COURT FILE NO.: CV-21-00664245-0000
DATE: 2022-12-08
ONTARIO SUPERIOR COURT OF JUSTICE
RE: Maryam Furney, Plaintiff
-and-
Canadian Imperial Bank of Commerce, CIBC Mortgages Inc., Trading as Firstline Mortgages, Christopher Staples, Adrian Besleaga, Florin Besleaga, John Doe 1 and Jane Doe 2, Defendants
BEFORE: Robert Centa J.
COUNSEL: Rolf Piehler, for the plaintiff
Jordan Goldblatt, for the defendant Christopher Staples
HEARD: December 7, 2022
ENDORSEMENT
[1] Maryam Furney owned property in Niagara on the Lake. In 2013, she mortgaged the property to CIBC for $330,000. CIBC eventually declared the mortgage in default and, on June 27, 2018, issued a notice of sale on the property. CIBC retained Christopher Staples to act as its lawyer during this process. On December 21, 2020, CIBC sold the property for $450,000. Mr. Furney alleges the property was worth $1.7 million at that time.
[2] Ms. Furney commenced an action against CIBC, its realtors, the purchasers, and Mr. Staples. In essence, she alleges that CIBC sold the property improvidently and for a price far below market value. She alleges that defendants entered a scheme to sell and purchase the property at below market value.
[3] Mr. Staples moved to strike the action against him under rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. He submits that it was plain and obvious that he only owed duties to his client, CIBC, and not to Ms. Furney, and that the statement of claim disclosed no cause of action against him.
[4] I agree and, therefore, strike Ms. Furney’s claim against Mr. Staples without leave to amend.
The material facts pleaded against Mr. Staples
[5] Although Ms. Furney has twice amended her claim in an attempt to survive Mr. Staples’ motion to strike, the version of the claim before me still does not crisply identify the causes of action against pleaded against Mr. Staples.
[6] Counsel for Ms. Furney fairly conceded that the motion turned on whether or not the Ms. Furney had adequately pleaded the tort of unlawful act conspiracy against Mr. Staples in paragraph 30 of the current version of the claim. To provide context for that pleading, it is helpful to set out all of the material facts that Ms. Furney pleaded about Mr. Staples in the claim:
Christopher Staples is a lawyer in Toronto. He acted as CIBC's lawyer.
The Defendants were each aware that the value of the Property was well over $1.5MM.
Christopher Staples was aware of the scheme being perpetrated by the Realtors and the Purchasers. Despite being aware of the scheme he acted for CIBC on the fraudulent sale.
He should be held responsible for the Plaintiff's losses.
CIBC with the direct participation of Staples conducted the sale of the Property. Staples was personally and directly aware of the falsehood, or in the alternative, wilfully and recklessly ignored the falsehood, Notwithstanding his personal and direct knowledge of the falsehood Staples actively participated in effecting the sale of the Property.
As a direct result of the actions of CIBC and Staples in conducting and participating in the improvident sale of the Property, the Plaintiff abandoned her efforts to obtain financing to repay the mortgage held by CIBC securing the Property.
29 The Plaintiff suffered a loss arising from the said actions of CIBC and Staples.
The Plaintiff states that Staples entered into an arrangement with one Johnny Fei, for the sale of the Property at a price much below its then current market value of $1,700,000.00 and thereby received a monetary benefit.
Details of this monetary benefit are unknown to the Plaintiff as of the date hereof and details of same will be delivered prior to trial.
The Plaintiff states that Jeff Smulin, a representative of CIBC, on Sept. 15, 2018 admitted that he was not aware of the wrongful actions taken by Mr. Staples against the Plaintiff to obtain vacant possession of the Property for the purposes of sale,
The Plaintiff states that Mr. Staples wrongfully refused to accept funds sufficient to pay the CIBC mortgage from a lender acting on the Plaintiff's, behalf represented by Kurt A. Sunn, in December, 2019.
[7] The only reference in the claim to Johnny Fei is found in paragraph 30. By reading the remainder of the claim, it is clear that Mr. Fei is not the mortgagee exercising the power of sale, the realtor, or the purchaser of the property. He is not a defendant.
The test to be applied on a rule 21.01(1)(b) motion
[8] Mr. Staples moves under rule 21.01(1)(b) to strike the statement of claim as disclosing no reasonable cause of action.[^1] I am to apply the following test: assuming the facts pleaded are provable and true, is it plain and obvious that the claim cannot succeed? Mr. Staples must meet the high standard of establishing that the claim as pleaded has no reasonable prospect of success: The Catalyst Capital Group Inc. v. Dundee Kilmer Developments Limited Partnership, 2020 ONCA 272, 150 O.R. (3d) 449, at para. 47; Bowman v. Ontario, 2022 ONCA 477, 83 C.C.L.T. (4th) 235, at para. 25.
[9] I must read the statement of claim generously. Novel cases that involve matters of law that are unsettled, or that require a detailed analysis of the evidence should not be dismissed on a rule 21.01(1)(b) motion: Transamerica Life Canada Inc. v. ING Canada Inc. (2003), 2003 CanLII 9923 (ON CA), 68 O.R. (3d) 457 (C.A.), at paras. 38, 57-59; PDC 3 Limited Partnership v. Bregman + Hamann Architects (2001, 2001 CanLII 38745 (ON CA), 52 O.R. (3d) 533 (C.A.).
The tort of unlawful act conspiracy
[10] As noted, Ms. Furney defends the motion on the basis that it is not plain and obvious that the pleading of unlawful act conspiracy in paragraph 30 cannot succeed.
[11] In Agribrands Purina Canada Inc. v. Kasamekas (2011), 2011 ONCA 460, 106 O.R. (3d) 427 (C.A.), at para. 25, the Court of Appeal for Ontario set out the five required elements to be pleaded in an unlawful act conspiracy:
a. the defendants acted in combination, that is, in concert, by agreement or with a common design;
b. the defendants’ conduct is unlawful;
c. the defendants’ conduct is directed towards the plaintiff;
d. the defendants should know that, in the circumstances, injury to the plaintiff is likely to result; and
e. the defendants cause injury to the plaintiff.
[12] Conspiracy is an intentional tort and a serious allegation. The material facts supporting such a claim must be pleaded with heightened particularity: Ontario Consumers Home Services v. Enercare Inc., 2014 ONSC 4154, at para. 25.
[13] For ease of reference, paragraphs 30 and 31 plead as follows:
The Plaintiff states that Staples entered into an arrangement with one Johnny Fei, for the sale of the Property at a price much below its then current market value of $1,700,000.00 and thereby received a monetary benefit.
Details of this monetary benefit are unknown to the Plaintiff as of the date hereof and details of same will be delivered prior to trial.
[14] I find that it is plain and obvious that Ms. Furney’s claim will fail. I see three significant problems.
[15] First, Ms. Furney has pleaded no material facts to explain the identity of Johnny Fei or how this person is connected to the mortgagee, realtors, and purchasers of the property. Mr. Fei is not a defendant to this action and this single reference to him raises more questions than it answers. If this were the only problem with the pleading, it could likely be remedied. The other two problems, however, are much more significant and either would be sufficient to strike this claim.
[16] Second, Ms. Furney has not pleaded what about Mr. Staples’ conduct was unlawful. In this context unlawful means wrong in law such as conduct that is a crime, tort, or breach of statute: Agribrands at para. 38; EnerWorks Inc. v. Glenbarra Energy Solutions Inc. 2012 ONSC 414, at paras. 68-69; Edgeworth v. Shapira et al., 2019 ONSC 5792. The failure to plead a specific and precise unlawful act is an appropriate basis to strike out a claim for unlawful act conspiracy: Edgeworth at para 44-45; Heydary Hamilton PC v. Dil Muhammad, et al., 2013 ONSC 4938, at paras. 59-60.
[17] I find that Ms. Furney has not pleaded that Mr. Staples engaged in conduct that was unlawful. He was neither the buyer nor the seller of the property. Given the balance of the pleading, alleging that Mr. Staples “entered into an arrangement” with another person who was not also party to the allegedly improvident sale of the property does not meet the requirement to plead a specific and precise unlawful act.
[18] It is settled that a lawyer for a party owes duties only to that lawyer’s client and not to their client’s adversary in litigation or transactions: Diamond Contracting Ltd. v. MacDearmid, 2006 CanLII 24444 (ON CA), 214 OAC 92. To hold otherwise would be place lawyers in the untenable conflict between their duty to their client and the need to protect themselves against their client’s adversary. For this reason, it is important to scrutinize carefully conspiracy allegations made against lawyers by their client’s opponents.
[19] Mr. Staples owed no duties to Ms. Furney, he owed duties to his client, CIBC, from whom he took instructions. Giving legal advice, advocacy, and providing assistance with commercial transactions to a lawyer’s own client cannot itself be an instance of unlawful conduct. In this context, “entering into an arrangement” is not an unlawful act for the purpose of the tort of conspiracy.
[20] Third, Ms. Furney has not pleaded that Mr. Staples conduct was directed toward her, much less particularized how such conduct was directed to her: OPFFA v. Paul Atkinson et al, 2018 ONSC 1207, at paras. 102 to 107. This requirement is even more important when the allegation is directed at counsel for an opposing party in a transaction or litigation. Lawyers always advance their clients’ interests. Almost as frequently, that advancement will come at the expense of those opposed to that advancement: the litigation opponents or transactional counterparties. Ms. Furney’s pleading fails to demonstrate that Mr. Staples’ conduct was directed at her as opposed to him simply working for his client.
[21] It is plain and obvious that this claim cannot succeed. I strike it out.
No leave to amend
[22] I exercise my discretion and do not grant Ms. Furney plaintiff leave to amend again the statement of claim.
[23] The statement of claim before me is the third version of the claim. All of them have suffered from radical defects that are incapable of being cured. This is not surprising given the extremely limited circumstances where a plaintiff can sue her opponent’s lawyer: 2116656 Ontario Inc. v. Grant and LLF Lawyers LLP, 2019 ONSC 114.
[24] The statement of claim was issued on July 16, 2021. It appears that defences have not been filed and the litigation is currently stalled. The core of Ms. Furney’s claim turns on whether or not CIBC sold her property to the defendant purchasers for $1.2 million less than its fair market value in December 2020. Ms. Furney and the remaining defendants have the right to have that claim tried on the merits in a timely and efficient way.
[25] I was not provided with a draft amended statement of claim or any proposed language that would solve the defects that I have identified. In these circumstances, I would not grant leave to amend the statement of claim for a third time: 9383859 Canada Ltd. v. Saeed, 2020 ONSC 4883 at paras 54 to 59; Grigonis v. Toronto Boardsailing Club, 2010 ONCA 651.
Costs
[26] If the parties are not able to resolve costs, Mr. Staples may email his costs submission of no more than three double-spaced pages to Theresa.Finelli@ontario.ca on or before December 15, 2022. Ms. Furney may deliver responding submission of no more than three double-spaced pages on or before December 22, 2022. No reply submissions are to be delivered without leave.
Robert Centa J.
Date: December 8, 2022
[^1]: Although the notice of motion also mentioned rule 21.01(a), counsel for Mr. Staples confirmed that the motion relied only on rule 21.01(1)(b).