so inadequate, that prejudice to the responding party will be presumed, absent evidence to the contrary: Klassen, at para 31 1588444 Ontario Ltd dba Alfredo's et al v State Farm Fire and Casualty Company, 2017 ONCA 42
[16] The Defendant has not opposed certain of the proposed amendments as identified in paragraph 12 of these Reasons. The Defendant's position is reasonable as these amendments do not appear to be prejudicial to the defendants and should not result in any significant additional delay in the proceedings. Accordingly, I would grant leave to the Plaintiffs to make those amendments. For the reasons that follow, I find that leave should not be granted with respect to the balance of the amendments sought by the Plaintiffs on this motion.
Amendment to add a new plaintiff
[17] As pleaded in the Proposed Amended Claim, the proposed additional plaintiff, Vito Auciello Real Estate Corporation, does not occupy the Plaintiff Property, but instead operates out of an adjacent property also owned by the Plaintiffs where it has been since 2009. The proposed Fresh as Amended Statement of Claim pleads that Vito Auciello Real Estate Corporation has shared access to the roof top patio of the Plaintiff Property. According to the Auciello affidavit, the Plaintiff Auciello is the director, officer, and sole shareholder of Vito Auciello Real Estate Corporation.
[18] The claims asserted by Vito Auciello Real Estate Corporation in the Proposed Amended Claim are the same as those asserted by the current Plaintiffs, including those claims in the current Statement of Claim issued in 2014. As such, the claims of Vito Auciello Real Estate Corporation are prima facie statute barred by the expiry of the limitation period. No evidence has been filed to suggest that the claims of Vito Auciello Real Estate Corporation were only discoverable within the last 2 years, nor could such evidence exist given that the company's controlling mind is one of the Plaintiffs who issued the 2014 claim. Accordingly, the Defendant will suffer non-compensable prejudice if the claim is amended to add this proposed plaintiff. Leave to make such an amendment is therefore denied.
[19] If I am wrong, and the claims of Vito Auciello Real Estate Corporation are not statute barred, then I find that the passage of more than seven years from the issuance of the Statement of Claim, coupled with the lack of any explanation or justification for the delay of the proposed new plaintiff in asserting a claim, gives rise to a presumption of non-compensable prejudice to the Defendant and I would deny leave to amend on that basis.
Amendments to causes of action
[20] The bulk of the amendments in the Proposed Amended Claim relate to windows and a venting exhaust system on the Defendant Property.
[21] The Proposed Amended Claim includes a new allegation that there are "five 5 illegally installed windows cut through the south Firewall compromising the firewall" (the "Windows"). The claim also alleges that the sills on the Windows are "encroaching" but provides no details of such encroachment. The Windows are alleged to have been in place prior since around 2008, before the Plaintiffs took possession of the Plaintiff Property. Although vaguely implied, the Proposed Amended Claim does not specifically allege that the Defendant installed the windows. In fact, the Proposed Amended Claim acknowledges that the Defendant has advised that the windows were installed before he acquired the Defendant Property.
[22] The Proposed Amended Claim does not allege any nuisance resulting from the presence of the windows. While the Windows are alleged to be illegally installed in a firewall, no damages are claimed in relation to any resulting danger or hazard. The Proposed Amended Claim references trespass in relation to the Windows. It is alleged that the location of the Windows is "landlocked" and can only be accessed by trespassing on the Plaintiff's property. The Proposed Amended Claim then baldly asserts that the Defendant has trespassed without providing any details of how and when such trespass occurred and whether it was with respect to installation or maintenance and does not allege any harm to the Plaintiffs resulting from such trespass.
[23] The Plaintiffs' chief complaint in the Proposed Amended Claim in relation to the Windows appears to be in respect of the Plaintiffs' "air rights and air density", and appears to be similar to the claims made relating to "air density" rights in respect of the two exhaust vents and the satellite dish in the current Statement of Claim. Specifically, the Proposed Amended Claim appears to be alleging that the presence of the Windows in the Defendant Property has somehow diminished the Plaintiffs' air rights and air density thereby diminishing the value of the Plaintiff Property.
[24] The Proposed Amended Claim makes similar claims with respect to a "venting exhaust system" with "continuous venting" and its various components such as "vent stacks" (the "Venting System"). This Venting Systems appears to be something different than the two "exhaust vents" referenced in the current Statement of Claim, which the Defendant has pleaded were removed in 2014. Unlike the Windows, the Plaintiff specifically alleges in the Proposed Amended Claim that the Venting System was installed by the Defendant, sometime in 2014. As with the Windows, the Plaintiffs' primary claim Proposed Amended Claim with respect to the Venting System appears to be based on an impact on the Plaintiffs' air rights and the associated diminished value of the Plaintiff Property.
[25] I find that the Plaintiffs' claims relating to the Windows and the Venting System are new causes of action. With these amendments the Plaintiffs are pleading new facts in support of the claims contained in the Proposed Amended Claim. These are not amendments that simply claim additional forms of relief, or clarify the relief sought, based on the same facts as originally pleaded. These claims are statute-barred on the face of the pleading. The Windows are alleged to have been installed in 2008 and the Venting System in 2014. There is no evidence on the record before me that these claims would not have been discoverable in 2014. Accordingly, I find that these claims are statute-barred and that the corresponding amendments would cause non-compensable prejudice to the Defendant. On this basis alone, I would deny leave to make these amendments.
[26] Similar to the proposed amendment to add a new plaintiff, I also find that the passage of more than seven years from the issuance of the Statement of Claim, coupled with the lack of any explanation or justification for the delay in asserting the claims relating to the Windows or the Venting Systems, gives rise to a presumption of non-compensable prejudice to the Defendant and I would deny leave to amend on that basis.
[27] In my view, the circumstances relevant to these particular amendments aggravate the prejudicial impact of the delay. The Plaintiffs initiated an action in 2014, primarily in nuisance, relating to allegedly encroaching exhaust vents and a satellite dish. Within weeks the Defendant removed the encroaching items and pleaded such removal in their defence. The Plaintiffs could have responded to the removals at that time, and sought to amend their Statement of Claim to add claims relating to the Windows and Venting System. In my view, for the Plaintiffs to wait over 7 years, after documentary and oral discoveries, a motion on refusals, an administrative dismissal and reinstatement, and mediation, when the action is now otherwise ready for trial, verges on an abuse of this court's process.
[28] Finally, I also think there may be merit to the Defendant's submission that the prejudice from these amendments is compounded by the fact that the Defendants have sold the Defendant Property and no longer have the access to the property they may require to properly respond to claims relating to the Windows and Venting Systems. However, the Defendants have not filed any evidence on this point so it has not factored into my decision.
[29] I would include in the amendments relating to the Windows and Venting System, for which leave is denied, those paragraphs in the Proposed Amended Claim that relate to the Defendant's sale of the Defendant Property to the "Buyer" (who is not identified in the proposed pleading). The pleading regarding the sale to the Buyer are ancillary to the claim that the Windows and Venting System diminished value the Plaintiff Property. I also agree with the Defendant's submission that many of the amendments relating to the sale to the Buyer improperly plead evidence and argument and I would have also denied leave to make those amendments on the grounds that they do not comply with the requirements for pleading in Rule 25.06.
[30] To the extent that any of the proposed amendments that are not connected to the Windows and Venting System (other than the amendments that are unopposed) I deny leave to those make those amendments on the basis that the passage of time and the circumstances surrounding the amendments, as detailed above, gives rise to a presumption of non-compensable prejudice that has not been refuted on the evidence before me.
Amendments to add heads of damage
[31] The Plaintiff seeks to amend paragraph 1 (a) of the Statement of Claim to add the following new heads of damages: "punitive damages, loss of rental income, loss of business income, loss of personal income and devaluation of the Plaintiffs lands." The claim for devaluation of the Plaintiffs' lands is not new, having been pleaded in paragraph 19 of the Statement of Claim. I find that the proposed amendment to add this head of damages to paragraph 1 (a) of the Statement of Claim is therefor unnecessary.
[32] The proposed additional heads of damage are pleaded both with respect to the new claims made in the Proposed Amended Claim and to the claims made in the current Statement of Claim. Per the decision of the Court of Appeal in Klassen (para. 28), these additional heads of damage do not constitute a new cause of action if they are simply claiming additional forms of relief based on the same facts as originally pleaded. These additional heads of damages are not statute barred if the current Statement of Claim "contains all the facts necessary to support the amendments". In considering whether the current Statement of Claim supports these amendments, it must be read generously and with some allowance for drafting deficiencies (Klassen, at para. 30).
[33] In my view, read generously, the current Statement of Claim contains facts necessary to support claims under these additional heads of damages. The Statement of Claim alleges that the nuisance and trespass complained of have prevented the Plaintiffs from developing the roof area of the Plaintiff Property, including a planned yoga studio and roof top café. Paragraph 16 of the the Statement of Claim pleads "The said encroachment prevents the Plaintiff from any development of any kind and reduces the earning potential of the Plaintiffs land." Read generously, the claimed "reduction in earning potential" of the Plaintiff Property could support claims for damages under the heads: loss of rental income, loss of business income or loss of personal income. There is also an allegation of malicious conduct in paragraph 24 of the original Statement of Claim that could support a claim for punitive damages. Accordingly, I find that in relation to the claims in the current Statement of Claim, the amendments to add these new heads of damages do not constitute the addition of new causes of action and are not statute-barred.
[34] However, as with the other proposed amendments to the Statement of Claim as discussed above, I find that the passage of more than seven years from the issuance of the Statement of Claim, coupled with the lack of any explanation or justification for the delay in asserting these new heads of damages, gives rise to a presumption of non-compensable prejudice to the Defendant and I deny leave to amend on that basis.
[35] The Plaintiffs' motion for leave to amend the Statement of Claim is dismissed except for the following amendments as reflected in the Fresh as Amended Statement of Claim attached as Exhibit "I" to the Auciello affidavit in the Plaintiff's motion record:
a) The amendment to change the name of the defendant to Thanh Quang La in the style of cause and elsewhere in the pleading where the defendant is referred to by name;
b) The amendments in subparagraphs 1(b) and 1(c) removing the claims for injunctive relief;
c) The amendments in paragraph 2. For greater certainty, leave is not granted for the amendments in paragraph 2a;
d) The amendments in paragraph 2;
e) The amendments in paragraph 3;
f) The amendments in paragraph 4. For greater certainty, leave is not granted for the amendments in paragraphs 4a through 4i;
g) The amendments in paragraph 10; and
h) The amendments in paragraph 11.
[36] These amendments will be reflected in an Amended Statement of Claim with the added portions underlined as required by the Rules.
[37] Leave is denied for all other amendments proposed in the Fresh as Amended Statement of Claim.
[38] To the extent the Defendant intends to serve and Amended Statement of Defence in response to the Amended Statement of Claim, he shall do so within 30 days of delivery of the Amended Statement of Claim.
[39] The parties may make submissions on costs of this motion in writing directed to my Assistant Trial Coordinator by email. Such submissions will be no more than two [2] pages in length, exclusive of any Costs Outline. The Defendant shall deliver his costs submissions within 21 days of the Release of these Reasons. The Plaintiffs shall deliver their costs submissions within 14 days of the delivery of the Defendants' submissions.
[40] If the parties are unable to settle on a form of order for this motion, they can arrange for a case conference before me by emailing my Assistant Trial Coordinator.
[41] I am not seized.
D. Michael Brown, Associate Judge
Released: July 7, 2022
COURT FILE NO.: CV-14-513870
DATE: 2022-07-07
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
VITO AUCIELLO and NETWORK CASH MART LTD.
Moving Parties/Plaintiffs
- and –
THAN QUANG LA
Responding Party/Defendant
REASONS
ASSOCIATE JUSTICE D. MICHAEL BROWN
Released: July 7, 2022
[^1]: The request for relief in the Plaintiffs' Notice of Motion included a request for "leave to add Li limited Group of Companies (Li Limited) and Wayne Levy Realty Corp. to the style of proceedings", without indicating whether these parties were to be added as plaintiffs or defendants. No evidence was filed in support of this request and the Plaintiffs did not pursue this relief at the return of the motion.