Court File and Parties
COURT FILE NOS.: CV-20-646129-00CL DATE: 20230308 ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST
IN THE MATTER OF the Ontario Business Corporations Act, R.S.O. 1990, c. B16
BETWEEN:
MORGAN KENNETH SNOOK Plaintiff – and – ROYAL STONE INTERLOCKING CONCRETE LTD., 1548166 ONTARIO LTD., ROYAL STONE CONSTRUCTION LTD., AQUASPA POOLS AND LANDSCAPE DESIGN LTD., G & G PROPERTIES INC., ROYAL STONE LANDSCAPING & DESIGN LTD., TESMA WAY HOLDINGS INC., ROYAL KING VALLEY HOLDINGS INC., GARAGE ROYALTY INC., UNIQUE LIFTS INC., BELLWORKS MANAGEMENT LTD., GARAGE ROYALTY PRODUCTS INC. and GIUSEPPE PRIZZI also known as PINO PRIZZI Defendants
Counsel: Matthew Valitutti, for the Plaintiff Matthew Kersten and Dominique Menard, for the Defendants
Heard: February 17, 2023
Before: McEwen, J.
Endorsement
[1] The defendants bring a motion to discharge the Certificates of Pending Litigation (the “CPLs”) ordered by Dunphy J. by way of his decision dated May 13, 2021: Snook v. Royal Stone Interlocking Concrete Ltd., 2021 ONSC 3476.
[2] The defendants assert that they discovered facts after the hearing of that motion that disclosed that the plaintiff fraudulently obtained the CPLs.
[3] The defendants allege the plaintiff withheld documentation from a prior matrimonial file, primarily a sworn financial statement (the “Financial Statement”). In the Financial Statement, the plaintiff deposed that he did not hold any interest in an incorporated company, which of course runs contrary to his position in this lawsuit where he alleges that he is a 50 percent owner of the defendant companies.
[4] The plaintiff brings his own motion seeking an order dismissing the defendants’ motion on the basis that it is, amongst other things, an abuse of process.
[5] The parties proposed that both motions proceed simultaneously. Given the intertwined nature of the two motions, I agreed.
[6] For the reasons that follow, I grant the plaintiff’s motion and dismiss the defendants’ motion.
[7] While at first glance the existence of the earlier Financial Statement is problematic for the plaintiff, I accept that the defendants’ motion is an abuse of process.
Background
[8] The history of this litigation is protracted and acrimonious. I do not propose to recite the litany of complaints that the parties make against each other. The basis for my decision can primarily be found in the prior orders of this Court and the materials filed by the parties on this motion. That said, the following is a brief contextual overview.
[9] First, in November 2020, the plaintiff served a motion record to obtain the CPLs. Soon thereafter, the defendants served a notice of motion seeking to remove one of the plaintiff’s lawyers as solicitor of record.
[10] On December 14, 2020, the parties attended a scheduling appointment before Dietrich J. She ordered that the motions be heard together, with the defendants’ motion being heard first, followed by the plaintiff’s motion for the CPLs.
[11] There were issues with respect to the date the motions would be heard. Ultimately, the motions proceeded, as per Dietrich J.’s direction, on May 10, 2021 before Dunphy J.
[12] Inexplicably, the defendants did not file any materials for either motion. Instead, they appeared and sought an adjournment of both motions. They raised several objections, one being that the removal motion had to proceed before any other steps could be contemplated, including the plaintiff’s motion for CPLs. The defendants raised these objections despite Dietrich J.’s clear direction that the motions would proceed together.
[13] Dunphy J. was highly critical of the defendants’ litigation strategy. In granting the CPL orders, amongst other criticisms, he noted:
- The defendants’ failure to take substantive steps constituted “an almost epic disregard for their obligations as parties to a proceeding pending before the Commercial List”.
- Notwithstanding the defendants’ position that their motion to remove plaintiff’s counsel must take absolute priority over any progress in the action, they took “precisely no concrete steps to bring their motion forward. No evidence has been filed. Nothing.”
- The defendants were the authors of their own misfortune in failing to file evidence in seeking the adjournment.
[14] I agree with Dunphy J.
[15] Thereafter, the defendants sought leave to appeal Dunphy J.’s decision.
[16] Notwithstanding their litigation strategy not to file any materials on the CPL motion, the defendants filed a factum on the leave to appeal motion wherein they stated:
Finally, the Certificate of Pending Litigation should not have been granted in the first instance due to the manner in which it was obtained. The granting of the Certificate of Pending Litigation to the Plaintiff was improper in that the Defendants were denied an adjournment, and were forced to proceed on the CPL Motion without responding material and crucial evidence clearly demonstrating that the Plaintiff has represented to the Court, in previous proceedings, [1] that he has no interest in the Corporate Defendants and/or the Real Property.
Most importantly, the Defendants submit that there is no triable issue in respect of the Plaintiff’s alleged interest in the Corporate Defendants and/or the Real Property owned by the respective Corporate Defendants. By his own admission and representations to the Court, the Plaintiff has absolutely no interest, legal or equitable, in the Corporate Defendants and/or in their Real Property.
[Emphasis in original.]
[17] Also, with respect to the leave to appeal motion, one of the defendants, Pino Prizzi, swore an affidavit on July 23, 2021 (which, for whatever reason, was not included in the leave to appeal motion record). In that affidavit, he deposed that both his wife and the Corporate Chief Operating Officer, Tony Compagnori, had been involved with the plaintiff’s matrimonial affairs and had advised Mr. Prizzi that the plaintiff had told them that, in his family law litigation, he had stated that he had no interest in the corporate defendants. This affidavit was not provided to the plaintiff until November 25, 2022.
[18] The defendants’ leave to appeal motion was dismissed on October 6, 2021 with costs payable to the plaintiff.
[19] Ultimately, after some legal wrangling, the plaintiff released the matrimonial file to the defendants in December 2021 and February 2022. In it, the plaintiff asserted some privilege claims.
[20] Next, the defendants brought a motion to remove both plaintiff’s counsel of record. Cavanagh J. heard this motion in February 2022 and dismissed it. Mr. Prizzi alleged that plaintiff’s counsel, Matthew Valitutti, had a prior personal and professional relationship with him and acted in a conflict of interest. In dismissing the motion, Cavanagh J. relied, in part, on the fact that Mr. Prizzi did not provide any documentary evidence to support this claim.
[21] The defendants now, several months after obtaining the matrimonial file, bring this motion, relying primarily upon the impugned Financial Statement. It bears noting that the plaintiff admits that the information in the Financial Statement concerning the corporate defendants was false. He alleges, however, that Mr. Prizzi, given the power imbalance within their relationship, essentially took control of the matrimonial proceedings to protect his own business interests and that he was well aware of the position the plaintiff was taking in his matrimonial litigation. There is some support for this allegation in the record, including contemporaneous emails that were prepared during the matrimonial proceedings that indicate that Mr. Prizzi was involved in discussions and reviewing documents. There is also evidence in the record that the plaintiff was a 50 percent owner of the corporate defendants.
Positions of the Parties
[22] Given all of the above, the plaintiff submits that this motion is an abuse of process. Essentially, the plaintiff submits that the defendants, despite having in their own words, “material and crucial evidence” as of the time the motion was originally before Dunphy J., knowingly elected not to rely on any of that evidence and instead sought to obtain an adjournment.
[23] In support of his motion, the plaintiff relies upon the doctrine of abuse of process which the Supreme Court of Canada endorsed in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 37 as follows:
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 be manifestly unfair to a party in the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel.
One circumstance in which abuse of process has been applied is where the litigation before the court is found to be in essence an attempt to relitigate a claim which the court has already determined.
[Emphasis in original.]
[24] The plaintiff also relies on the following statement of the Supreme Court in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at para. 18:
The law rightly seeks a finality to litigation. To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so. A litigant, to use the vernacular, is only entitled to one bite at the cherry. … An issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner. A person should only be vexed once in the same cause. Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided.
[25] The plaintiff further relies upon the decision of the Court of Appeal for Ontario in Winter v. Sherman Estate, 2018 ONCA 703, 42 E.T.R. (4th) 181, at para. 7 wherein the court stated the doctrine of abuse of process applies to bar litigation that if it proceeded would “violate such principles as judicial economy, consistency, finality and the integrity of the administration of justice”.
[26] The plaintiff, based on the above, submits that the defendants were given every opportunity to file materials at the CPL motion and made a conscious decision not to do so. This was done intentionally, despite the fact that it had six months’ notice of the motion and Dietrich J. had specifically directed that the CPL motion would be heard at the same time and immediately after the removal motion.
[27] Both the defendants’ factum filed in the leave to appeal motion and Mr. Prizzi’s July 23, 2021 affidavit confirm that the defendants had evidence concerning the plaintiff’s disclosure in the Financial Statement. Even though it is not alleged that they had the Financial Statement itself, by their own admission, the evidence that they did have prior to the CPL motion was “material and crucial” and clearly demonstrated that the plaintiff had made prior misrepresentations in his matrimonial proceedings.
[28] The defendants, on the other hand, submit that they could not have included the Financial Statement at the original motion or the leave to appeal motion as they were not yet in possession of it. The defendants further submit that the CPL motion was tainted by fraud and dishonesty as the plaintiff misrepresented his interest in the corporate defendants to the court and that it runs contrary to accepted law that the plaintiff should be allowed an advantage obtained by fraud: see Lazarus Estates Ltd. v. Beasley, [1956] 1 Q.B. 702 as cited in Fatahi-Ghandehari v. Wilson, 2022 ONSC 4799, at para. 48.
Analysis
[29] I prefer the plaintiff’s submissions.
[30] First, I am of the view that the defendants’ position is fatally flawed by virtue of the fact that they consciously, despite Dietrich J.’s scheduling order, chose not to lead any evidence at the CPL motion and instead risked obtaining an adjournment. To this day, they have never disclosed the nature of the “crucial and material” evidence that they had at the hearing of the CPL motion.
[31] It is therefore impossible for me to place in context the import and veracity of this evidence as opposed to that which was disclosed in the Financial Statement. Further, the plaintiff has provided an explanation as to why the Financial Statement contained the false statement concerning his lack of interest in any corporate defendants.
[32] All of the above could have been fully canvassed had the defendants followed the direction of this Court and sensibly filed materials before Dunphy J.
[33] Here, the Court of Appeal for Ontario’s decision in Winter is on point: “[w]hile [abuse of process] is similar to issue estoppel in that it can bar litigation of legal and factual issues ‘that are necessarily bound up with the determination of’ an issue in the prior proceeding, abuse of process also applies where issues ‘could have been determined’ ”: at para. 7 (emphasis added; citations omitted).
[34] In my view, the defendants are doing exactly what the Court of Appeal and the Supreme Court of Canada say they should not do: continuing to re-litigate the same issue when they should have put their best foot forward at the outset. In all of the circumstances, the defendants ought not to re-litigate based on information they have obtained by way of the Financial Statement which was known to them at least in a general way and was, by their own description, “material and crucial”. [2]
[35] Based on the foregoing, I grant the plaintiff’s order dismissing the defendants’ motion to discharge the CPLs as an abuse of process. It is therefore unnecessary to go on to consider the defendants’ motion.
[36] Last, I cannot conclude this endorsement without commenting on the defendants’ litigation strategy. As noted, I agree with Dunphy J.’s comments that the defendants’ failure to take steps, in accordance with Dietrich J.’s clear direction, constituted a near complete disregard for their obligations as parties to a proceeding on the Commercial List. Failure to follow scheduling orders of this Court wastes time and diverts scarce judicial resources to the detriment of other litigants who follow the rules and wish to have their matters heard in a timely fashion.
[37] Instead of both the removal motion and the CPL motion proceeding sensibly at the same time, the defendants’ litigation strategy has resulted in the motions being heard separately, potentially an unnecessary leave to appeal motion, and now this motion. It has also resulted in additional case conferences being held to deal with interlocutory matters. I further agree with Dunphy J.’s additional comments that this matter has been delayed primarily due to the defendants’ conduct.
[38] This cannot be allowed to continue. I am therefore ordering that the parties not be allowed to bring any further motions in this action without leave of the Team Lead of the Commercial List. Although my criticisms have only been directed at the defendants, I believe that such an order is sensible so that the Court can control its process and ensure that this matter sensibly moves forward. I do not see that this order would prejudice the plaintiff in any way.
[39] Case conferences for further scheduling orders can be arranged through the Commercial List office.
[40] Insofar as the within motion is concerned, the parties have agreed that the successful party on this motion would receive $12,000 all inclusive. I award this amount to the plaintiff to be paid within 30 days.
McEwen J. Date: March 8, 2023
Footnotes
[1] The defendants concede that these were the aforementioned matrimonial proceedings in which the Financial Statement was provided by the plaintiff.
[2] I should note that in addition to the Financial Statement, the defendants, in their factum, also rely upon a correspondence between matrimonial counsel and the separate agreement, but at the hearing of the motion, defendants’ counsel only referenced the Financial Statement.